Robotics as a Service (or RaaS) is emerging as a top technology trend when it comes to warehouse and supply chain automation.

In this article, I look at what is involved with Robotics as a Service – and what to watch out for when finalising the contract.

So, what is Robotics as a Service?

Just like with “software as a service”, the idea is very simple.  A customer will identify part of their operations that can be automated.  But, instead of buying robots to do the job, a supplier provides the equipment “as a service”.  Under this model, the supplier still owns the equipment. The supplier takes on all the responsibility for deploying, programming, monitoring, maintaining and optimising the whole robot fleet.  The customer simply pays a service fee.

A quick note on terminology

As with any new technology or business model, you have to be careful about terminology. 

Robotics as a Service is not yet a defined concept, so when you see the label being used, you have to understand what exactly is being offered. 

For example, a supplier might package up their robot product and offer it to the market on a lease financing option.  This is simply a way to help the customer pay for the equipment (as you might with any other type of equipment lease).  This isn’t the same as a true RaaS model, where the supplier is tied to service levels under the Service Level Agreement.

Here we are talking about RaaS as a business model.  Automation is provided “as a service”.  You might also hear RaaS being referred to as “Robotics on demand” or as “Pay-as-you-go”.

Watch out too that the label “Robotics as a service” is sometimes used to describe a technology model (as distinct from the business model).  This is sometimes also referred to as cloud robots.  When used in this way, the RaaS label is not referring to who owns or operates the robots.  It’s referring to the fact that the robots are internet connected and that the computational or data storage resources required all happens in the cloud.

Why is Robotics as a Service gaining popularity?

There are the definite advantages from using a RaaS provider:

• The equipment can be funded as an operational expense, rather than as a capital purchase. All the operating costs are included, including all parts and service.  This can make it easier to demonstrate the R.O.I. and get approval.
• The supplier is motivated to make sure the equipment is reliable and stays functional. After all, they will have to replace it if a unit isn’t performing to standard.
• It’s a scalable solution. The idea is that you can add capacity to manage peak periods or even redeploy at a different site.  It should be as easy as adding additional robot units and powering them up

RaaS can also help with future-proofing operations.  Large capital projects have a long payback period, so have to be based on long-term assumptions.  There is a couple of problems with this.  One is that you don’t know if the economic assumptions play out as you expect.  You could lose market share to a competitor leading to a reduction in volume throughput.  There could be a general economic downturn, or supply chain shocks, as have been experienced more regularly in recent years. 

There are also technological reasons.  New generations of technology are coming through all the time.  A new system could quickly start to be overtaken by more reliable or cheaper options.

Where is Robotics as a Service being used?

RaaS is being used in the supply chain where:

• Labour makes up a high component of the overall cost profile for that function.
• It’s already common to outsource the function and the business may already be paying performance-related fees.

Current popular use cases include robotic delivery services, robot cleaning, warehouse operations and security robots.

What do you need to consider in a RaaS agreement?

The issues you need to think about in a contract for Robotics as a Service will be different from when you purchase a system.

The relationship will usually be defined in a Service Level Agreement (or SLA).  This SLA will define the deliverables of the solution.  It’s likely that the relationship with the service provider will be business critical.  This means it’s important that this agreement captures all the key issues properly.  

You will also want to make sure that the contract terms don’t prevent you from getting the benefit of the advantages you’re expecting from the RaaS model.

So, what are they key issues going to be?

The first issue to overcome will be that the supplier is likely to assist you with scoping requirements and designing the solution.  This can introduce a tension in that you are relying on the provider to scope your requirements but also to be responsible if the solution doesn’t deliver what you need.

Beyond this, key issues to consider in the contract include fees, maintenance, the flexibility of the solution and IT security.

Fees

It will be important to understand how the service fees are going to be calculated under the agreement.  You will also need to check that all the details of the SLA are consistent with the way you have done the financial and operational modelling.  

Generally, under a RaaS agreement, the fees will reflect actual usage.  This this will generally be defined by throughput.

• Who collects the throughput data and how can it be accessed or verified?
• What are the metrics?  Is it “per pick”, or based on hours of operation?
• Does the supplier provide daily consumption reporting? 
• Are there any minimum monthly or quarterly charges?
• Are there any set-up costs for the scoping and integration work?
• Are fees calculated based on hours of operation?  If so, does this exclude hours when units are turned off or charging?

Maintenance

The Supplier is going to maintain the system, so the SLA will need to define response times.  How quickly will problems be identified and fixed?  How are problems escalated? What are the repercussions if they cannot be resolved?  Are there any scheduled maintenance windows?  What uptime commitments are given?

Again, it’s important that the contract details reflects the assumptions you’ve built into the operational modelling.

Flexibility and scalability

A major advantage of RaaS is that it is sold as a flexible and scalable solution.  You will therefore need to understand how to benefit from that flexibility.  How much notice do you have to give?  How quickly can the supplier scale up or down?  And how does this scalability

IT security

Another issue is that the supplier will be providing remote monitoring and maintenance.  It’s therefore important to look at what cyber and data security commitments are provided by the supplier in the contract.  These will need to align with your organisation’s existing data security policies and processes.  After all, these assets will be critical to operations and the impact of downtime due to a malicious cyber attack could be significant.

Final word

In every technology market where “as a service” models have been introduced, that model has quickly become the preferred way of obtaining that service.

Although still relatively new now, it’s likely that Robotics as a Service will grow quickly – which means it’s important to plan for these issues from the beginning and to get the contract right.

Please note: The articles published on this blog are for general information purposes only. They are not legal advice! You should always obtain your own legal advice about your specific circumstances.