Equipment manufacturers expect integrated finance to boost sales by over 25%

20-Jun-2019

  • New global research from Siemens Financial Services reveals that equipment manufacturers (OEMs) across the globe expect to boost their sales by 25%-35% over the next five years by offering integrated financing options 

  • Integrated financing options – where tailored financing is included as part of the overall technology proposition offered via the OEM  -– provide the customer with an affordable means of acquiring the technology via monthly payments, which in turn can be related to the business benefit of using the digitalised technology.

  • These integrated financing options, which help their customers acquire digital technologies without having to raise large amounts of capital, are viewed as a competitive advantage for OEMs over their rivals and form part of their customer value proposition 

  • Industry 4.0 transformation requires widespread investment in technology, which is presenting many OEMs’ customers with a major financial challenge

  • OEMs are under pressure to provide a value proposition that makes it commercially sustainable for their customer manufacturers to acquire new generation technology

Siemens Financial Services (SFS) has released a new research paper examining the importance of integrated finance in enabling manufacturers to invest in Industry 4.0 and in helping OEMs to sell their digitally-enabled solutions.

The journey to Industry 4.0 is now well recognised as an imperative for manufacturers across the globe seeking to remain competitive in their industries. Industry 4.0 is making it possible for SME and mid-tier manufacturers to compete in global markets, even with very large rivals. Therefore OEMs that supply Industry 4.0-enabled technology want to make it easy and straightforward for their manufacturing customers to invest in their machinery, equipment and technology offerings.

The emerging marketplace for Industry 4.0 technology is substantial; predicted to reach $214bn by 2023, up from $66bn in 2016, and reach $1tr by the early 2030s.  Projections for Industry 4.0 specific sales alone do not embrace the much larger market for retrofit and new digitalised versions of key production technologies, meaning that in reality future expenditure is expected to be much larger. As a result, the manufacturing industry globally is facing major investment challenges and demand is growing for financing solutions to enable acquisition of new generation technology. 

Machinery and equipment OEMs are under pressure not simply to offer high performance digitalised technology, but also provide a value proposition to their clients that makes it easy and commercially sustainable for them to migrate their machinery, equipment and technology to the Industry 4.0 environment – at home and abroad.

SFS asked manufacturing technology OEMs across the globe how offering integrated financing options in their customer value proposition is expected to boost their ability to help their clients acquire new generation digitalised technology over the next five years.

The research confirmed that OEMs are either experiencing, or expect to experience, a 25-35% uplift in sales over the period as a result of offering this type of financing which makes the technology investment affordable and commercially sustainable for their clients.

A range of specialist financing methods are being deployed by manufacturing CFOs to upgrade to the digitalised, automated operating platforms of Industry 4.0. The specialised range of financing techniques – often referred to as Finance 4.0 - covers the full range of requirements, from the acquisition of a single digitalised piece of equipment, to financing a whole new factory, to even acquiring a competitor.

“Finance 4.0 arrangements tend to be offered by specialist providers that have a deep understanding not only of how the digitalised technology works, but also how that technology can be practically implemented to deliver the efficiency, productivity and competitive benefits of digitalisation,” says Brian Foster, head of industry finance at Siemens Financial Services in the UK. “At best, the financing arrangement will be an embedded part of the value proposition, offered right at the beginning of the customer discussion on requirements. Complete solutions should be taken into consideration in order to identify the best financial package to effectively digitalise a manufacturing facility’s entire operation - from equipment to software to production line to the full enterprise.”