Why as-a-service is the tech industry’s biggest disruptor

Think Progress Team

Tuesday 28 February 2017

We are entering a period of digital Darwinism. The tech industry is being up-ended thanks to a perfect storm of digital platforms, rapid scalability and social disruption. New as-a-service business models are sweeping through the sector, allowing companies to quickly sharpen their competitive edge by hurdling traditional barriers.

 

Proprietary systems, licensed software, established business rules. None of these things matter. There are countless examples. We used to flag down taxis in the street; now Uber pairs drivers with passengers. People used to book a bed and breakfast and hope for the best; today Airbnb connects guests with rated hosts.

There’s no proprietary tech, just reliable APIs and quick thinking.

The same thing is happening in the tech industry. The wealth of software packed into products is turning them into viable platforms. Thanks to a seabed of innovation laid down at the turn of the century by the likes of Amazon and various search engines and social media channels, customers now expect lightning-quick scaling, instant responses to user insight and compressed iteration cycles.

The rise of the digital middlemen

Software and connectivity are increasingly coming together, driving a trend for evergreen products. As long as information tech teams have the hardware to cope, new functionality can be added online, rather than through expensive procurement. It’s why the Ubers and Airbnbs of this world have shot to prominence, while established enterprises have grappled with their own, suddenly outdated business models.

As-a-service also means customers can get flexible, tailored products, access to the cloud and rolling preventative and remedial updates.

The Internet of Things is playing a big part in the surge. Real-time user insight – such as data on how products are performing – is relayed back to a manufacturer to drive future innovation. That’s one advantage. Another is that companies are realising the marketplace is being levelled and opened up. Connected products means connected customers, service providers and manufacturers.

The vast tracks of data that flow between points in this interconnected world can be handled in the cloud and leveraged to fine-tune supply chain operations, after-purchase support and future development.

You don’t need a big bang rollout

Of course this openness brings with it specific challenges which demand new ways of thinking, such as adaptive security architecture. There’s also the question of how to match agile, digital start-ups without ripping up an entire business playbook.

One way to go is the two-speed approach favoured by motor manufacturers. On the one hand, they need to keep up with green-and-clean innovators such as Tesla, but they also need to maintain their traditional business baseline. The answer is to establish separate, as-a-service teams (electric vehicles) and bring these up to speed while ramping down legacy products and practices (petrol-powered vehicles).

The move to as-a-service business models is the starting gun on a race to seize market share at the short-term expense of margins. It means buying into a ‘fail fast to win big later’ philosophy. But as the platform itself becomes the business model, a new ecosystem will build up around it – one that enables tech teams to respond quicker and more effectively to future trends, and maintain that all-important competitive edge.

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