Why 'as a Service' is becoming status quo in the enterprise
When a large grocery wholesaler in South America was looking to gain a competitive edge, it turned to technology. Working with Accenture, the company built an end-to-end, turnkey, as a Service solution that allowed the grocer to quickly launch a new digital business.
Like the grocer, business leaders of all types are turning to as a Service models to improve agility and get ahead of shifting markets and fast-moving customer demands.
Two years ago, 68% of business executives surveyed by Accenture and HFS Research said they believed their core enterprise processes would not be delivered as a Service for five or more years.
But just one year later, another Accenture/HFS survey found more than half of senior business leaders want to adopt as a Service features within two years.
"As a Service is a great business model because it helps companies smooth out their revenues, which leads to better and more sustainable investment decisions, ultimately allowing a company to deliver better service and products to their clients," said Jeb Ory, CEO of Phone2Action, a Washington D.C.-based startup allowing citizens to connect with policymakers via email, Twitter and Facebook using their mobile phones. Phone2Action uses dozens of different Software as a Service solutions to run its business.
The acceleration of the as a Service model speaks volumes about how companies are now looking to technology to streamline their processes and make their businesses work better. While it may have been slow to ramp up, business leaders now appear ready to adopt as a Service models as they work to digitally transform.
The reasons for moving to service-based technology can be different for each organization. But one of the primary drivers is the potential to create a technology advantage. As more organizations find success with as a Service, others realize they’re increasingly dissatisfied with the way their major functions and processes run.
"With an as a Service model, services are defined based on business results, produce value quickly, are flexible, implemented consistently with high quality, and paid for based on value tied to business outcomes or on a consumption basis," said Fabrice Dersy, senior managing director and as a Service lead at Accenture Operations. "Organizations that transition to this model will have a definitive advantage over those that don’t."
On the flip side, companies that don’t shift to service-based model may see their ability to compete diminished. Today, there’s more urgency than ever to make the shift.
"Small players are rapidly disrupting larger incumbents in all industries," said Dersy. "Leveraging as a Service capabilities can prevent organizations from losing ground to their increasingly agile and efficient competitors."
An as a Service model can also offer a company greater agility. Many industries are consolidating amid increasing mergers and acquisitions, and that means companies need to be agile, according to the report.
M&A activity increases an organization’s technology, with bottom line increases coming from the cost of integration while maintaining existing infrastructure operations, the report found. But service-based models allow companies to trim infrastructure, creating more flexibility to scale the volume of transactions either up or down, depending on business needs.
An as a Service model can also allow a business to more easily employ analytics to derive business insight and help make performance improvements.
For example, Accenture recently worked with Dollar Tree, a leading discount store, to develop an energy reduction strategy using more than 12 million data points and performance models to derive real-time insight into the energy used in each of the store’s specific locations, according to Dersy. Accenture then developed a technology roadmap that showed how Dollar Tree could optimize energy and money in its more than 13,000 retail stores.
Determining how to start the transition to an as a Service model is not always easy, however. Some companies will begin with the technology component as they work to migrate functions to the cloud, according to Dersy.
"They may start with a single function, then expand to others," said Dersy. "At that point, the jump to as a Service is shorter."
Others companies make take an automation angle. For example, Robotic Process Automation as a Service can enable a rapid upgrade in quality and efficiency, while keeping needed investments as low as possible, explained Dersy.
No matter how a company gets there, in the long run, businesses that use as a Service delivery models generally have incomes that become more consistent over time, allowing them to make better business decisions that are more rooted in long-term sustainability.
"As the business grows, the revenues will grow, allowing for faster scaling and quicker growth," said Ory. "As the base gets larger, the company can start to leverage receivables to make even more investments."