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The SaaS Business Model And Digital Transformation

Software as a service, SaaS, is a business model that fits very well in modern businesses. It allows them to work more flexibly and to amortize various fixed costs. The system thus functions as an essential engine of digital transformation. Even if we link the name to some popular programs right away, SaaS is a business model. It indicates a formula by which the functions of a program are accessed.

The modality is precisely that “as a service,” like a service, and produces various consequences. The model represents a radical change from the classic “on-premise,” providing the final purchase and ownership of the software. It is the system that has been mainly used so far, especially in the corporate environment (but also by various public administrations).

It still represents the standard in some industries. Many things have changed, especially in recent years, and when it comes to digital transformation, the SaaS model is often a part of it. So let’s see why and how the as-a-service model and digital transformation support each other.

The SaaS Business Model And Servitization

“Servitization marks the transition from a product economy to an economy of services and experiences usable through physical and digital interfaces.” The “as-a-service” model is a long-standing phenomenon that we have seen grow over the years. And that will probably be the business model we will have to deal with in the future. It is based on “servitization”: a sharing economy applied to the productive world.

Servitization is that which “transforms the sale of goods or products into the sale of services.” So those who buy, instead of grabbing an asset, rent it to use it only for the time necessary. The seller gets a more stable and continuous relationship with the buyer and is more advantageous in the long term. Shared mobility services, workplace sharing, and the productivity apps used in the software-as-a-service formula are examples of this model.

In particular, SaaS programs allow those who use them to carry out the required tasks without paying for licenses, installation, configuration, and maintenance. The advantage is significant in terms of costs and efficiency. Of course, as long as you use exemplary service and most suitably, as we will see later. After all, a transition to the SaaS model is not a solution that can be adopted overnight.

Quite the contrary. In many cases, there is a need for an overall rethinking of the company’s role and operations. A process that takes time to develop new productivity schemes and adapt the program to your particular situation. In essence, moving to a SaaS system is a significant driver of transformation.

The Digital Transformation

The way of working changes, the time to devote to operations, and the relationship with the interlocutors. Likewise, the tools to be used to manage operations must change. The “as a service” model and, in particular, the SaaS formula makes these tools available. Digital transformation is a complex process that produces positive and negative consequences. Among the first is the possibility for companies to optimize resources and investments and measure the effectiveness of production processes with extreme precision.

The latter is undoubtedly a drastic reduction in the workforce and even more heated competitiveness, the continual need to update company skills. The challenge, therefore, is to understand how to respond to new needs. Because the question is not whether to start a business digitization process, but rather how to do it, from this point of view, then “as a service” and SaaS systems may not always be the most suitable for the situation.

Still, they offer an effective response to the new needs of the 4.0 economy. In particular, they create the agile structure of the company that allows it to move quickly and flexibly to market demands. And this is the new scenario that we will have to deal with more and more often in the coming years.

An Agile Working Method And The Tools To Implement It

Nothing new under the sun. At least since the 1980s, business processes have been following or trying to follow the principles of lean thinking. The 4.0 business model, and therefore the “as a service” economy, can then represent implementing these principles on a larger scale. Therefore an economic model is based on reduced reaction times, the centrality of the consumer, and an on-demand offer. Companies respond to specific requests rather than offer them goods and services in this context.

The “as-a-service” model works both ways to implement digital transformation: it offers companies very lean and flexible operational tools. It provides consumers with timely and practical solutions to their needs. There are several examples of an “as-a-service” economy for the B2C field, from shared mobility apps to AirBnB-style immediate rental services. What is clear is that the model fits perfectly with the economic scenario of our years. 

If we want to find three qualifying points, they are:

  1. access anywhere;
  2. light technology;
  3. mass customization.

It means:

  1. We expect to perform our duties or meet our needs regardless of where we are.
  2. Technology is required to be the engine of simplification, and therefore easy to access and simple to use.
  3. demand and offer are negotiated in an almost one-to-one approach. That is, for which those who buy can choose precisely the things they need, and those who sell can supply them with extreme precision.

SaaS: Advantages And Disadvantages: Practical Applications

Software as a Service as a system fittingly incorporates these three points. And yet, it’s not always the perfect solution. Indeed, there are several unknowns and situations for which the use of better localizable and customizable software may be more suitable. In this sense, the model is perfect for startups or companies in the running-in phase. It allows them to start and consolidate the business with reduced costs and good quality standards.

For those with an already defined infrastructure, the transition to cloud services or shared productivity tools is not always painless and requires a lot of attention. The SaaS business model is complex, and in some fields offering subscription services is more complicated. For example, it implies giving up control over sensitive areas such as data. Or because it requires stable and constant Internet access, which cannot always be guaranteed.

On the other hand, many companies experience a significant cost reduction after adopting such systems. More importantly, the transition to SaaS induces a sort of chain reaction: the first step towards innovation produces others in the same direction, up to a more complete and radical digital transformation. That’s what happened to many office productivity giants from Microsoft onwards.

A striking case is, for example, that of Adobe, which has gradually transformed its best-selling products, starting with Photoshop, into apps to be used as SaaS. A transition to the service model was not difficult but brought the number of users who subscribed to the service to triple the number previously reached. The advantages of the SaaS model for advanced digitalization in the company

Digital Transformation Also Passes Through SaaS

In short, as far as services are concerned, the transition to the SaaS model now seems irreversible. It is a system that offers everything a company needs today: flexibility of movement, adaptability, and cost optimization. If we look at digital technology, it is evident that the “as a service” model is an essential driver of transformation. 

The direction is towards that dematerialization that allows companies to reduce costs and effort in maintaining an operational infrastructure, for example, servers for storing data and processes, fixed workstations, personnel for monitoring the network. This is where outsourcing offers the most significant opportunities because it allows you to count on efficient, up-to-date, and workstation-independent operational tools.


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