You Know SaaS, Now Get To Know RaaS

From drones that perform surveys for agriculture to mobile telepresence robots used for security, see why many robotics suppliers are expanding their businesses into robot-as-a-service (RaaS) business models.

By Scott Simone, Contributor

Humming around the upscale Stanford Shopping Center in Palo Alto, California, is a 300-pound robot that looks something like a fan-made version of R2D2. But it’s no sci-fi fan heading to Comic Con—it’s a sensor-filled K5 robot security guard, made by a startup called Knightscope, that patrols the area and detects suspicious behavior.

Security companies can rent this five-foot tall egg-shaped patrol bot for around $7 per hour. (In fact, companies often opt to rent two robots, so one can charge while the other patrols a geofenced area.) As its job, the robot allows human security guards to autonomously patrol larger swaths of area, even reading up to 300 license plates per minute.

The K5 security robot is part of the ever-growing robot as a service (RaaS) economy. While it’s similar to SaaS solutions, which offer software for things like management, analytical, and other data-related services along with the base-level services provided, it’s unique in that the main offering is robots—along with the data and information they can supply.

Over the last few years, a number of different robotics companies have begun offering RaaS business models, with everything from drones that perform surveys for agriculture to mobile robots for healthcare. The developments should come as little surprise.

Back in 2016, IDC released a report with predictions for the future of the robotics industry. In it, experts predicted that by 2019, 30 percent of commercial service robotic applications would be in the form of a “Robot-as-a-Service” business model, reducing costs for robot deployment. The report further estimated that by 2020, 60 percent of robots will depend on cloud-based software to define new skills, AI capabilities, and application programs, leading to the formation of a robotics cloud marketplace.

With this industry beginning to bud, the questions are: How primed is this market for success, and why should companies care?

The RaaS Players

In addition to Knightscope, a handful of other robot producers have thrown their hat into the RaaS ring. San Francisco-based Kindred is trying to revolutionize the e-commerce supply chain with SORT—a robotic system that can pick up, barcode scan, and sort nearly any item, at speeds of 400+ units per hour, all day long. Eschewing the typical sales model of robots, Kindred allows companies to implement SORT into their warehouses with no cost up front, and then charge a pay-per-use fee.

Niryo—maker of a 3D-printed, 6-axis robotic arm used by educators and researchers—is currently developing a new robot for small business owners. Though the company isn’t ready to release specifics, they’re aiming to use the RaaS model.

“We plan to first test RaaS with some local businesses, and then in 2019 start to sell a Robot as a Service solution,” said Edouard Renard, chief technology officer of Niryo. “The robot we are currently developing will not be sold as a product, but as a service—less hardware to maintain, no huge investment upfront, and useful data, which makes maintenance and production planning easier.”

Then there’s Australia-based Queensland Drones, an aerial photography and drone imaging company. The company’s services—administered through drones rented to farmers and growers—includes crop-health mapping, farm-infrastructure mapping, and soil-conductivity mapping.

“We will adopt new RaaS technologies as they become job-ready,” said Tony Gilbert, the company’s CEO. “An example of this would be robots that allow our clients to automate earthworks through precision GPS, and robots that allow our rural clients to conduct remote sensing in enclosed spaces, such as below orchard canopies and under bird netting.”

Another big-time player in the RaaS world is inVia Robotics, which developed a picking and tracking system to promote warehouse productivity without disrupting the ecosystem of a business’ operations. The system allows the customer to control the fulfillment process with easy-to-use software that powers robotic pickers, which improve shipment fulfillment times.

“At a time when e-commerce companies are offering lower prices and faster shipments to remain competitive with behemoths like Amazon, inVia’s technology and subscription-based services are helping its partners improve warehouse productivity, decrease operational costs and increase order fulfillment by 200 to 400 percent,” said Lior Elazary, CEO and founder of inVia.

Elazery sees RaaS as the ultimate business model, since it allows companies to implement new technologies and procedures without deviating from their central offering. The model makes robots more cost effective, as companies don’t actually have to own the robots.

“Our typical customer could use several hundred robots; if they were to buy the same robots, the company’s business would now essentially be, in part, a robotics business,” he explained. “[In that scenario] they’d need to hire a team of PhDs and robotics engineers. They’d need to know how to tune the robots, maximize the robot’s workflow, and repair the robots. In about five years, they would also need to buy a new fleet.”

Yet, with the RaaS model that incredible investment is tempered. “Our customers can concentrate on what they do best and run their business while knowing exactly how much it will cost them to fulfill their orders,” Elazery said. Robotics companies, then, are incentivized to ensure the robots are operational—taking care of support and optimization.

“We upgrade the robots and the software as needed, meaning our customers always have access to the latest and greatest technology, allowing them to concentrate only on their core business,” Elazery explained. “This relationship results in increased growth for both the robotics companies and their customers since each can focus on what they do best.”

Renard from Niryo agrees, citing the time and cost savings to customers. “Instead of buying a robot and having to deal with the initial setup, you will be able to just pay for a service as you go without worrying too much,” he said. “This will remove a huge barrier, and once some businesses start to get massive results, well, you can expect everyone else to want to get a RaaS solution.”

“Instead of buying a robot and having to deal with the initial setup, you will be able to just pay for a service as you go without worrying too much. This will remove a huge barrier, and once some businesses start to get massive results, well, you can expect everyone else to want to get a RaaS solution.”

– Edouard Renard, chief technology officer of Niryo

Prime Industries

In the eyes of John Santagate, research director at IDC responsible for the service robotics market, the two sectors most primed for a RaaS takeover are the security and warehousing industries.

“In the security industry, the model is to go out and hire a security guard and pay them an hourly wage,” Santagate went on, “so, that model becomes taking a security robot, figuring how you equate that to the cost of human security, and then figuring out what number of security devices makes sense to augment the security staff.”

Then there are warehouses where, due to seasonal ebbs and flows of demand, companies could benefit from the implementation of rented robots. “These companies aren’t bringing on excess labors right when they need it—they’re bringing them on weeks and months in advance to get the people trained on,” he said. “If you have robots deployed and you drop in new devices to increase throughput, you don’t need that same sort of lead-time, because you’re not training the robot to do anything new.”

While Santagate thinks there’s a large market to be had, he is skeptical on how quickly that market will grow. “Robotics manufacturers are in the business of making robots—they’re not in the business of building and maintaining equipment,” he said. “And so one of the challenges that I’ve heard is really around the capital intensiveness of being able to build and maintain such a model.”

The cost and the labor intensiveness of having to routinely update and service a fleet of deployed robots would, in turn, prohibit these robot companies to continue to tinker and to innovate—something that’s fundamental to these companies. “These companies have to figure out how to overcome that capital-utilization strain that is really confining the ability to go forward on a large-scale with such a model,” he said.

Niryo’s Renard holds similar reservations stating that RaaS could take a few years before it goes mainstream.

Yet for Santagate, there is an option outside of stagnation or rapid development. “I see a third option, which is a third party, distributors or something along those lines, who buy the robots from the manufacturers and then own the rights to sell, distribute, service the robots and then become the as-a-service holder,” he said. “I think that will become the de facto model, it’s just a matter of when we’ll hit that tipping point.”