Investing in AI: Service as a Software is the New Paradigm

You've been thinking about your next vacation, and you want to plan it in advance. This time, you want a combination of experiences to share with your son and at his young age make him reflect on life, while at the same time share moments of leisure, fun and learning that allow you to connect more and more.

However, your work pace is complicated now, full of meetings with clients, investment committees and new projects, so you don't have time to go to a travel agency, or to search specialized websites in this category, which additionally have the particularity of offering services in a disaggregated way, and you want to put everything in a bundle. 

Considering the above, you decide to ask your friend Jim if he can recommend a travel agency that can serve you quickly and at the same time suggest some places to travel based on your interests and the experiences you want to live and share with your pre-teenager son.

Jim is a constant world traveler, as well as a technologist with a strong business focus and very up to date on business model trends. He listens patiently and smiles slightly, then responds: A few months ago, I stopped going to travel agencies and now I do everything through a virtual agency that uses artificial intelligence to offer me several alternatives based on my tastes and preferences.

-Jim, are you telling me that in recent months you have been traveling based on what a machine suggests to you, without considering the recommendations of a human travel assistant?

-Yes indeed, this travel agency's service as a software platform is a virtual bot that listens to my wishes, suggests options and refines the answers as I am more specific. In addition, the more I interact with the platform, the better it gets to know my tastes and preferences and makes increasingly better suggestions. Likewise, it bundles flights, hotels, transfers, excursions, restaurants and even guided tours if I so wish. And do you know what the best thing is? I don't have to leave the house, or I can even do it while I'm driving.

-Hey Jim, wait a minute. All that sounds great, although it really sounds more like science fiction than reality. On the other hand, let me correct you one one thing: surely you meant software as a service and not the other way around. 

Jim interrupts me, takes a deep breath, as if he were filling himself with patience instead of air, and begins to explain. 

-Service as a software is a new paradigm that leverages the resources and learning capabilities of AI to focus on offering personalized services tailored to the needs of the customer. Based and supported by AI, this model emphasizes end-to-end experiences, which additionally allow it to predict and respond to customer needs in real time. As a result, it offers improved user experiences, and does so efficiently with results more aligned with your interests.

-Jim, so if I understand you correctly, with this new alternative you don't pay for a platform on a regular basis as you do with traditional software as a service platforms, but rather you access a service provided by a third party.

-That's correct. Service as a software focuses on providing services that solve specific customer needs. In this way, companies can offer personalized solutions through AI-driven platforms, which adapt to changing situations due to the profile and needs of each client. The purpose is to solve problems and deliver results instead of simply providing software tools.

-Do you mean that a service as a software platform can be used in other applications to meet other specific customer needs? Because if so, it occurs to me that in this way we can better serve our customers.

-That's right, allow me to explain a little more.

Customer Service

- In a traditional SaaS model, companies use software to manage their customers' queries, relying on predefined responses or with some human intervention. Whereas with the service as a software model, AI can handle more complex interactions and adapt responses depending on the type of customer and their needs, learning from past interactions.

AI-Powered Marketing

Similarly, in a traditional SaaS context, companies use platforms to manage email campaigns and post on social media. With service as a software, AI analyzes customer behavior, which allows for campaigns or offers being tailored to their very specific tastes and preferences. In this way, marketing strategies are bespoke and personalized, making them more effective.

Research and Analysis of Information

-Collecting, researching and analyzing information can now be faster and more accurate using AI models, instead of just paying for subscriptions to databases or general access to studies as you do in a traditional SaaS model. LLMs like ChatGPT can collect, research and analyze information about the market and the competition, but when combined with Retrieval-Augmented Generation (RAG) systems they become even more powerful, since the latter analyze your question or request for information and share reliable sources with the LLMs, strengthening the generation of information and making it more reliable.

-In this way, many of the services that were offered unbundled can now be sold in a bundle, as is the case with your trip, in which you can find end-to-end solutions more quickly and tailored to your needs, tastes and experiences.

-For example, in the case of your company, you could customize the investment processes for your clients by creating a portfolio according to their individual profile of tastes, expectations and interests in the assets to be invested in.

-So, Jim, if I understand you correctly, would investing in AI technology and solutions make it easier for me to develop highly personalized, tailored products and services in a more agile, flexible, less expensive and more satisfactory way for my clients? If so, what I used to do with a group of experts, I would  be able to develop through AI.

-That will depend on several issues, including design. However, AI powers the development of better, more efficient and more accurate services for humanity.

-I have a suggestion for you, Jim: Join us on our next trip so you can continue telling me about the different opportunities in which our company can invest in AI to develop services for our clients.

Luis Hernández Alburquerque is an expert leader in Corporate Venturing and Corporate Venture Capital (CVC) focused on transforming mindsets to build growing organizations based on innovation, technology and venture investments.