Service as software – you heard that right. If you Google it out of curiosity, you will be surprised to find all your search results on the software as a service (SaaS) business model. That’s because the concept is just beginning to emerge but is poised to become a key driver of change in the software ecosystem.  

Service as software is an emerging trend that is creating a furor in the Software as a Service market. Imagine paying for services or outcomes (instead of software) on demand, just as you would for project management services offered by a certified PMO or tax services provided by a skilled AI accountant. The focus is on what the software can do for you rather than the features of the software itself.

The SaaS World is Constantly in a State of Flux‍

SaaS-based applications have become a preferred choice for companies, with the data these applications generate expected to be among the fastest-growing sets of critical enterprise data over the next five years. According to Gartner, worldwide end-user SaaS spending is forecast to reach nearly $300 billion in 2025. Here are some trends that are likely to shape the SaaS industry in 2025 and beyond: 

• Given the risk of IT outages, SaaS vendors are prioritizing data backup and recovery and investing in robust backup solutions to safeguard customer data against errors, cyberattacks, and vendor mishaps. According to Gartner, Backup-as-a-service has become essential to protect workloads and maintain operational continuity. 
  ‍
• With double-digit growth in SaaS spending and businesses' increasing reliance on SaaS applications, companies need to take a strategic and proactive approach to ensure that their IT infrastructure and processes are optimized for consistency, reliability, and performance across various environments.
  ‍
• At the same time, AI is becoming integral to every aspect of operations. According to recent research, the global AI software revenue is expected to reach $118.6 billion by 2025, with AI being integrated into nearly every new software product and service. Today, almost every SaaS vendor, from Microsoft to Amazon, Salesforce to Google Cloud, Atlassian to Tableau, etc., has integrated AI into their product portfolio.

The Emergence of Outcomes-led-SaaS and Service as a Software

‍The pace of AI innovations is changing how SaaS is delivered and consumed. The technology world is moving from software as a service to service as software. What does service as software mean? In the traditional SaaS model, vendors enable access to their cloud-based tool, but customer organizations are responsible for using it to achieve their goals whereas the SaaS vendor is responsible for driving results in the service as a software model. While both models focus on delivering software applications over the internet, service as software enables companies to receive packaged services like customer support, data processing, or analytics via software platforms, typically powered by automation, AI, and cloud computing. The main drivers for the growing interest in service as software include: 

• The demand for flexibility and scalability, allowing companies to access the services of choice, without investing in specialized infrastructure, personnel, or external vendors to handle these tasks.
  ‍
• Budget restrictions, enabling even small and medium businesses to access fully managed, enterprise-grade services with no upfront costs. 
  ‍
• The ease of vendor management as businesses can leverage all the services they need using a single platform and use not just the product on-demand (say Tableau) but also associated services (data cleaning, custom reporting, etc.). 

‍

What Service as Software Means for SaaS Vendors

‍For companies developing SaaS products, now is an excellent time to consider integrating AI into their business models and transitioning to service as a software. An AI-driven mindset can help optimize performance, strengthen security, and ensure seamless scalability. To ride on the software as a service wave, here are some points to keep in mind: 

• Move to a services mindset: In the service as software world, companies must think of selling the services enabled by these tools instead of selling tools. For example, for DevOps companies, SaaS vendors can sell on-call AI agents that intelligently resolve software bugs and issues. This can help align the cost of the software unit with the associated business value while also unlocking a much more scalable business model where customers are ready to pay more for more data.
  ‍
• Integrate AI from the beginning: Embedding AI into SaaS products from the start can ensure services are tailored to individual user or business needs. For example, AI-powered recommendation engines can offer targeted services or insights based on user behavior, preferences, or historical data. This helps drive customer engagement and satisfaction while reducing the need for human oversight.
  ‍
• Enable Observability: Observability via AIOPS Platforms can help SaaS vendors build and deliver apps faster than ever. By unifying, monitoring, and optimizing the underlying SaaS infrastructure, they can gain end-to-end visibility, resolve issues quickly, and align their services with business goals. 
  ‍
• Think of new pricing models: To ensure success with service as software, SaaS companies must move away from traditional software licenses or subscriptions. Instead, they must charge for their services per transaction, usage, or result. This can pave the way for outcome-based pricing, where customer organizations will pay for results rather than just access to software.
  ‍
• Build an AI-enabled ecosystem: As more services get embedded into SaaS platforms, companies must focus on building an ecosystem where partners thrive. By integrating with other service providers or AI tools, SaaS companies can enable dynamic and adaptable platforms that offer a more comprehensive range of services.
  ‍

The SaaS industry has long been ripe for disruption, causing service as software to become the next big thing. In this new business model, mundane tasks like cleaning data or answering user questions will be entirely handled by AI, allowing SaaS companies to deliver more accurate, timely, and personalized services to their customers.

This new model will ensure that services are not just delivered as software but are constantly learning and evolving with time.