In line with today’s lecture on pricing innovations, I want to share with you the emergence of the Anything-as-a-Service (XaaS) model. In times of digitalization, lots of opportunities are out there to move towards a service-based model as opposed to a product based model. Over the years, we have seen the rise of Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). Some well known examples of SaaS are: Dropbox, Google Apps, Salesforce and Cisco WebEx. In the Netherlands, we have recently even seen the rise of the Bike-as-a-Service (BaaS) model; brought to the market by Swapfiets.
The main principle of the XaaS business model is that it shifts the customer’s focus from high fixed costs and capital expenditures to variable costs and operational expenditures. In the case of software, in the past, companies had to buy very expensive software products and the software had to be run on the companies’ premises, which also required hardware investments. Moreover, software updates were not always included and in case of defects, service was not always included. With the emergence of SaaS, most of these disadvantages are tackled by this new model:
• A company pays a monthly/weekly/yearly fee (instead of one big lump-sum)
• The software runs on the cloud (so expensive hardware is not necessary anymore)
• Software updates and maintenance are usually included
All in all, the emergence of SaaS really changed the way software is distributed. An interesting overview of what companies had to previously manage and what they have to manage now can be found here: https://www.bmc.com/blogs/saas-vs-paas-vs-iaas-whats-the-difference-and-how-to-choose/
The future of the XaaS business models look really promising, IBM (2014) even believes we are entering an ‘XaaS Era’. Currently, in India, Farming-as-a-Service (FaaS) is emerging as well (e.g. Mitchell & Sehgal (2018), from Bain & Company wrote a really interesting piece on this) and Artificial Intelligence-as-a-service (AIaaS) is on the rise as well. I’m curious how the future of XaaS models will be like, but it seems inevitable that we are moving towards a service based economy.
References:
IBM (2014) The XaaS family: Understanding Iaas, PaaS and SaaS. Retrieved from: https://www.ibm.com/blogs/cloud-computing/2014/10/31/xaas-family-iaas-paas-saas-explained/
Mitchell & Sehgal (2018) Indian Farming’s Next Big Moment: Farming as a Service. Retrieved from: https://www.bain.com/insights/indian-farmings-next-big-moment-farming-as-a-service/
