SKF uses cloud to offer new business models

In production environments, there’s an alternative to owning resources and outsourcing: performance-based contracts. At SKF, for example, customers pay to use assets and benefit from guaranteed uptime. Effective delivery of Everything-as-a-Service (XaaS) business models depends on data collection and processing. On top of that, MindSphere, the leading industrial IoT as a service solution, as part of the Xcelerator portfolio brings quite a few more advantages.

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Use instead of own: More and more, in the B2B world companies are preferring to pay for the use of assets required for day-to-day operations rather than own them outright. Classic examples include software licenses and data center infrastructure.

Everything-as-a-Service (XaaS) business model

The advantage of so-called Everything-as-a-Service (XaaS) business models is that companies pay for only what they use. Increasingly, XaaS is being extended to production assets. An example can be found with SKF, a manufacturer of, among others, rotating equipment like bearings.


The idea is simple: Instead of buying industrial bearings – whether for conveyor belts, pumps, crushers, paper machines, steel or pulp mills and railway bogies – SKF’s customers pay for uninterrupted rotation services. Under SKF’s Rotating Equipment Performance service, customers pay a fixed fee, which covers the provision of bearings, seals, lubrication and condition monitoring.


On the topic of payment: For many manufacturing operations, the argument for XaaS is that payments fall under operational expenditures (OPEX), thus leaving capital expenditure (CAPEX) budgets intact for the big, essential investments. When a contract is drawn up the parties agree on targets, which could be machine production level, uptime or other KPIs. Digitalization is essential for delivery and to ensure the promised uptime.

Therefore, data from the bearings must be collected and evaluated on a continual basis. When MindSphere, Siemens' cloud-based, open IoT operating system, as part of the Xcelerator portfolio, is brought into the picture, a whole range of possibilities emerges. Because aside from collecting information and providing insights, MindSphere can be enriched with data from other areas in a plant to create applications and draw conclusions that add even more value.

Sensors generate data

Bearings are usually not at the top of a plant operator’s mind – unless they fail and cause production to stop. “A good ball bearing is one that you never ever notice,” says Victoria van Camp, Chief Technology Officer at SKF.

A good ball bearing is one that you never ever notice.
Victoria van Camp, Chief Technology Officer at SKF

Before a bearing fails, it gives signs: balancing changes, temperatures increase, vibration patterns vary. Sensors attached to bearings pick up on these early indications of imminent failure. The data they assemble can be transferred to either SKF’s own cloud solution – or to MindSphere.


Bringing data together is no small task, considering the number of collection points in a plant: In a single paper machine, for example, up to 600 bearings have to be monitored. In a conveyer belt in a large mining operation, there could be some 70,000 bearings to keep track of.

Real-time evaluation

The collected data is evaluated in real time in the cloud to deliver insights. The algorithms employed here uncover irregularities. That allows faulty rotating equipment to be pinpointed and replaced before it can cause unplanned – and expensive – downtime.


But there’s another advantage to replacing bearings before they fail, says Alrik Danielson, CEO of SKF: “If we detect an upcoming failure in time, we can renovate and reuse the bearings, which from a sustainability standpoint is certainly better than scrapping or melting them. It’s the circular economy in practice.”

If we detect an upcoming failure in time, we can renovate and reuse the bearings, which from a sustainability standpoint is certainly better than scrapping or melting them. It’s the circular economy in practice.
Alrik Danielson, CEO of SKF

Aside from detecting failures before they happen, data evaluation is essential for selecting the right rotation services. SKF can measure the rotating equipment performance and from the data recognize whether the solution it has proposed is meeting its customers’ needs. If not, adjustments can be made to provide the best solution possible.

More with MindSphere

Collecting data and deriving short-term insights from it – that could be the end of the story. However, when MindSphere is employed, more is possible. “The biggest effect can be achieved when an SKF customer is already using MindSphere,” says Victoria van Camp. That’s the case at a major steel manufacturer, for example.


Through additional apps, MindSphere can combine the data from SKF’s bearings with other data from a site. Suppose rotation equipment has needed to be replaced frequently. The data could easily reveal the reason – perhaps high humidity is behind premature wear, or the machine speed is set too high. “It could be a thousand different things. With MindSphere, you can draw higher-level conclusions because data is being gathered on one platform,” says Erik Lundén, SKF Account Manager at Siemens.


SKF could then proactively introduce solutions that are more suitable to the application. Furthermore, SKF’s engineers can use and analyze data to consider how future bearing generations might be designed to be more energy and cost efficient.

Powerhouse for outcome-based contracts

In the end, the advantage of performance-based contracts is that customers don’t have to think about the equipment they’re running. They get maximized machine performance and can put their entire focus on their business. The companies offering these models bring their hard-won years of competence to the table, which is a competitive advantage in markets that are being inundated with low-cost players. And when MindSphere is brought into the picture, the services can be provided more efficiently – and even more can be made of the data generated in the process.

March 2021

SKF's mission is to be the undisputed leader in the bearing business. The company does this by offering solutions that reduce friction and CO2 emissions, whilst at the same time increasing machine uptime and performance. SKF’s products and services around the rotating shaft include bearings, seals, lubrication management, artificial intelligence and wireless condition monitoring. SKF is represented in more than 130 countries and has around 17,000 distributor locations worldwide. Annual sales in 2020 were SEK 74,852 million (7,386 million euro) and the number of employees was 40,963.

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