Services as Software - the new paradigm?

Transforming Services into Scalable Software Solutions

Across 2024, a fascinating trend has emerged in the software industry that has caught the attention of businesses and thought leaders alike: "Services as Software." Coined as a clever play on the concept of Software as a Service (SaaS), this paradigm shift represents a new era for service-based businesses aiming to scale their impact, revenue, and valuation. It’s a term that, while still underrepresented in market discussions, is quietly revolutionising industries.

At Vencha, our interest in this concept was first piqued by a Forbes article penned by Joanne Chen of Foundation Capital in April 2024. Her insights highlighted how Artificial Intelligence is reshaping the services industry, creating unprecedented opportunities to automate and scale. It’s no longer just about delivering services; it’s about turning those services into software platforms that can be sold repeatedly with minimal marginal costs. Forbes reckons the Services as Software industry to be worth as much as $4.6 trillion so this is a significant market trend we all need to understand.

Coincidentally, over the past year our business, Vencha (www.vencha.team) has been asked by the Founders of a diverse range of businesses spanning Affordable Housing, Procurement, Oil & Gas, and Strategic Planning - to help them "SaaSify" their pre-existing service-based models. It’s been a fascinating exercise and hugely rewarding all round - these companies have now successfully leveraged their unique expertise to expand into new markets, all while reimagining their value propositions for scalability.

This blog explores the concept of Services as Software, diving into its challenges, advantages, and practical strategies for businesses ready to embark on this transformative journey.

Understanding Services as Software

Services as Software (often referred to as SaaSification) is the process of transforming traditional, bespoke services or single-instance software solutions into scalable, cloud-based SaaS platforms. It’s a fundamental shift from delivering one-off, manual solutions to offering standardised, automated tools that are accessible to a global audience.

Businesses considering this transformation generally fall into three categories. First, there are companies that began by solving a specific pain point for an individual customer. For example, they might have developed a platform to streamline procurement workflows or manage large data sets for a single organisation. Once the solution succeeds, the realisation often strikes - there’s a broader market of companies grappling with the same problem. These businesses inadvertently discover the potential for a standardised product with far-reaching appeal.

The second category involves professional services firms that codify their expertise into software. By documenting their processes and creating templates, they move from a people-dependent model to a scalable, technology-enabled one. This transition often integrates AI to automate repeatable tasks like generating RFPs or analysing complex data. The result is a SaaS product that clients are eager to license, unlocking new revenue streams.

Finally, some organisations develop internal tools to manage their own workflows or data challenges, such as orchestrating complex advertising campaigns or automating multi-level processes. Over time, they recognise that these tools could serve other businesses, leading to the creation of market-ready SaaS products that address industry-wide needs.

The Challenges of the Services as Software model

While the potential of Services as Software is undeniable, the journey is not without its hurdles. At Vencha, we’ve identified several key challenges that businesses face during this transition.

The first challenge lies in moving from bespoke to standardised solutions. Bespoke software is designed to meet the unique needs of a single client, but SaaS platforms must cater to a diverse audience. This requires re-engineering the product to include configurable features while maintaining user simplicity—a delicate balance that demands careful planning and technical expertise. Breaking the habit of creating customised software flavours for each new customer can be particularly difficult for teams used to bespoke development.

Hosting and scalability represent another critical challenge. SaaS platforms must be built on robust, scalable infrastructure capable of handling fluctuating demand. Choosing the right cloud provider—whether AWS, Google Cloud, or Azure—is crucial for ensuring reliability and performance. However, as sales increase, so do operational costs. Financial planning and resource allocation become essential to prevent scaling pains from derailing growth.

Deeply understanding customer pain points is also a fundamental aspect of successful Services as Software. Businesses must empathise with their target audience to create products that address real needs. For example at Vencha, we use "Pain Statement" visualisations to align a product’s features with customer challenges. This clarity not only informs product development but also strengthens go-to-market strategies.

Building a sales and marketing infrastructure is another significant hurdle. Unlike traditional services, SaaS requires a robust, multi-channel approach to drive adoption and retention. Digital campaigns, automated lead nurturing, and channel partnerships are all critical components of a successful SaaS sales strategy. For many businesses making the transition, this marks an entirely new way of operating.

Finally, Services as Software demands a mindset shift from Founders. The focus moves from one-off project revenues to recurring income streams, which necessitates new skills in product management, customer success, and scalability planning. Founders must embrace the realities of the SaaS business model, often requiring them to unlearn old habits and adopt a forward-thinking perspective.

The Advantages of Services as Software

Despite the challenges, the rewards of Services as Software are immense. For forward-thinking businesses, the benefits make this transformation a compelling proposition.

SaaS products are inherently scalable, enabling companies to expand their reach without significant incremental costs. A cloud-based platform can be accessed globally, breaking down geographical barriers and opening up new markets. This scalability often translates into exponential growth opportunities.

Recurring revenue is another standout advantage of Services as Software. Unlike traditional service models, which rely on project-based income, SaaS generates predictable cash flow through subscription-based pricing. This steady revenue stream enhances financial stability and increases customer lifetime value.

Automation and efficiency are also hallmarks of SaaS platforms and by leveraging AI and automation, businesses can eliminate labour-intensive tasks. For instance, within Vencha’s client base, we’ve seen companies automate the creation of RFPs—a process that was once painstakingly manual. These efficiencies not only reduce costs but also improve customer satisfaction.

The valuation of SaaS businesses tends to be significantly higher than their service-based counterparts. Investors are drawn to the scalability, recurring revenue, and growth potential that SaaS offers. For businesses looking to attract funding or plan for an eventual exit, Services as Software can be a game-changer.

Finally, SaaS products are designed for continuous improvement. Updates and enhancements can be deployed in real-time, ensuring that customers always have access to the latest features and security updates. This iterative approach fosters customer loyalty and keeps the product competitive in a fast-evolving market.

 Real-World Applications of Services as Software

Services as Software is not limited to a specific industry; its principles can be applied across various domains. In Affordable Housing, for example, a platform initially developed to streamline tenant application processes for a single Housing Association has been standardised and offered nationwide. In Oil & Gas, internal tools designed to manage vast data silos have been transformed into SaaS products, enabling other companies to leverage advanced analytics within the field of repairs and maintenance. Similarly, in Procurement, bespoke platforms built for individual clients have been reimagined as scalable solutions that optimise procurement processes across multiple layers of the business.

These examples illustrate the versatility and impact of Services as Software, demonstrating how businesses in any sector can leverage it to create value and drive growth.

Steps to Successfully SaaSify Your Business

For businesses ready to embark on the Services as Software journey, a structured approach is essential. The process begins with analysing market potential. It’s crucial to assess demand for your solution and identify target customer segments. This research lays the foundation for product development and go-to-market strategies.

Standardising and templating are the next steps. Converting bespoke processes into repeatable workflows ensures that the product can be scaled efficiently. Documentation, templates, and flexibility are key to making the platform adaptable to diverse use cases. And as discussed above, choosing the right technology stack is another critical decision. Scalable, secure cloud infrastructure is the backbone of any successful SaaS platform. Providers like AWS and Azure offer tools that simplify deployment and enable growth.

Developing a go-to-market strategy is mission critical. Digital marketing, SEO, and customer onboarding strategies must be tailored to the SaaS model to drive adoption and retention. Finally, focusing on customer success right from the get-go ensures long-term satisfaction and loyalty, creating a virtuous cycle of growth and retention.

The Future of Services as Software

As technology continues to evolve, the Services as Software trend shows no signs of slowing down. Innovations in AI and machine learning are enabling businesses to automate increasingly complex processes, making SaaS platforms more powerful and accessible. At the same time, the growing emphasis on digital transformation is driving demand for scalable software solutions across industries.

At Vencha, we’re passionate about helping businesses unlock the potential of Services as Software. Whether you’re transforming a bespoke service, standardising your professional expertise, or repurposing an internal tool, we’re here to guide you through the process. The journey may be challenging, but the rewards are worth it. Let’s build the future together.