Nancy A Shenker, Founder & CEO, theONswitch & nunu ventures.
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You’ve probably heard of SaaS. It stands for software as a service, and it is expected to grow to a $220 billion industry in 2022 (a 13% increase from 2018). Including companies like Slack, DocuSign and ADP, it refers to any cloud-based, subscription-based system that enables companies to perform more efficiently and scale without developing their own software solutions.
Over the years, I’ve worked with a variety of SaaS companies as a marketer and brand builder. These companies often focus on the first S and the features and functions of the software they offer. But the buyer isn’t necessarily looking for just technology. They want a solution to a specific business problem. That’s why I’m advocating making that S invisible and focusing instead on what the technology delivers as a benefit, which is what great marketing is all about.
What are “as a service” (aaS) models? We’re seeing a surge in technology-driven cloud-based services that enable businesses to streamline business operations and perform specific tasks or manage key expense line items.
For example:
• GaaS: Gifting as a service. Sales professionals express gratitude or build prospect relationships by simply checking a box in Salesforce or other CRM platforms. For example, Sendoso and Alyce allow companies to send gift cards, plants, branded products and even spirits.
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• RIaaS: Revenue intelligence as a service. Several fast-scaling companies, such as Gong and RingDNA, use AI to analyze sales conversations and enable coaching and fine-tuning of pitches. Sales professionals use this data to improve business results, and management can assess team and individual productivity.
• EaaS: Education as a service. Employees can upskill or reskill by accessing online training 24/7. This has replaced the classroom model for a wide range of businesses. Traditional universities like California State are investing in technologies to enhance their online offerings. The Covid-19 pandemic has accelerated the development of digital-only training options — from nursery school through adult learning and professional training.
• TMaaS: Time management as a service. From scheduling and paying hourly employees to tracking billing for service companies, these tools enable businesses to better analyze and control their human capital expenses and workflows. Harri and Deputy are just two of the many platforms that help retailers, restaurants and other industries that employ hourly workers schedule and manage staffing expenses.
• BaaS: Banking as a service. New cloud-based companies are leading a financial services revolution as the traditional brick-and-mortar systems become obsolete. These emerging companies don’t have a physical presence but offer a full suite of banking products.
• LaaS: Lighting as a service. Energy expenses can be daunting for restaurants, retailers, auto dealerships, prisons and other commercial enterprises. LaaS companies like Future Energy Solutions average out the cost of lighting over time and charge clients a flat fee each month, which includes expenses like bulbs and maintenance. With an increased focus on sustainability, companies like Carbon Lighthouse are examining other energy sources beyond lighting and managing and tracking both carbon footprints and expenses.
Subscription Models Are Not New; They’re Just Smarter Today
Subscription-based business models for consumers have existed for decades. In the analog era, the book-of-the-month and Columbia House Record Club were mainstays of their industries.
As businesses looked for more ways to get complex services while managing cash flow, the SaaS industry emerged. Fueled by automation, developers started to look at tasks and functions that most businesses need and then created ways to perform them using cloud-based tools.
The business benefits of aaS offerings include:
• Access to complex programs that would take years and millions of dollars to develop in-house. The aaS company is constantly investing in improvements and functionality, often based on customer input.
• Predictable expenses. In the case of lighting, for example, commercial enterprises spend millions of dollars a year on energy. Having a set monthly expense enables them to better manage cash flow. Some companies even cover the entire upfront cost of LED lighting conversion and simply amortize that expense as part of the monthly fee.
• Ease of use and analytics. When everyone in a company is using the same cloud-based system, CEOs and other decision-makers have easy access to comparative measurement.
Companies with aaS offerings are also able to prove their long-term value to subscribers. Subscription models enable these businesses to use a wide range of sophisticated tools, measure their effectiveness and determine their ROI over time.
As companies head into 2021, they will be looking for ways to manage expenses and scale. Subscription aaS models can give them access to best-of-class tools and services while controlling costs.
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Author: Nancy A Shenker, Forbes Councils Member
