Deere's Software as a Service Model

SFTW Convo with Matt Percy, VP Solution As a Service, John Deere

Welcome to another edition of “SFTW Convos” with Matt Percy, Vice President, Solutions as a Service at John Deere. This conversation is available to all subscribers.

Over the last few years, much ink has been spilled over new business models in agriculture, with software-as-a-service (or solution-as-a-service) being one of the leading flashpoints. Within the OEM space, different companies have taken different approaches, while Deere has boldly stated a strategy goal of making 10% of their revenue from as-a-service business by 2030.

I wanted to understand Deere’s approach, thought process, and their strategic conviction around this business model. There are few better people qualified to talk about this than Matt Percy from John Deere. Matt spent most of his career in gaming at Microsoft (Minecraft, anyone?). Matt has brought his technology and business model experience and expertise to Deere. This conversation goes behind the scenes on how Deere thinks about customer value, their dealer network, why they believe so strongly in the software-as-a-service model, and much more.

This is a conversation with an industry and technology expert, you don’t want to miss!

Note: This conversation happened in December 2024.

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Summary of the Conversation

Matt shares his unique journey from a long career in gaming at Microsoft to his current role at John Deere, where he focuses on business transformation and the introduction of subscription models in agriculture. He discusses the importance of customer focus, the shift towards technology and sustainability in farming, and the critical role of dealers in delivering value to customers. Matt emphasizes the need for creating economic value through innovative solutions and the future of farming as a sustainable and collaborative ecosystem.

Matt Percy, Vice President, Solution as a Service, John Deere

From Tech Giant to AgTech Giant

Rhishi Pethe (RP): Matt, thank you for joining. You were at Microsoft for many years, and then you decided to join Deere recently. What attracted you to Deere?

Matt Percy (MP): Not many people with a background in gaming and subscriptions have entered agriculture and AgTech yet. I spent most of my career at Microsoft—16 to 17 years. I started in product management and worked on Xbox and gaming across various roles.

I later took on a corporate strategy role to help Microsoft understand why staying in gaming was important. Leading marketing for Minecraft after Microsoft acquired Mojang in 2014 was an incredible experience. It taught me the importance of being a steward in a business.

That acquisition marked Satya Nadella’s first major move. At the time, Microsoft hadn’t created a beloved service with hundreds of millions of users in a long while. We learned far more from Mojang than they did from us. It taught me how to adapt as a fish out of water—and have fun while doing it.

Afterward, I led business planning for subscriptions and incubated Xbox Game Pass, a product similar to Netflix but for games. For $10 to $20 a month, customers gained access to a variety of games across platforms. We grew the business from zero subscribers to nearly 35 million (the last publicly reported number). It was an incredibly exciting learning experience.

I love building businesses. I enjoy taking something from zero to one—figuring out how to delight customers, energize them, and build an ecosystem where everyone wins. In gaming, your ecosystem includes developers, publishers, and consumers. Designing a business that benefits all participants feels deeply rewarding, especially when you’re part of the team building it.

That experience also sparked my love for subscriptions. I worked on different subscription models and learned how they align a company’s incentives with its customers. Customers can cancel their subscriptions at any time, so companies must constantly improve their products. It holds your feet to the fire to create something better.

For a while, I thought I’d stay at Microsoft for the rest of my life. Gaming is one of the coolest jobs in consumer technology. It’s fun, exciting, and culturally significant for Microsoft. That’s why Microsoft spent $70 billion to acquire Activision Blizzard. Watching all of that play out was incredible.

Then, a couple of years ago, John Deere reached out. Living in Seattle, I didn’t know anything about agriculture. Like many people, I never thought about where my food comes from. But I recognized John Deere’s iconic logo, so I took the call.

What I discovered was amazing. John Deere has always been a technology company. Its customer focus is unparalleled, and the company deeply cares about its products and delivering value to farmers. I also learned about the sheer scale of agriculture.

Agriculture remains one of the last untapped frontiers for technology, which is surprising and concerning given how vital farming is for feeding and clothing the world. Deere, however, focuses relentlessly on helping customers achieve higher yields. Our mission is clear: to feed, clothe, and shelter the world more profitably and sustainably by making our customers more profitable and sustainable.

John Deere wanted to bring in people with subscription expertise to deliver software products, such as See & Spray ™, as a service. The company understands that for us to succeed, our customers must see a positive return on investment for every decision and purchase they make. It’s the right approach.

As I learned more about farming, I realized that agriculture is a trillion-dollar opportunity that’s bigger than gaming, search, and social combined! Precision agriculture technology takes this even further. It allows farmers to apply inputs more effectively, yielding better economic and environmental outcomes.

No other business integrates economic value for customers and environmental surplus for the world as seamlessly as agriculture does. After talking to John Deere for a few months, I fell in love with this opportunity. While gaming and consumer tech are fun, this role allows me to help make the world a better place.

RP: Your title includes business transformation. Deere has been around for more than 180 years. They have survived through all kinds of cycles. What do you mean by business transformation?

MP: My title is VP of Solutions as a Service. I’m responsible for bringing our as-a-service products to market and building a sustainable, durable business. Our goal is not just to make the business great for us, but, more importantly, to make it amazing for customers and the entire ecosystem.

“Business acceleration” is a better term here because this isn’t about transformation. Innovation has always been at Deere’s core. The company has operated as a technology leader for nearly 200 years. Deere was born in 1837 with the creation of the steel plow, a groundbreaking innovation at the time.

Since then, Deere has led several transitions and platform shifts. In the 1920s, we introduced motorized tractors with Waterloo. In the late 1990s, we launched guidance systems. By the 2000s, we added AutoTrac, and today we’re layering autonomy and automation software onto machines like See & Spray ™ and future autonomous offerings.

Significant technology innovation and transitions in Deere history (artist rendering by EI). The autonomy rendering is not a real Deere product, but an artist reimagination of autonomous equipment in the future

Deere has always embraced transformation. One of the things I love most about the company is its strong learning culture. Deere constantly seeks new ideas from every angle. That’s why they reached out to someone like me—a video game professional from Seattle. They wanted to know what unique perspectives I could bring and how we could create even more customer value for the industry.

Software-as-a-Service model

RP: Many people have resisted the software-as-a-service model in this sector for various reasons. What is driving the need to have this business model and why now?

MP: We’ve always been a deeply customer-focused company. If you look at the history of technology in agriculture, our mission has always been to help farmers do more with less—producing more yields with fewer inputs, lower costs, and greater efficiency.

Customer focus drives everything we do. We believe—and we hope the market agrees—that we know our customers better than anyone else. We know our equipment better than anyone else and understand how to improve it. We’re deeply embedded in agriculture, with our headquarters in Moline, Illinois, at the heart of the U.S. farm belt.

Many of our employees grew up on farms and bring both experience and empathy for the challenges farmers face every day. Our geographic proximity allows us to understand the needs of farmers better than most.

This focus creates an engineering culture that relentlessly solves problems by analyzing every step of production. Motorizing equipment marked a huge productivity leap that unfolded over 70 to 80 years. Then we started adding software, a shift that has been playing out for the past 40 to 50 years, beginning with guidance systems. In the 1990s, we used satellites to enable precision guidance with AutoTrac, which laid the foundation for autonomy.

As we integrate more software into our equipment, we incur higher costs as a company. We generate and adjust massive amounts of data, maintain tools like the Operations Center, and continually improve our software products.

In many industries, recurring revenue or subscription models have proven to be the best business approach. That doesn’t mean subscriptions will necessarily be the winning model for agriculture, but we’re exploring it with that context in mind.

A big part of Deere’s success comes from our ability to adapt business models to meet specific needs. We pride ourselves on taking a long-term view of opportunities. Deere genuinely thinks in decades. The path to autonomy, for example, began 27 years ago with a relentless focus on continuously improving our equipment and software. That’s where the as-a-service model fits in.

RP: How does Deere think about a particular solution or a product where as-a-service works better and versus a different solution or a product where it doesn't. And how do you frame that decision?

MP: That’s a great question. We like the as-a-service business model because it makes us more accountable to our customers. We want customers to decide whether or not to use a technology. We only get paid if they use it, which ultimately aligns us better with their success.

It’s also about creating economic value. Three guiding principles drive our as-a-service journey: affordability, accessibility, and adaptability.

First, affordability. We aim to make our technology more affordable, accessible, and adaptable. Farmers of all sizes should have access to cutting-edge solutions with lower upfront costs. Customers should pay only for what they use or need.

We love that we can democratize access for small farmers, but we also ensure that our largest customers—who run some of the biggest farms in the world—get rewarded for their investments. We’re exploring options like volume-based discounts and rewards based on spending.

Second, accessibility. The as-a-service model lets us put technology into the hands of more customers, including through retrofitting older equipment. Historically, equipment makers struggled to make retrofitting viable because it didn’t generate revenue.

For example, with See & Spray Premium, we can install precision-edge essentials—like AutoTrac, the G5 Advanced Suite, turn automation, in-field data sharing, and machine sync—onto older equipment. This retrofitting approach gives older machines more value.

We aim to meet customers wherever they are on their journey. Selling new equipment isn’t always the answer. By unlocking more value from existing machines, we can create opportunities across the ecosystem.

Third, adaptability. Software as a service requires products to improve over time. For example, See & Spray recognizes new weed types as we refine its capabilities. In the future, we could enable the system to deploy fungicides or pesticides, generating similar savings.

We’ve already seen how AutoTrac improves over time. It started with two-and-a-half meters of precision, and now delivers less than two-and-a-half centimeters of precision. That precision reduces soil compaction, fuel usage, and other operational costs.

We design all our products to improve over time. We also give customers flexibility to experiment. For example, with See & Spray, you’re not locked into using the technology just because you own the equipment. If you believe broadcast spraying will deliver better outcomes, we encourage you to make that choice.

These three principles—affordability, accessibility, and adaptability—guide how we bring as-a-service products to market. We believe that if we create more economic value, the market will respond positively over time.

That said, we understand this takes time. Coming from big tech and consumer technology, I know success doesn’t happen overnight. You’re talking about people’s livelihoods. Being a farmer is incredibly complex. Farmers act as CEOs, COOs, CFOs, and frontline workers all at once.

It’s a demanding job, and farmers must get everything right within narrow time windows. That’s why patience is essential for technology adoption. These changes will take decades, and they will only succeed if they benefit everyone.

The solution can’t just work for John Deere. It must deliver incredible value to customers, dealers, and all participants in the ecosystem.

RP: Let's get a little bit more specific. You talked about See & Spray and multiple flavors and different levels. And I think if I understand it correctly, it helps you segment your customers. Not everybody wants all the features that you are willing to offer and they can self-select. I mean, the running joke with Microsoft Excel was 95 % of the features nobody used.

As a personal user of Excel, I know that having all that optionality at a low price is key. It gives you the right tool for the job at a great value.

In many ways, Microsoft is the John Deere of productivity technology. It stays ahead by putting value at the core of everything it does. Customer focus is absolutely critical.

RP: It resonates with me having worked at Amazon and Google. If you get specific about some of these examples like See & Spray (™), I'm assuming you want to charge based on usage. But if you look at John Deere Operations Center, it is free. How do you compare and contrast the differences in how you are putting that in front of your customers?

MP: Ops Center serves as a foundation. Once customers set up an Ops Center account, they can run and manage different applications. It’s a platform that must demonstrate real economic value and real impact to customers.

For example, See & Spray saved over 8 million gallons of herbicide mix across a million acres this year. It reduced herbicide usage by 60% and generated an average economic savings of about $15.70 per acre.

The question is: How do we grow that value over time? Whether it’s See & Spray, autonomy, ExactShot, machine sync, or in-field data sharing, we must deliver a positive ROI to our customers. Farmers should confidently say, “I spent X and received a multiple of X in return.”

When we achieve that, everyone wins, and we get happy customers. To reinforce this, we’re rolling out an “application savings guarantee.” It helps customers spend more effectively and gives them peace of mind. With See & Spray, they only pay when they achieve measurable savings.

Our focus is to keep adding more value over time. We’re designing ways to reward both small and large customers. Smaller farms can access advanced technology through retrofitting and subscriptions. At the same time, we ensure larger farms generate significant economic value as well.

We’re also releasing new features regularly and at a rapid pace. For instance, we can update weed detection, but we’re exploring ways to expand the system to manage other inputs and provide even more value.

We’re taking a long-term view, thinking in terms of decades. Our goal is to make it easy to meet customers where they are and provide flexibility. We’re not mandating anyone to switch to new technology. We want to enable choice.

RP: Many farm management systems have struggled. One of my hypotheses is that they create some value, but it is very difficult to figure out how much and when. It is even harder to attribute any value that you create to those systems. Due to this people have struggled with adoption and pricing. For See & Spray, there is a clear link between what you used, and the corresponding value. What do you think about it?

MP: I love this aspect of our company. It’s thrilling because it feels like engineering with a real purpose.

We don’t just build something; we focus on ensuring it generates real value over time. That’s the real question. We start with a thesis about what we think a solution will achieve. Then we test it on a farm, analyze the results, and if the results are positive enough, we know we have something we can scale and grow.

It’s fascinating to see how this process has played out over 200 years. Every solution we build aims to create economic value. Now, we can measure that value even more effectively, which benefits both us and our customers.

For example, a farmer looks at See & Spray and says, “I spent $4 and saved $15.70.” We love that because the value clearly works in the customer’s favor. This mindset—creating measurable, real value—is deeply ingrained in our company culture, and it’s incredibly inspiring.

Ecosystem enablement

RP: Dealers are a big part of the ecosystem. In preparation for this, I talked with a couple of different equipment dealers and I got different feedback from how different OEMs work with their dealers. How do you think about enabling dealers to help your end customer get the best value from your products?

MP: This is incredibly interesting to me: How do we ensure new technology succeeds in any ecosystem? Historically, we’ve done that through our dealers. Our dealers are amazing business leaders in their own right. They care as much—if not more—about delivering great outcomes to customers as we do.

Dealers are a critical differentiator for us. As we focus on solutions-as-a-service, we’re laser-focused on preparing our dealers to help customers get the most value from our equipment and software. Dealers guide customers to make the right decisions for their farms and increase productivity.

We’re investing heavily in dealer training. Together, we’re developing ways to drive utilization of our products. When customers pay for new technology, it must be easy to use, and they need to quickly see the value and return on their investment. Achieving that requires listening closely to their feedback.

The advantage of having a global network of thousands of dealers is clear—they speak frankly. They tell us when we’re missing the mark, and we can respond quickly.

Building a network like this is hard, but it’s fundamental to our success. Our dealers must succeed on this journey, and we ensure they’re rewarded for the incredible value they create. Success requires deep collaboration, and we’re committed to making sure our dealers thrive in every way.

RP: What are your dealers asking you differently when it comes to solution-as-a-service or software-as-a-service? Are there any specific examples that you could talk about?

MP: Dealers are much closer to customers than we are. Agriculture is vast, and we can’t be everywhere. Dealers want products that are easy to sell and deliver real value when they ask customers to make an investment.

We need to be thoughtful about when we scale a product and offer it to more customers. For example, when we launch something like See & Spray, it must work well in enough situations to create real value for customers.

The worst scenario for anyone—whether it’s the dealer or Deere—is when a customer buys something and doesn’t see the value. We work hard to prevent that.

What I love about Deere, compared to other industries, is its patience and relentless focus on solving for customer value at every step.

RP: How do you make sure the incentives are aligned between Deere, the dealership and the grower? And how do you think about sharing value that is being created and captured across all these different players?

MP: We ensure success by creating products that deliver significant economic value. When we start from the mindset of “we want the customer to achieve a surplus,” we focus on developing products that get better over time. If we do that, everyone can be rewarded.

Subscriptions offer many benefits on the business side, but companies often lose their way when they prioritize business goals over customer value. We remain laser-focused on delivering extreme customer value.

The question we constantly ask is: How do we grow customer value through our as-a-service businesses? If we achieve that, there will be more than enough value for everyone to benefit and be happy.

Future casting

RP: If you think about farming and business acceleration, how will it change over the next 10 years?

MP: What will stay the same is our focus on creating more value with our products. We must help farms access their data and provide tools that enable more informed decisions tailored to their specific environments, ultimately increasing yields.

While the global population continues to grow, albeit slowly, the heartland—where most of our crops are produced—faces major labor input challenges. It’s critically important for us to help farmers navigate these challenges and achieve more with less. We want to ensure that people can make an excellent living producing food, clothing, and shelter in a way that is both economically viable and sustainable.

We’ve already seen incredible progress in increasing food productivity, which is a testament to the ingenuity and creativity of farming as a profession.

I also believe other industries can look to farming as a model for building sustainable, durable ecosystems where everyone benefits. On a personal level, I’ve found that the best businesses are those that create value for everyone involved.

Agriculture reminds us that true success comes only when everyone wins. I think there’s a powerful lesson in that for society—especially right now—and I hope we get the chance to share it.

Relevant previous SFTW editions

• SFTW Convo: Technology which lives in the field with Leo Carvalho (December 11, 2024)

• SFTW Convo: Bringing Iron and Tech together with Sona Raziabeegum (December 4, 2004)

• Autonomous equipment: Subsidies and Labor (November 10, 2024)

• The Fusion Frontier (May 5, 2024)

• The Labor Dilemma (March 17, 2024)

• Augmentation is on the road to Automation (September 18, 2023)

• Moravec’s Paradox for Ag Robotics (October 23, 2022)