Welcome to the As-a-Service EraBy Mijael Feldman | Mon, 08/01/2022 - 16:00
Israelis love hummus. We eat it every day with almost every meal, and of course, my mom makes the best you can find in Chile (where she lives). She started selling hummus to close friends and family and doing deliveries by herself every Friday. But good products create word of mouth and she started to double her sales every month. Delivering the products herself would start to take a whole day if not more.
Growing meant solving the delivery issue. Should she buy a van and hire someone to make deliveries? Or pay a delivery service like Justo or Rappi to deliver her products?
This is not an isolated case. In today's fast-moving environment, customer preferences and expectations are constantly evolving, new competitors are defying incumbents, and uncertainty and inflation are making executives of companies of all sizes more cautious about where they invest and commit capital, making as-a-service solutions a new strategy to keep up with market needs.
During the Ford era, vertical integration seemed like the best strategy to win a market. They would buy rubber and produce tires and buy steel and produce engines and chassis. This would allow them to take advantage of their scale and protect their intellectual property, increasing barriers to new entrants. But this also entailed big capital investments to buy warehouses to store materials, machines to produce engines, and an army of workers to keep the operation running.
Amid uncertainty and inflation, everyone is thinking twice before tying money to a project that will be in the market in six, 12 or 24 months. Imagine a restaurant owner who wants to grow his business. He could open a second restaurant, get a place with a 24-month lease in a high-traffic location, buy furniture and decorations, hire cooks and waiters, among other things, or he could just rent a space in a dark kitchen, hire a couple of cooks and use Rappi, Uber Eats or Justo to deliver. If everything goes wrong, he just finishes his contract with his dark kitchen and delivery providers and little investment is lost.
Or maybe you want to launch a digital bank. Doing everything in-house would mean getting a banking license with a big legal and compliance team and hiring hundreds of developers to get you a nice banking app with all the features your customers want, which would take you two to three years with a big initial investment. Or, you could just hire a banking-as-a-service provider like Galileo or Pomelo to offer debit or credit cards, hire Getxerpa to offer all the cool features your customers want to manage their money and hire a small team of developers to connect all the APIs and use Amazon Web Services to host everything on the cloud.
You get the point. Developing new businesses can be done in two ways: one is where you control everything, you invest a lot of money and time to launch everything by yourself; the other way is where you look for partners with as-a-service solutions to reduce time to market, the investment required and increase speed and agility to find product market fit and evolve with the market.
Don’t get too surprised next time you see BaaS (banking as a service), SaaS (software as a service), IaaT (infrastructure as a service), or propositions like ours at Getxerpa where we offer financial institutions PFM and data enrichment as a service.
Once you partner with an as-a-service company you’re also getting three things that allow you to stay relevant in the market.
- You’re buying experience, know-how and using the learning curve this company already has. You no longer need to test something in the market, fix journeys based on user feedback, or hire experts. Using Justo (Chile) for your deliveries makes you forget about hiring delivery guys and managing their routes to improve their delivery times. You get that with your service.
- New features and product evolution. At Getxerpa, we’re constantly researching the market and improving our tools, so our end users can enjoy new features like subscription management, group savings, or budget alerts. You buy our service and you get more value for your money, a product that improves every time!
- Forget about support. Software fails, it always does. But with Amazon Web Services, if servers go down, they have a team dedicated to resolving the issue and giving you alternatives to keep your service running.
Next time you’re thinking of starting a new business or developing a new feature in your job, start by googling “name of your product” plus “as a service” and you’ll be surprised how your time to value will be increased by magnitudes.