In the As-a-Service economy, 'subscription' without 'service' just won't fly

As we think about the past year in business, the subscription and "As-a-Service" economy has to be at the top of the trend lists. There is a difference between products on subscription and a true service. Take consumer services as an example.

Consumer-oriented grocery delivery, shipping services, videoconferencing and entertainment solutions all have seen tremendously accelerated adoption in the months since the onset of the pandemic. And these services in turn are convincing reasons to adopt IT infrastructure as a service, cloud, and sophisticated third-party logistics services. Getting what you need, when you need it, and only paying for what you use are the new standards by which businesses are measured.

Changing customer expectations and the shift to recurring revenue business models are helping to drive the shift globally as consumer businesses around the world innovate to try to get closer to their customers and create more stickiness in a very competitive world. On the enterprise side, software, platform and IT infrastructure delivered as a service is affording organizations greater control over spending than ever before.  

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For businesses seeking to successfully capitalize on the As-a-Service economy, there is no room for complacency -- prioritizing the customer experience and delivering value every day is a make-it-or-break-it proposition. 

The subscription economy has made it so easy to sign up for a service and then discontinue it in favor of a different one if it doesn’t meet your needs, so As-a-Service models have to earn a customer’s business every day and with every interaction. Is that fresh produce delivery dropping off sub-par items? Canceled. Same goes for any SaaS, PaaS or IaaS solution you can think of that is not delivering what you need.

What is wonderful -- and enduring -- about the subscription and As-a-Service market is the flexibility, scalability and hyper-personalization it delivers -- and the possibilities for innovation it unlocks for the enterprise. As we head into 2021, here are four observations about what to expect.

Good, better, best: In the hierarchy of awesome customer experience: it's good to be responsive, it's better to be proactive and let a customer know that there's a problem, and it's even better to let a customer know there was a problem and you have already fixed it. We’ve all experienced the personal frustration of a shipping delay -- and how great it feels in comparison to get an email that says 'hey, there was a problem but we’ve dispatched a replacement for your order and it’s on the way.' Look for IT spending to increase for any transformational technology that will enable more automation and provide faster time to problem-solving insights through analytics. We might not quite have pizza-as-a-service yet, but just look at the advances Domino’s has made employing AI to enhance customer service.

'Subscription' and 'As-a-Service' are often used interchangeably -- they shouldn’t be. Especially for enterprise offerings, true As-a-Service solutions are about buying a service with built-in benchmarks (or 'service level objective'). You should be able to start small, grow over time, and have complete transparency over pricing and related performance indicators. The customer should never feel like they've bought something and they are now on their own -- or that they are locked into a service that offers little benefit compared to traditional capital purchases and must pick up the phone to get problems solved. The next year will bring greater clarity around the differences between "products on subscription" offerings and true As-a-Service solutions.

Customers will read your fine print. As-a-Service allows both consumers and businesses to expect more from their vendor. For businesses, it also allows them to make faster pivots that can help drive innovation by moving between platforms or services without incurring the massive amount of tech debt that they would have under more traditional, locked-in models. Service providers should expect customers to read the fine print -- and reward them if they do so, with real transparency. What's the price? How long is the commitment? Am I expected to sign a 24-month contract? Transparency will increasingly be rewarded in the As-a-Service economy, so make these details easy to find on your website. For example, car services allow you to predict the cost of your ride before calling for the car. Technology should be no different.

5G will deliver As-a-Service at the Edge. Among its many advantages, the coming of 5G will have tremendous benefits that will fuel the market for As-a-Service IT solutions as it takes applications that were on the data center or in the cloud and creates the potential for hyper-localization. Consider the impact on personalization that 5G will have on retail, for example. Now imagine a sports retailer spinning up an application that provides an interesting in-stadium user experience for people who are baseball fans by using 5G and edge locations. That’s a very seasonal experience, and most of the edge and 5G technologies that support it are being consumed as a service, because they tend to be transient.  The As-a-Service economy is driving accountability and serving as a continuous innovation engine across industries. For companies getting it right, it’s a virtuous circle -- good for the customer, who in turn drives adoption, which is great for companies that lead with innovative ideas and fuels further innovations.  

Image credit: Africa Studio / Shutterstock

As General Manager, FlashArray at Pure Storage, Prakash Darji is focused on democratizing the consumption of data. He has a passion for building sustainable businesses and helping to mentor and grow talents across a broad range of functions, including Go-to-Market, Operations, R&D, Services, Applications, and Technology. Prakash has a proven track record of accomplishments in growing new businesses in the area of Financial Performance Management, Database, and Cloud Platform as a Service Technologies.

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