If you listened to the recent podcast with Dave Mackerness of Kaer, you should understand the value that the As-a-Service business model holds. However, it seems that there are some common myths around what it really means to introduce an As-a-Service offering that holds companies back from it potential. On this week’s podcast, I welcome Kevin Bowers, Director of Field Service Research at Technology & Services Industry Association to discuss the myths and truths of As-A-Service.
Kevin recently wrote a column on this topic that prompted me reaching out and inviting him for a podcast discussion. In that column, he shares the two most common misperceptions he’s witnessed – that As-a-Service means simply leasing equipment or that it is related to a cloud offering. “My boss’s boss often says, do you know what the S in as a service stands for? It doesn’t stand for subscription. It doesn’t stand for solution. It’s for the service,” says Kevin. “It’s about adding value to that piece of equipment. It’s not, like you said, CAPEX, OPEX. It’s about helping the customers achieve something that they’re after. And it doesn’t have to be in the cloud.”
I agree with these points fully. As-a-Service gets brushed off as nothing more than giving customers a way to pay that is OPEX versus CAPEX, but the true value of this opportunity is in delivering far more than different payment terms. It’s about offering customers an outcome they need, an experience they desire, and the peace of mind they seek. As such providing something As-a-Service is really one method of migrating to an outcomes-based model. When companies simply try to re-label their traditional products and services “As-a-Service” and wonder why customers aren’t interested, it’s because the true value of the model is in the outcome not in the offer.
One of the benefits of introducing As-a-Service is in its simplicity – you are solving a problem your customer has, reliably and consistently, as a service. This is easy to understand, highly compelling, and likely to succeed. What happens, though, is that companies over-complicate the idea of As-a-Service based on legacy thinking by trying to position it as the capabilities that enable the company to provide X-as-a-Service rather than articulating the outcome to the customer.
What companies must understand is that today’s customers are far less interested than ever in the products you sell or even the services you provide – they care about how you can help them. This is the root of As-a-Service. It doesn’t mean repackaging what you’ve always done with a shiny new bow, it means reorienting your business to guarantee outcomes that your customers need and value. “At TSIA, we’ve been saying it for seven, eight years now: customers don’t care about your product,” says Kevin. “You posted about your experience at your event in Netherlands recently, talking about how it’s not about the product, the service. It’s about the story, and more and more, that story is about outcomes. And to be clear, it’s about the customer’s outcome, not your outcome. I think that idea still ruffles feathers.”
This mindset or identity shift can prevent companies from seeing the realities of the transition to As-a-Service, which then prohibits their success because they are hedging their bets instead of taking a leap. One important aspect of As-a-Service to understand is that risk is inherent, and the more you try to mitigate your risk, the less value you’re delivering to customers which means that your shift to the model will appear unsuccessful when you never truly embraced the model at all. Companies who offer outcomes take on a certain amount of risk, which is part of the appeal for customers. There’s no way around that, so rather than looking for a shortcut, you should spend your energy determining what you need to change within the business to be confident in accepting more risk.
This is where technology plays a huge role. It’s incredibly challenging, if not impossible, for a company to scale its operations to guaranteed outcomes with manpower and sheer will. You need data, automation, and intelligence of modern tools to enable this transition. “Historically a missed SLA was a missed SLA. In the world of outcomes, when field service doesn’t arrive on time, you don’t get paid,” explains Kevin. “This means you have to have the right infrastructure in place. You can’t run field service on an Excel sheet anymore and have pipe dreams that you’re going to deliver an outcome.”
This brings about another misperception, which is that the introduction of As-a-Service is a service transformation. It’s not, it’s a business transformation. You cannot, as a company, introduce As-a-Service in just one silo – it is an overarching strategy and shift in companywide approach. This realization can scare some folks away and it needn’t. While ultimately the move to delivering outcomes is a change in company identity, it isn’t a matter of flipping a switch – it can most certainly start and be proven in an area of the business and then expanded strategically over time. This approach was discussed in the podcast with Kaer and Kevin gives another example in our discussion this week.
The truth Kevin and I, along with many others, agree on is that As-a-Service isn’t a trend or fad but a proven business model that will only continue to become more prevalent. So, take stock of what misperceptions you may have and consider what you stand to gain by breaking those down and examining the truths of companies like Kaer seeing immense success from embracing risk and being willing to innovate.