Well into the 21st century, we are already seeing widespread deployments of the as-a-Service business model, which in the early 2000s was primarily relegated to software companies like Salesforce, one of its modern innovators.
If you’ve booked a Careem recently or watched a show on Netflix, you’ve been utilising the as-a-Service business model. Careem, while having diversified its offerings as of late with the introduction of its super app, was originally a mobility-as-a-service company. Swvl also uses this model. As for Netflix, it follows the more commonplace Software-as-a-Service (SaaS) model utilised by companies like Google, Microsoft, Adobe, and so many others.
But what is the as-a-Service model exactly? Generally, it involves the offering of a product or service to a customer on a subscription basis, with little to no customer ownership in the equation. It is a very flexible business model that has allowed a massive number of companies to launch with as-a-Service offerings, given the often reduced cost of set-up and number of employees needed, and the potential for easy scalability.
One of the reasons for this is that this model is often cheaper for both the company and the customer, while also guaranteeing a company a more consistent cash flow over the months as opposed to a one-off payment. Couple this with the fact that many of these services offer additional upgrades and features for the customer to avail for a price, and businesses now have more sources of revenue than they might have traditionally been able to secure.
As for the customer, they are offered unparalleled flexibility and a much-reduced price for entry. As opposed to purchasing a suite of Adobe software for $200+ for example, a user can subscribe for $15 a month to gain access to these same programs (figures are not verified, just an illustrative example). This price is often discounted further when you take into consideration the markdowns applied on longer-term commitments, like bi-annual and annual subscriptions. So, the customer can test the waters with a one-month subscription, while committing a minimal sum of money. Moreover, in the case of Software-as-a-Service, corporate clients can save further by not having to host these programs on their own servers, but instead relying on the supplier’s cloud network.
This is one of the most basic examples of this business model. Apply it to Uber or Careem, and you’ll see similar parallels. It has thrived thanks to evolving technology like 5G and the Internet of Things, the COVID-19 pandemic, and primarily due to the changing habits and preferences of a millennial-heavy client base which is often cash-strapped and ownership-averse.
Streaming services are common everyday examples of SaaS companies.
Still, this is just the tip of the iceberg. Over the years, the as-a-Service model has proven revolutionary for many industries that might not come to mind when one thinks of such a tech-based solution. This has given rise to the term Everything-as-a-Service (XaaS), where nearly any product or service can be reconfigured to fit the as-a-Service business model.
Today, the global Everything as a Service (XaaS) market is projected to grow from $545.35 billion in 2022 to $2,378.07 billion by 2029, at a CAGR of 23.4%, according to new research. The MEA region is expected to grow moderately during this forecast period, primarily due to the mass adoption of XaaS across the banking, financial services and insurance sectors.
Still, while XaaS use in the UAE has been mostly relegated to more traditional deployments, like fintech and IT, we are seeing some interesting applications of XaaS. Examples include startups like MAKAN, a Furniture-as-a-Service platform that makes the process of renting, swapping and buying furniture hassle-free, and The Scalable CFO, a company that enables small businesses to get the benefits of a CFO without the inhibiting costs of actually hiring one.
It has become clear to entrepreneurs that with XaaS, the sky is truly the limit, and boundaries are being pushed every day. Now, the MENA region is set to reap great benefits as we see further innovative uses of this business model.