Getting on your aaS

 I moderated a talk last week with Erik Vermuelen under the Bursa Thought Leadership series organised by ICDM. Among other things, he talked about how Microsoft turned itself around from being a mere software peddler to being one which adopted an open culture. Through this, Microsoft under Satya Nadella extracted huge market cap gains than was seen under either Steve Ballmer or late-stage Bill Gates, at one point even challenging Apple/Amazon to be the world’s largest company.

According to Erik, one way companies can transform themselves is to upgrade from being mere product companies to becoming platforms. This would involve storytelling to communities and stakeholders as well as adding “as a service” or “-aas” behind what you do. -aas refers to selling a suite of services that is related to using a particular product instead of selling that product alone or that product at all. 

If this is transformative for companies it should also be transformative for users. The main benefits for users of -aas are cost reduction and more meaningful experiences.

Instead of selling a car which you can drive to get from point A to B, companies like Uber and Grab provide “transportation as a service”. A lot of cost disappears when you don’t have to buy and maintain a car. At the same time it is enhancing your experience because you no longer have to look for parking, fill in petrol, go to the mechanic. During the ride, you can do work, play games or read, essentially becoming chauffeur driven.  You have effectively shifted your budget from a fixed asset to experiences. A main implication for this blog is also that you can use the cost savings to invest to achieve other experiences. 

The secondary effect of experience is variety eg if you use Grab’s premium rides, you get a taste of what it’s like being inside of different sedans or in the case of the just announced Airbnb Luxe, you can now experience different luxury properties around the world without coughing out a lot of money to buy and maintain holiday homes. This puts such real estate within the reach of the merely affluent rather than restrict it to the realm of the super rich. Even for the super rich, outsourcing maintenance is an attractive value proposition.

Many businesses are also evolving their models to adjacent industries like payments, insurance, foreign exchange transactions.. In the case of Airasia, becoming asset-light by shedding planes off their books gives them more strategic flexibility. 

A trait of why certain companies can do this is exactly because they have built and continue to tell their stories, they have become platforms that are in control of an ecosystem. The following is a non-exhaustive list of -aases:

-aas as an idea is of course not new as people have been platform services to themselves without the help of technology:

And who knows, some of the stuff we may see in the future is both at the same time life-changing and scary:

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