Bye Bye - Software as a Service (SaaS), Hello VaaS or AaaS or TaaS?

At the outset, the title is clickbait. But on a more serious note, are we at the end of the SaaS business model and beginning to explore newer models? Call it "Value as a Service" (VaaS), "Agent as a Service" (AaaS), or "Task as a Service" (TaaS).

Backdrop

Let’s look at the context of why SaaS thrived and flourished in the first place.

The backdrop of Software as a service(SaaS ) was an environment, where we saw multiple fold growth in Information roles. As the digitization of information progressed, these information roles were created to broker and drive value creation within businesses. They further accelerated and thrived as more businesses came online and digital-first businesses became an investment hype across categories. SaaS became the ideal tool to help information roles create and mine business value. It penetrated in every small segment which could help the information worker acheive the task at had in a productive way. This was coupled by the fact that the cost of management and operations was real and often complex with lots of specific nuance. SaaS businesses therefor stayed clear of owning or offering solutions to that part of the complexity.

What is Driving the shift?

There are multiple drivers that may be seeding this new trend. Some are technological, while others are related to behavioral, safety, and privacy concerns.

Let us look at the technological changes first.

Technological Shifts

AI Agents and Agencies are poised to have a transformative impact on the future of enterprise roles and agencies of ‘value creation’ from information. Sanjeev Mohan and I wrote about it in our trends document (https://sanjmo.medium.com/unveiling-the-crystal-ball-2024-data-and-ai-trends-74164da31cf8) earlier this year. To our surprise, this has been far more exponential and steeper than we believed or saw coming when writing in December last year.

The future of agencies and information roles is showing exponential acceleration, with many information roles likely to be replaced by AI Agents.

AI Agents are expected to become superior and take over end-to-end automation, instilling far more intelligence and handling a variety of simple to complex information tasks, including those that need cognitive reasoning and decision-making like human agents and agencies do.

This trend is likely to accelerate further as we approach 2025. The implication of this trend is a reduction in the cost of management and operation of SaaS software, which is currently borne by enterprises.

Serverless

With cloud computing, we had given away the management of our own hardware, but it initially started with businesses configuring their own VMs, storages, etc. They wanted to ensure they had an understanding of the machines they used, privacy, etc. With more and more SaaS services going fully serverless, it further made IT hardware akin to a rental taxi model rather than ownership for a longer duration. Your jobs run on server farms you aren’t aware of, nor do you know their physical location or appearance. Businesses care less about owning software or even hardware and are okay with a consumption model as long as value can be delivered by their employees.

Behavorial Shifts

Let's look at the behavioral and other noticeable shifts.

• Dilution of data privacy and security concerns or perception of it

While enterprise data continues to be more valuable in the owner’s mind, employees or agencies often don’t value data privacy, security, and ownership of enterprise data as much as the enterprises themselves. This has led to a significant dilution in terms of what “data privacy” and “security” even mean.

The biggest driver for “data privacy” and “security” continues to be regulatory compliance and not necessarily employee behavior.

• Acceptable tradeoff: Sharing of private data for business value

Cloud-based SaaS services, often touted as secure (despite each experiencing data breaches over the past three years), are considered drivers of innovation. The trade-offs with respect to data privacy are now more accepted when sharing data with SaaS vendors.

How many enterprises continue to share their data with SaaS players after news such as this: https://thehackernews.com/2024/06/lessons-from-ticketmaster-snowflake.html, or warnings such as this: https://x.com/Snowden/status/1801610725229498403?

What has changed is that, like employees, businesses are making trade-offs between compelling value versus absolute ownership and privacy.

What does all this mean for SaaS?

All the above technological and behavioral changes have serious implications on how SaaS is sold today.

First and foremost, what does it even mean to build software for a specific persona if the future lies in higher-level automation of various tasks and low-to-mid complexity work performed by various information agents?

As the cost of operations and management of SaaS drives down to zero, vendors/economics are steadily driving towards IT product vendors offering Agent as a Service (AaaS), Task as a Service (TaaS), or Value as a Service (VaaS).

Could these be the models that replace SaaS in the next decade? What do you think?