It’s hard to think of any procurement model which has offered more opportunity for entrepreneurs and innovation than the as-a-service model most of us have now become accustomed to.
The phrase is now a little over-used and sometimes a little parodied with the odd company trying to zazz up their mediocre offering by adding the anything-as-a-service, or XaaS, tagline, but the concept for delivering the myriad of technology solutions that most businesses from start-ups to scalers require has been phenomenal.
As-a-service has revolutionised the business world and it’s hopefully not going away. In fact, it’s predicted to be worth about £200 billion and counting right now. It’s in all aspects of our lives from solutions like Salesforce which got things kicked off in 1999 to residential solutions such as Netflix.
So why has it retained its popularity in the business world?
- It lets smaller, newer businesses with less capital compete with the big boys by essentially renting the solutions that they need in a scalable fashion on an Opex model.
- It allows for lean and or practically non-existent IT teams. It’s not just the infrastructure and software that businesses are renting, it’s the expertise and skillset of the MSP involved.
- It delivers peace of mind – all patches and updates are covered by the MSP - plus SLAs mean limited downtime or outages.
- Economy of scale – businesses with a low-risk appetite can trial enterprise-grade solutions without breaking a sweat or the bank because they are sharing their providers’ infrastructure with other tenants.
- It’s secure with monitoring, data protection business continuity solutions built in.
- There is no requirement to house, set up or maintain any hardware.
- It allows businesses to dip their toe into new, innovative areas such as AI and machine learning without much of the complexity traditionally required.
The move towards as-a-service has been a huge shift for providers. The lower barrier to entry for customers, wealth of new solutions and 24/7 demand culture means that the most successful MSPs have been working around the clock to expand their own portfolios and knowledge, hold customers’ hands, appease the big players like Microsoft and try to integrate their as-a-service solutions into whatever legacy solutions their new customers wish to sweat.
For traditional providers which would like to move over towards this type of model, it’s no easy job with the process for quote to cash changing dramatically and perhaps unfavourably for many providers until they can get their operations streamlined with as-a-service in mind. The adaption makes sense if done well but I advise any going down that root to consider that they aren’t simply adding to their portfolio.
It is important to shift your offerings alongside updates to the customer journey and employee experience. Some due diligence needs to take place to consider the opportunities and threats to make this work. Some analysis will show for example, that if that’s the plan, wisely choosing industry verticals to target and services to launch first will be the difference between make and break.
Thankfully, I believe that as a service hasn’t just delivered in a practical sense, it’s also likely supported a great cultural shift. The model works on trust. For many businesses, it has involved putting a lot of eggs in someone else’s basket.
We know from our research that this made some businesses feel uneasy. They were, we can all agree, told for years to invest in hardware and then suddenly hear that they don’t need it anymore, they can just pay a monthly fee and it will all be taken care of. A tough new initiative to get onboard with.
For the most part however it has worked, and I think to a certain extent that it is the success of these sorts of business models that will lead to more and more ICT providers being willing to collaborate and partner up with others in their field rather than working in silos.
As-a-service can, in many ways, be seen as a big driver of co-opetition and collaboration and I expect to see more providers working together and optimising their skillsets to help buyers to consolidate their supply chains and also help themselves to sell more.