Complex Made Simple

Has the ‘as-a-Service’ business model gone too far? – Part 2

In the first part of this 2-part article series, we explored the ascent of the as-a-Service (aaS) business model, which has slowly creeped into every part of our life. From Uber to Spotify and more, we're subscribed to and use more services like these today than ever before.

So, then, has the as-a-Service business model gone too far, and could it bring newfound risks to businesses and consumers? Companies relying on the Google Suite of services were forced to experience these risks first-hand this week, when an outage cut access to the search giant's plethora of services Consumers often face similar risks when opting to rely on XaaS

In the first part of this 2-part article series, we explored the ascent of the as-a-Service (aaS) business model, which has slowly creeped into every part of our life. From Uber to Spotify and more, we’re subscribed to and use more services like these today than ever before.

Image: Siemens

So, the question now is whether this trend has gone too far. First, however, we need to trace the reason behind its popularity. 

The demand for XaaS

As mentioned in the last part of this article series, one of the enablers of aaS has been the improvement of our internet connections, which makes it possible for businesses and the average consumer to gain access to services of varying levels of sophistication: from something as simple as renting an Uber to incorporating a complex enterprise resource planning (ERP) software ecosystem into you business. 

The benefits to both companies and consumers (whether B or C) are plentiful. Companies are drawn to this model because it produces a recurring source of income, one that requires little in the way of physical assets, reducing a company’s liability and costs. Consider a company like UAE startup Trukkin, which offers B2B truck-hailing services to the GCC. The company does not own any trucks itself, much like Uber’s business model, and instead deals with third-party contractors and truck owners and connects them to business customers. This is just one of many reasons businesses both old and new are boarding the aaS bandwagon. 

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As for customers, the demand for these services has been similarly multifold. With millennials representing the largest portion of consumers in the world right now, the world of business has been shaped by their drastically different world view. Growing up in a world where everything has become much more expensive, housing is unaffordable for many, and a recession had permanently shaken up the world’s economy not too long ago, millennials have completely different priorities as far as consumerism goes – much different than those of Baby Boomers or Gen X. 

Given their predisposition to career flexibility, travel and experiences above all, businesses have adapted to suit their needs. A millennial would rather subscribe to a streaming service to watch their favorite TV show at their own convenience as opposed to being constrained by traditional broadcast times; they would rather spend money on travel and Airbnb than on exorbitant real estate and fancy cars; and finally, many of them would rather subscribe to a software service as opposed to outright purchasing a lifetime license to it. Millennials have come to embrace the ephemerality of life in the 21st century, especially given that they have much less disposable income than previous generations. They want the best of what the world has to offer for a fraction of the price, even if it means they own none of what they’re using. 

All these factors have come together to power the XaaS business model, but could there be drawbacks? 

Read: The UAE is leading innovation in the $546 billion global smart cities market

The negatives of XaaS

In terms of businesses, relying on SaaS, for example, reduces costs and improves efficiency and flexibility, allowing all employees to remain connected and synchronized to the business and be able to enjoy flexible working arrangements, such as with telecommuting. However, it also makes the firm susceptible to threats it might have been shielded from before. 

Consider what would happen if the SaaS provider were to suffer an outage, for example, whether through an internal error or due to an external attack. Companies relying on the Google Suite of services were forced to experience this first-hand this week, when an outage that lasted a minimum of 45 minutes and a maximum of 2 hours for some users cut access to the search giant’s plethora of services. Gmail, Google Docs, and Google Drive, which are key to the operations of many businesses both small and large, all went offline. 45 minutes might sound like a short period of time, but in the business world, those are 45 minutes where deals, acquisitions and new consumers were not gained. 

“While G Suite now hosts over 6 million paying businesses, a lot more people are using Google services for free,” insights and analytics firm SEMrush noted in a blog post analyzing the outage. “Therefore, every minute of an outage puts millions of people in distress and slows down businesses.”

Read: Uber is giving up on developing its own self-driving vehicles

That’s not considering the growing bring your own device (BYOD) trend, which sees employees connecting their own devices to company computers and networks, opening the door to endless cybersecurity and corporate espionage disasters waiting to happen. 

As for consumers, while the millennial mindset is understandable, at the end of the day, their over-reliance on XaaS means that should they suffer a loss of income, they would lose access to most of the services powering their lives. Sure, it’s cheap and easy to acquire many of these services we wouldn’t usually be able to afford, but it’s equally as easy to lose access to them. 

Even small conveniences, like being able to access your family photos, becomes a challenge should you no longer be able to afford the cloud photo storage service you’re subscribed to, or because an outage or hack resulted in either the temporary inaccessibility to this service or a complete loss of data. Sometimes, it’s just better to invest in an external hard disk drive, or to simply print your most cherished of photos. 

In the grand scheme of things, XaaS is certainly a boon to the evolution of humankind. However, as is usually the case with anything, it also comes with some caveats.