Updated March 2, 2022
Cloud infrastructure has fundamentally changed the way IT services are provided. Soon, it may change the way that key business services are offered, too.
Business as a Service (BaaS) is an application of the Everything as a Service (XaaS) model. It provides services like marketing and accounting in much the same way cloud storage is delivered — through an on-demand model where you only pay for what you use.
With the COVID-19 pandemic accelerating the growth of the industry, BaaS may soon be how most traditional services are provided. Here is what that means for direct-to-customer eCommerce companies.
What Is Business as a Service?
The “as a Service” model is expanding and changing, with IT and other third-party services becoming more strategic in 2022. From finance to marketing to IT, the as a Service model delivers software and services designed to achieve specific goals.
Hayes Software Systems’ CTO Kunal Ashar believes that businesses providing services within the cloud represent the next stage of economic growth.
“It’s the service that will be provided to the consumer in the form of an integrated set of transactional and collaborative activities to accomplish a specific organizational goal,” Ashar writes. “Comprehensive business services (offered as SaaS) will be orchestrated (as BPaaS), managed and monitored (as MaaS), run (as PaaS) and hosted (as IaaS) – all in cloud.”
The result is remote, cloud-based management of entire services of departments. BaaS offloads the work of business-building then lets executives and teams focus on their organizations’ core offerings.
According to Gartner research, spending on public cloud services totaled $332 billion in 2021. Spending is projected to grow by 20% in 2022. Similarly, the global market for XaaS hit record highs in 2021, more than 29% higher than the previous year.
The Everything as a Service model easily expands to the offline world, as well. You can see this firsthand in the way Uber and Airbnb have disrupted traditionally offline services like transport and accommodation. The same thing is now happening with Instacart, which is providing customers with a fast and cost-effective delivery service.
Why Would a Company Switch to a BaaS Model?
Instant gratification is a big driving force behind the adoption of Business as a Service. Departments want frictionless access to core services that someone else delivers and maintains. Deloitte leader Mohit Mehrotra says there are several other forces driving the popularity of BaaS and other “as a Service” models, including the desire for personalization and access instead of ownership.
Further, the cloud, and the “as a Service” model in particular, is democratizing business functions, writes Botmetric’s Amarkant Singh. Businesses do not need to spend time and money to build up departments. Now, they can deploy ready-made business processes.
Many BaaS and XaaS adopters say they view the move as a catalyst to innovation. Eight in 10 companies say XaaS has helped their organization reinvent business processes, develop new products and change how they sell to customers.
In addition, BaaS gives companies more flexibility, says Broadsuite Media Group CEO Daniel Newman. Flexibility is essential for any company operating in the 21st Century. Big companies cannot change their old systems quickly enough. Everyone wants to change instantly. Business as a Service allows brands to add or remove what they need in real-time and at will.
BaaS Has Moved to Offline Applications
The “as a Service” model has grown beyond the scope of cloud computing. Brands can convert almost any product or process into a service offering. This allows companies to move away from expensive ownership and toward variable costs.
In fact, it has gone way beyond the internet full stop, says Aria’s Sean Kirk. A lot of “as a Service” offerings often have nothing to do with IT at all.
This shift is happening more and more in the B2B world, says marketer Kate Harvey. “In fact, if you are offering a B2B product or service and still locking people into extended contracts, you stand to lose in the near future to a competitor who realizes that our collective mindset has shifted.”
Rolls-Royce is an excellent example of how a company can deliver an “as a Service” model in a B2B world. The company’s TotalCare program rents jet engines to airlines and charges them “power by the hour”. IoT sensors in the engines capture data and allow Rolls-Royce to offer a proactive maintenance service helping customers cut costs.
Staples is transitioning from being an office supplies retailer to an “office services provider” writes Chief Outsiders’ Blaine Mathieu. Rather than selling office equipment outright, Staples provides a done-for-you office service that covers everything from equipment to cleaning.
Scalefast is an example of BaaS. We combine eCommerce software with solutions to physical, real-life problems like customer service, warehousing and order fulfillment.
How BaaS Marries With eCommerce
The BaaS model is a natural fit for eCommerce. Smaller brands must effectively and efficiently compete for sales in a crowded marketplace.
Through eCommerce as a Service, brands can launch a multichannel direct-to-consumer sales offering quickly and easily, without having to build anything in-house, the team at Fashion Tech Group writes. Everything the business needs is available to rent, including the eCommerce platform, analytics, fulfillment and tax advice.
Having a managed eCommerce platform can be key to your success, notes A Better Lemonade Stand’s Richard Lazazzera. “Hosted eCommerce platforms make your life easier,” he says. “You don’t have to worry about security, vulnerabilities, PCI compliance, backups, or website crashes. It just works. All the technical aspects of maintaining a safe and secure website are managed by the platform provider.”
Getting the back-end of eCommerce right is also important, and it can be expensive. However, outsourcing your eCommerce offering can save up to 90% of upfront costs compared to developing such an offering in-house. That’s because eCommerce as a Service provider will already have the people, processes, tech stack and warehouses ready to go.
eCommerce as a Service is a way for businesses to focus on what they are best at while outsourcing the parts where they are not as strong, says Shyp Co-Founder Kevin Gibbon. Whether at the customer service or customer experience level, eCommerce as a Service acts as a plug-and-play offering so you can choose the business services you need and forget the ones you do not.
BaaS is the next step in cloud evolution.
Find out more about the benefits of BaaS for your business. Schedule a call with one of our eCommerce experts.