These days, the idea of ownership has started to lose its relevance as the ‘as-a-service’ revolution continues to gain traction. People have started to realise that they no longer need to purchase goods or services through hefty, one-off financial investments, but rather can now access them as and when needed and pay for them only upon usage.
What has led to this change in attitude towards accessibility over ownership? What does this mean for businesses today, and how could your new business potentially tap into this lucrative phenomenon?
With its roots as far back as 1999 and the launch of Salesforce.com, the original portfolio of as-a-service solutions largely consisted of SaaS (software as-a-service), PaaS (platform as-a-service), and IaaS (infrastructure as-a-service) offerings. However, over time this has evolved to include what’s become known as ‘XaaS’, or for those less up-to-date with the latest abbreviations, ‘anything as-a-service’.
Used to define the extremely diverse range of tools, technologies, and products that are starting to be offered by vendors on an as-a-service basis, XaaS is now used as a collective term that indicates the delivery of literally anything as a service. No longer limited to the tech industry, it has started to encompass relatively new offerings that further question the notion of ownership.
Partly attributed to the shifting consumer and business attitudes towards opting for more operating expenses (OPEX) rather than capital expenses (CAPEX) when it comes to acquiring new products or services, one can also thank convenience for this development. Both consumers and businesses alike have understood that they can access various products or services on demand, rather than having to commit to them for set periods of time – and this has changed how we do business.
While there are clearly a number of as-a-service examples that I could cite in this article, I’ve decided to limit them to the ones which are the most widely-used.
First, and perhaps the most popular example of this would be best illustrated through the rise of popular ride-hailing applications such as Uber and Lyft. Due to the incredible growth and rapid user-adoption which each of these platforms has experienced over the last couple of years, people have started to realise that they no longer need to own cars to get around. Instead, they can simply access them as needed, thus shifting attitudes more towards ‘accessibility’ rather than ‘ownership’. Now, while this change is welcomed by some, it has also resulted in fundamental shifts (for better and worse) in the established automobile and transportation markets by questioning and modernizing legacy business processes in order to accommodate today’s consumer.
A report carried out by the University College London MaaSLab (Mobility as-a-service Lab) which sought to better understand Londoners’ attitudes towards car ownership and car sharing highlighted that the younger generation was less inclined to own a car as more and more alternatives became available. Most notably, the report found that 55% of those surveyed and under the age of 30, stated that if there was an application that offered a bundled combination of easy access to public transport, car-sharing, and ride-hailing through a single, easy-to-use interface with simple payment options (known as mobility as-a-service (MaaS)) they would be willing to use that app as opposed to acquiring their own means of transport. This was due to the fact that it would help alleviate the pain-points of car ownership such as insurance, petrol and parking – especially in big cities!
Perhaps even more interestingly, when it comes to the property market and more specifically rental properties, the likes of services such as Airbnb are quickly disrupting them. While you would not be wrong in arguing that rental properties already present a shift away from ‘ownership’ towards ‘accessibility’, what Airbnb has managed to achieve is to make these properties even more widely accessible. With their short-term lets, popular locations and general affordability, Airbnb has grown over 200% between 2015 and 2017 and has become so influential in the UK property market and economy overall that various UK MPs (member of Parliament) are seeking government intervention.
Examples such as the ones mentioned above, clearly illustrate that not only are business models fundamentally changing (Airbnb and Uber were able to be so successful in their markets without even owning a single property or car respectively), but so too is everyone’s day-to-day life. One cannot help but wonder what the next big venture will be added to the already-extensive portfolio of XaaS. Perhaps it’s Power-as-a-Service, which features an off-the-shelf biomass power plant for businesses with medium to high power demands, costing a mere £4.95 a month without fuel or £12.95 with fuel included. Or maybe it will be the popularization and commercialization of education as-a-service which enables students and institutions to pursue specific academic interests rather than having to take additional courses to fulfil specific degree requirements. Either way, it’s obvious that the ‘as-a-service’ model is fast replacing big capital investments and is helping to alleviate the pain-points many businesses struggled with in the past when it came to acquiring new software or equipment.
That’s why, my advice to any budding-entrepreneur looking for ideas on a new business idea or venture to explore, would be to go down to their local coffee shop, grab a drink, and gaze out of the window. In doing so, you’ll be able observe the different ways that people engage with their surrounding environments and perhaps find a way to add a new product or service to the ever-expanding portfolio of XaaS.