How We Use SaaS Now
If you work in technology, it probably feels like “as-a-service” software products have been around forever. In fact, even consumers have grown accustomed to “software as a service” or “SaaS” offerings. Some of them are now so embedded in our everyday lives that we no longer think of them as different from the other products and services that we purchase. Take a moment to think about these examples:
- Your cloud storage subscription (probably via Apple or Google, or perhaps Dropbox). You pay a monthly or yearly fee for a certain amount of cloud storage, which automatically backs up your photos, emails, lists of contacts, and more.
- Video streaming services including Netflix, Hulu, and internet subscription versions of cable channels like HBO, Showtime, and ESPN. Remember when Netflix was a DVD you received in the mail?
- Music streaming services like Spotify that provide music, podcasts, and access to originally radio-based programming.
- Amazon Prime, which provides much of the above as well as recurring subscriptions to products like toilet paper, shampoo, pet food, and even magazines.
- Business and work services like Microsoft Office 365, which is now available completely online, Adobe Creative Cloud, and other paid items.
It has probably been years since you thought of something like Spotify as a SaaS offering—which goes to show how embedded these services are in our everyday lives. One hallmark of SaaS offerings has become ongoing added value, which is what causes most customers to switch from basic unpaid versions of the services to the paid subscription models that most of us use. Great examples of this business model are apps like Calm and Headspace: users download them and access a limited amount of unpaid content, but are often drawn to subscribe by a wider, constantly-updated volume of material available via subscription. The free version of a meditation app, for instance, might offer ten guided meditations, but the subscription version grants access to hundreds, with new ones added daily or weekly.
Thanks to the predominance of these offerings, Deloitte has started referring to this model as “XaaS,” or “everything-as-a-service.”
Why It’s Here To Stay
Why has the XaaS model taken over everything from how we purchase dishwasher detergent to how we listen to music, from how we store our family photos to how we complete our daily work obligations? Some answers to that question, like the fact that work has moved massively to the cloud, apply much more to SaaS business services than to the everyday ways we use XaaS services. But one answer is important to every use of XaaS: flexibility.
- Financial flexibility: XaaS items can typically be canceled instantly, with no long-term financial obligation. For consumers, a year-long subscription is considered “long-term,” with most apps and services offering monthly payments instead. Prices have also fallen for more professional services. For instance, a traditional Microsoft Office package containing an installation disc costs about $150 – $200, whereas purchasing Microsoft 365 online costs between $70 and $99, depending on number of users.
- Flexible access: Thanks to the XaaS model, customers can download and begin using products and services instantly. They can also typically access customer service messaging 24/7, use products and services on mobile devices, and get updates, upgrades, and add-ons within seconds, sometimes for free. As consumers grow accustomed to this type of service, it has started to become more common in the business world, too.
The demand for XaaS was only accelerated by the Covid-19 pandemic, which left many people working from home and relying more on cloud products and SaaS services than ever before. Irregular work hours and the necessity of more flexibility thanks to childcare duties and other non-work obligations pushed the XaaS transformation farther than ever.
Now that both consumers and enterprises have grown used to the XaaS model, it is not going anywhere any time soon. Consumers are purchasing more apps and subscriptions than ever before, thanks to their prevalence and their individually low prices, and businesses now operate in the cloud to an extent they never could have imagined even a couple of years ago. It is now difficult to imagine an enterprise not having accounts with Zoom or GoToMeeting, as well as accounts with webinar services and professional network accounts like LinkedIn. It is tough to imagine most companies providing employees with access to networks and accounts only through an in-office desktop computer.
SaaS (and XaaS) are here to stay, and companies that fail to follow the model might find their digital transformations stalling out.