Always getting smarter : The shift from products to smart services
By Greg Roberts , Managing Director and Partner , Accenture
Software as a Service ( SaaS ) is now a proven model for making software applications available on-demand over the Internet . Just 2.5 years after announcing the plan to go from offering boxed software to a subscription-based SaaS model , Adobe reported record revenue with a 3:1 ratio of subscription revenues to other types of revenue . Intuit successfully transformed itself to a cloud-based SaaS provider with flagship products Quickbooks , TurboTax and Mint . Autodesk took a significant step toward SaaS by moving to a subscription-only business and cutting off the sale of perpetual desktop licenses early in 2016 . This move from a perpetual license model to a subscription service is fundamentally transforming not only the approach software companies are taking but the underlying experience value received by their customers .
But SaaS was just the tip of the “ as a service ” iceberg . Airlines no longer purchase jet engines . Instead they pay “ as a service ” based on the hours the engine is used . The automotive industry is responding to customer demand by exploring transportation-as-a-service . HP continues to drive innovation through evolving these constructs as well . From HP ’ s managed print services through to Device-as-a-Service , HP is pivoting from a product centric approach to more of a solution and outcome focus . This creates new capabilities for customers to more effectively manage their environment and costs as well as drive seamless scalability and variability .
As this trend continues , more opportunities will be created for customers to realize even greater benefits . For example , in solutions such as HP and Accenture ’ s Retail Store of the Future and Office of the Future , offerings are created by combining multiple products and services into an integrated
14 Innovation Journal · Issue 5 · Winter 2016 solution aligned to outcomes that address the overall experience and value desired . This is also achieved in a flexible , service based model resulting in an ability to focus on the targeted value and experience versus traditional features and functions . The move to these types of models creates a new class of offerings called Smart Services .
Considerations for entering the smart services world
As companies and whole industries shift to smart services , the impact is far greater than simply re-tooling product and service design . The shift involves navigating significant disruption : new forms of competition , a radically different business model , and the creation of ecosystems of partners working together to innovate and meet customer needs .
A focus on outcomes : A very important component in the growth of smart services is the shift toward competing on the ability to deliver measurable results to customers . In the example of Retail Store of the Future , companies are offered more than an efficient point-of-sale device . They receive a fundamentally transformed buying experience . This type of Smart Service aligns to the end goals of the customer , better unlocking value and flexibility .
New competitors and disruptors : As companies move out of the traditional product bounds the likelihood of new tech-savvy competitors is high as barriers to entry can be low . Consider that that Uber , Lyft and other ride services did not exist a few short
years ago . New entrants can quickly change the expectation of customers and how they think about the products they buy versus services they consume . It is critical that smart services be grounded in constant innovation and evolution .
An ecosystem of collaborators : Delivering outcome-based , smart services will require new levels of collaboration and transparency across an ecosystem of businesses and digital business models . In the case of HP and Accenture the best of both organizations is being combined to drive this next generation of smart services . Though these offerings , more holistic solutions can be created that unlock differentiated value for customers .
A change in business model : A pivot from product to smart services will require changes in the business model and the processes and tools that support it . For example , it involves moving from transaction-based selling to nurturing a relationship with customers through a coherent user experience and focus on value creation over the lifetime of the relationship . In addition , the provision of smart services is likely to result in profound changes in people ’ s work , and the talent and change management implications of smart services need careful consideration .
Above all , culture : While there are many moving parts in the shift from products to smart services , fundamental to success is a shift in mindset . As HP and Accenture have partnered together to deliver these smart services across multiple industries , the underlying cultural theme is a focus on the customer and realization of the outcomes they are targeting . This is a big step from the historical separation of product and services and fundamentally changes not only the approach but the value that can be realized . •
Greg Roberts is a Managing Director and Partner in Accenture ’ s Communications , Media and Technology consulting practice focused on the Electronics and High Tech industry .