The era of service productization

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From software to platforms to security and databases, the as-a-Service (aaS) market has cemented itself in business and IT lexicons, providing agile, on-demand and customised solutions that deliver business value and improved process capabilities. The ability to shift anything from AI to infrastructure into a cloud-based system that allows for consumption on demand has allowed for both IT service providers and organisation to manage outcomes and return on investment (ROI) with far greater accuracy. Solutions have become services. However, as Karien Bornheim, Founder of FABS points out, Services-as-a-Service, the other SaaS, is increasingly gaining traction in a market hungry for optimisation and efficiency.

“Services-as-a-Service is considered part of the Everything-as-a-Service (XaaS) model,” she explains. “It is the commoditisation and productization of the services that walk alongside software, infrastructure, and platforms. The services that ensure that IT operations and infrastructure are managed more efficiently so the organisation can get the most value from its cloud investments.”

The growth of the XaaS market has been, in part, driven by the growth of niche service providers and solutions. Technology has become too varied, too expansive in its capabilities, for any one organisation to provide comprehensive services across the board. This has led to a more focused approach – companies providing highly targeted services within an ecosystem comprised of other niche service providers and solutions. It is a trend that has become imperative for organisations that want to succeed in highly competitive and crowded markets. In a recent report, Accenture points out that ecosystems are one of the cornerstones of future business growth. The reason? Because business models are changing – being disrupted and disrupting – and the ecosystem model allows for sustainable growth while giving the organisation room to pivot and adapt.

“As a result of this evolving need for more focused, niche companies that can deliver highly targeted services to organisations, Services-as-a-Service is becoming increasingly relevant,” says Bornheim. “Another factor that is driving the growth of this model is the fact that enterprises want outcomes, not problems. The days of box dropping solutions and running are long gone. If an enterprise has invested in a platform or infrastructure as a service, they expect relationships as well as results.”

This has given consulting firms and companies that specialise in providing clients with the support and services they need to get the most out of their technology investment, to really reshape how they collaborate and engage with their customers. In short, Services-aaS is the opportunity to take services and package them as products that can be consumed by businesses on demand.

“Flexibility is the golden thread that runs through the aaS market,” says Bornheim. “It is the key to unlocking the potential of Services-aaS. Realistically, a business is not interested in investing in service provision unless it can adapt to what they need while addressing pain points and improving outcomes. If a service model cannot meet those basic criteria, then it is not going to work. You have to be capable of delivering the right solutions, collaborating with customers to ensure they resolve specific business problems, and then ensure that you’re capable of change and pivot throughout the relationship so that every part of the service remains relevant.”

In a recent Deloitte Insights report entitled ‘Accelerating agility with XaaS’, the company points out that IT-as-a-Service is increasingly being used to gain a competitive advantage. The survey found that most companies want everything except hardware as a service and that they want these services to be available on a flexible consumption model that they can leverage to drive their own innovation and agility. It also pointed out that the organisation that can help customers improve their understanding of aaS usage is the organisation that is best placed to add value and gain market share.

“Alongside the productization of services, XaaS and Services-aaS give companies the freedom to focus on development and growth, to explore new markets and opportunities,” says Bornheim. “This applies to both the companies that consume the services and those that provide them. In the IT service provider space, focusing on a niche and delivering within a core ecosystem means that you have room to try new markets and ideas with less risk. You can build on your existing offering using the modular approach – expanding your services, innovating those you have, and redefining how your services are consumed.”

Services-aaS may have lost its chance to grab the catchy SaaS moniker, but it has yet to fully explore its potential. The demand for consumption models, the need for constant flexibility, and the drive for agility – these market factors are reshaping consumption models and how organisations approach them. The winner won’t be the company that takes it all, it will be the one that can deliver highly specialised services within a tightly commoditised model that is relevant to customer and market.

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