Complex Made Simple

Has the ‘as-a-Service’ business model gone too far? – Part 1

The as-a-Service (aaS) business model has grown in popularity exponentially in recent years, but has it gone overboard in recent years?

We are past the time when most of us would buy DVDs, software, and other products in favor of subscription and PaaS (Product-as-a-Service)/SaaS (Software-as-a-Service) business models More and more, customers buy the right to use and consume certain products and services for as long as they continue to pay a periodical fee, as opposed to outright buying them The benefits are plentiful, certainly, but have they also led to some liabilities in other areas?

The as-a-Service (aaS) business model has grown in popularity exponentially in recent years. We are past the time when most of us would buy DVDs, software, and other products in favor of subscription and PaaS (Product-as-a-Service)/SaaS (Software-as-a-Service) business models, where customers buy the right to use and consume certain products and services for as long as they continue to pay a periodical fee. 

“Product-as-a-Service (PaaS) is a business model that allows customers to purchase a desired result rather than the equipment that delivers that result,” Engineering.com explains. “For example, a manufacturing operation may need to have two pieces of metal welded together. In the traditional purchasing model, the manufacturer would buy a welding robot. In the PaaS model, the company would purchase a certain number of welding operations, not the robot itself—in effect, paying for repetitions instead of robots.”

This model is not entirely new in concept, as it can be traced back to the first time someone ‘rented’ a product or service for a certain amount of time as opposed to buying it: think cross-country carriage rides, library books, and even the act of borrowing farming tools. 

Today, with the major advancements of technology present, companies are able to apply this as-a-Service model to a wide variety of products and services. Faster internet and growing Internet-of-Things (IoT) capabilities, for example, are making it increasingly possible for companies to explore new ways they can offer their products to customers. 

Read: Google Photos sets up paywall, will no longer offer unlimited free storage for all your pictures and videos

While in the past you might have purchased a piece of software or bought a movie at your local DVD store, today you are more likely to be subscribed to the Microsoft Office suite of programs, or to Netflix. For the same price you’d pay to buy a DVD, you can instead have access to a massive library of films, documentaries, and TV series on a platform like Amazon Prime, StarzPlay, or Netflix. 

Let’s take the video-on-demand industry for the sake of our argument. The cost benefit and value for money for both parties are perhaps what’s most alluring about this business model. Media companies like Disney will be able to cut down on the factory production and raw material costs of physical discs in favor of more profitable and efficient IT hardware like servers and cloud tech that power a service like their VOD platform Disney+. Customers, in return, are provided a great selection of films and series for a sum that’s less than the price of a single Blu-Ray disc, and sometimes, cheaper than a movie ticket. 

Read: Is video-on-demand the killer of TV?

But VOD platforms are just one example of companies that full under this business model. Amazon Web Services, Microsoft Azure, Airbnb, Spotify, and many others fall under the as-a-Service category. We’ve even reached a point where we’ve come to refer to this business model as Everything-as-a-Service (Xaas), where healthcare, mobility, banking, security and much more find themselves being offered in a subscription-based manner. 

Have we reached a point where this has gone overboard? Has the as-a-Service business model gone too far?  

In the next part of this 2-part article series, we look at the negatives of over-relying on this business model.