Services as a Service Cut Through Bloat

The model of software-as-a-service is dead. Already successful businesses have been able to hold onto some of their past glory, but new SaaS businesses have it much more difficult than they did even five years ago. Businesses are tired of paying for tools that have potential to make them more efficient. People are ready to pay for services that can complete their work. It is expensive to keep updating software as technology advances, and often the more useful solution is to simply pay for services on a process level. It takes days to teach someone how to automate an internal process. However, it takes months to teach employees how to use new tools while they are already doing their daily work on legacy systems. The most significant reason that it is services rather than software that will form the backbone of the businesses of the future is that all software has a learning curve that collapses entirely when a service is sold instead. Time is the most valuable commodity, and unless a software has a massive value add for the amount of time it takes to learn, it will just add to the constant stream of underutilized and overpriced tools.

Services are the future because people are tired of paying for promises that never come to fruition. Different technical tools depend so heavily on employee use that any promise of business value is far from a guarantee. However, software companies are able to continuously sell tools because the input to output relationship is not very clearly observable. While it is not preferred to spend money on services, the input output relationship can be much more robustly studied, and the cost analysis can actually be done more easily. The promise of software-as-a-service is infinite productivity on a fixed cost basis. The only thing limiting productivity is adoption, and blame can be shifted from the vendors to the businesses they are selling to when their product causes no measurable difference in productivity. Every business fears that they’re getting left behind, wrongly believing that the problems they experienced in adoption are unique to them, and that everyone else is able to derive value from it. This is far from the case, but this damaging and inaccurate blame shifting is extremely common. 

Unless people become far more adept at learning, directly delivering services will almost always be more efficient than trying to buy software and teach employees how to use it. Software is not a stagnant industry, and new tools are constantly being developed. If one form of software could be known to be permanent, then energy devoted towards learning it would never be wasted. However, the short life cycle means that real work is not getting done by people who are learning and the knowledge they are spending time to gain is quickly becoming obsolete. When someone is paid to actually do the work, employee time is not wasted, and unnecessary knowledge is also not gained. This multicausal mechanism allows businesses who pay for task completion to have a multiplied advantage over those who default to purchasing software. While many businesses have the suspicion that they alone are struggling to learn new software and feel pressure to try harder, the only way to escape this vicious cycle is by rejecting pure software-as-a-service in general and replacing it with purchased services.

Not every company can be a tech company. When people try to build their systems in house or develop systems to complete work they could have someone else complete, they often end up diluting what they are best at. Businesses are able to make thoughtful choices about what to attempt and what to buy as a service. They should reject the current paradigm that every company should add layers of tech on top of the work they are already doing. Instead of trying to revolutionize industry specific workflows, businesses should evaluate the potential for simplicity and return on a task by task basis. No amount of technology can fix a situation when the sticking point is human judgment. Unless it is for a clear reason, internal adoption can often lead to expensive and unused software licenses. Only the largest non-tech companies should build their own tech department rather than outsourcing more technological tasks. The default is heavily weighted towards SaaS at the moment, but services and outcome-based products are the way of the future.