During last spring (2025), our Circular Shift blog series has spotlighted how leading companies in the Combient Network are building business out of Product-as-a-Service (PaaS) models. Companies like Atlas Copco, SKF and Scania have found paths for scaling their PaaS offerings through internal reorganization, new technology acquisition and a bold joint venture.
However, many established manufacturing companies find it challenging to navigate the shift from traditional product sales to service-based business offerings [1]. Even with some successful pilots under their belt, established companies find scaling a PaaS business a difficult task.
The difficulties in scaling a PaaS business inside an established corporation include competing priorities, linear mindsets or the fear of cannibalizing existing product sales-based business [2]. Strategic business decisions that lead to business model innovation and organizational change can nevertheless help find solutions. From an organizational perspective, we have found that established companies can scale their PaaS business either through internal or external means.
Internal scale up means that companies keep the PaaS business within the existing organization, either by integrating the offering to existing business lines or by creating new business lines for them. This involves the build up of teams with specific capabilities and resources for working with PaaS solutions, such as new ways of conducting key account management for a service business. This may be an attractive option when there are clear internal synergies between the PaaS offering and the existing business.
However, sometimes a service-based offering may conflict with current operating models. For example, shifting to a PaaS model requires rethinking product development and sales, as it prioritizes component longevity and service contract-based maintenance, unlike traditional spare part sales. These kinds of problems need to be resolved by aligning the organization’s old processes with a circular offering. If this alignment is not feasible, the company should consider spinning out the offering outside the company.
External scale-up of the PaaS offering can happen either through spin-offs, joint-ventures or startups. Here companies will need to consider how they can support the growth of the new business with, for example, the right partnerships. The external trajectory encounters less organizational inertia, as this strategy provides freedom from previous organizational structures or processes, and the new organization can be designed specifically to accommodate the PaaS business.
Ultimately, the decision to scale a PaaS business internally or externally depends on the organization and its overall business strategy. For example, the Combient network has examples of both scaling strategies, with companies like Atlas Copco championing internal PaaS development, SKF integrating a purchased technology into a new service offering, and Scania showcasing an example in external development.
Scaling a PaaS business next to an existing linear business line is not simple. Instead, it requires a strategic vision and careful balancing of different organizational variables. Without a clear sight on how the PaaS offering will fit into the larger organization, companies run the risk of making suboptimal choices, which will affect the profitability and value creation potential of the PaaS business.
Interested in hearing more about how your organization can navigate the transition to a PaaS business model? Learn from the Combient Network’s success stories here, and feel free to reach out directly at melissa.kanerva@combient.com to discuss how Combient Pure could help your organization accelerate the transition to a circular offering.
References:
[1] Bertelli, A., West, S., & Rapaccini, M. (2024). Navigating the Shift: From Traditional Sales to Product-as-a-Service (PaaS).
[2] Golinska-Dawson, P., Sakao, T., Sundin, E., & Werner-Lewandowska, K. (2025). How can OEMs scale up remanufacturing in product-as-a-service (PaaS)? – Challenges and enablers from a theoretical and industrial perspective.
