The Transformational Journey From SAAS to SAAT
In today's economy, businesses that focus solely on providing a service are in danger of falling behind. The world is shifting towards the transformation economy, where companies work with customers to improve some fundamental aspect of their lives and help them achieve a "new you". To succeed in this economy, companies need to understand the progression of economic value, which starts with commodities, moves to goods, then to services, experiences, and eventually to transformations.
Unfortunately, some major players in the software industry have hit a stalemate by only considering their software as a service, leading to commoditization and rising competition from smaller niche companies. For example, Adobe went into the SAAS snooze for some time and was startled to see Canva catch up and even exceed expectations by acquiring a lot of customers early on. Canva democratized design and asset creation, transforming regular people like me ?? into social creative designing machines. This caught Adobe off guard, and now they are having to play catch-up.
Introducing the Transformation Economy and the progression of economic value from Commodities to Goods to Services, to Experiences and eventually Transformations by Joe Pine
It refers to the idea that companies can create economic value by helping customers achieve major changes in their lives. This is different from selling goods, services, or experiences, which provide customers with specific products or experiences but do not necessarily help them achieve significant personal or professional growth.
The progression of economic value in the software industry has been no different. Software companies have evolved from selling commoditized products to offering goods, services, and experiences. However, the true potential of the software industry lies in offering transformations to customers.
Let's take a closer look at each stage of economic value in the software industry:
Commodities: In the early days of the software industry, companies sold software products as commodities. These products were not tailored to the specific needs of customers and were sold at a low price point. However, as the industry grew and competition increased, companies realized they needed to differentiate themselves from their competitors. This led to the development of more specialized software products that catered to specific industries or business functions.
Goods: As the industry matured, software companies started selling goods. These were software products that were designed to meet the specific needs of customers. For example, a company might sell a software product that helps manage customer relationships or inventory. These products were sold at a higher price point than commodities and were often bundled with additional services like training and support.
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Services: The next stage in the evolution of the software industry was the offering of services. Companies started selling software as a service (SaaS), which meant customers could access the software through the cloud without having to install it on their own servers. This model provided customers with greater flexibility and reduced the cost of ownership. However, it also led to the commoditization of the software industry.
Experiences: In response to the commoditization of the industry, software companies started focusing on providing experiences. They realized that customers wanted more than just a software product or service; they wanted an experience. This led to the development of user-friendly software interfaces, personalized experiences, and even gamification of software products. Companies like Apple and Google are prime examples of how the experience economy has transformed the software industry.
Transformations: The final stage in the progression of economic value in the software industry is offering transformations. This means that companies help customers achieve significant changes in their lives or businesses. For example, a software company might offer a transformational product that helps customers become more productive, more profitable, or more successful. This requires a deep understanding of the customer's goals and aspirations, and a commitment to providing complete solutions that enable customers to achieve those goals.
To avoid the SAAS trap and move up the ladder of economic value, software companies must understand their true transformational potential. This means focusing on the customer's success, selling a distinct economic offering, and having a solutions mindset. Companies must also spend time interacting with customers to understand what success looks like at every point along the transformation journey. By doing so, companies can design a transformational offering that meets the needs of their customers and provides them with the tools and support they need to achieve significant personal or professional growth.
True transformations require complete solutions, and most companies provide only a small part of what customers need, leaving the actual change to the customers' own efforts. Instead, companies should offer everything customers need to succeed, either on their own or in partnership with others.
Businesses should ascertain the jobs to be done, define success along the way, and identify the barriers. To ascertain the jobs to be done, executives must understand what customers want & need to achieve. Those jobs fall into four categories: functional jobs, emotional jobs, social jobs, and aspirational jobs. Once a company understands what success means for a customer, it should identify the barriers that stand in the way and figure out how to assist in overcoming them.
By shifting their mindset from SAAS to SAAT, software companies can achieve greater success. They need to understand that the end goal of their customers is not to buy their software as a service, but to achieve a transformation. Companies should focus on providing complete solutions to help customers achieve their desired results, and this is where they will find their true transformation potential.
As Joe Pine stated, "Enterprises should recognize the economic opportunity offered by the transformation business, in which they partner with consumers to improve some fundamental aspect of their lives—to achieve a 'new you'." Companies that understand this concept and implement it in their businesses will stay ahead of the competition and achieve success in the transformation economy.