In the beginning, there was Software-as-a-Service (SaaS). Then came Platform-as-a-Service, Infrastructure-as-a-Service, and Banking-as-a-Service. Soon the alphabet soup overflowed: Data-as-a-Service, Security-as-a-Service, Disaster-Recovery-as-a-Service, even Transport-as-a-Service.
By now, the ‘as-a-service’ suffix has been slapped onto everything from databases to desktop computers, creating what industry types call XaaS—’Everything as a Service’ or, more brazenly, ‘Anything as a Service’.
The global SaaS market, worth 267 billion US dollars in 2024, is projected to balloon to 1.1 trillion US dollars by 2032. Banking-as-a-Service, meanwhile, is expected to quintuple from 12.2 billion US dollars in 2023 to 60 billion US dollars by 2033. Even more esoteric offerings such as Data-as-a-Service are booming, with projections of 76.8 billion US dollars by 2030.
For all its ubiquity, however, the ‘as-a-service’ revolution raises an obvious question: is there anything that cannot, or should not, be servitised?
The answer, according to today’s entrepreneurs, appears to be a resounding no.
From timesharing to toasters
The roots of ‘as-a-service’ thinking stretch back to the 1960s, when computer timesharing systems allowed multiple users to access expensive mainframes remotely. But it was the rise of cloud computing and ubiquitous internet connectivity that transformed this niche concept into a dominant business model. Software-as-a-Service led the charge, liberating office workers from the tyranny of CD-ROM installations and offering subscription access to everything from word processors to customer-relationship management systems.
What followed was a deluge of servitisation. Platform-as-a-Service emerged to spare developers the headache of managing servers. Infrastructure-as-a-Service virtualised entire data centres. Banking-as-a-Service allowed fintech start-ups to offer payment processing and loans without the inconvenience of obtaining banking licences. Data-as-a-Service promised to democratise information, letting businesses subscribe to everything from weather patterns to consumer sentiment rather than collecting it themselves.
The logic is simple. Why own when you can rent? Why invest capital upfront when you can spread costs over time? The ‘as-a-service’ model promises scalability, flexibility, and freedom from maintenance headaches. For cash-strapped start-ups, it offers access to enterprise-grade capabilities without enterprise-scale budgets. For established firms, it provides a route to steady, recurring revenue streams.
The servitisation of everything
Emboldened by these successes, entrepreneurs have begun servitising with evangelical fervour. Rolls-Royce now rents jet engines by the flying hour, taking responsibility for maintenance and repairs. John Deere offers farming equipment on subscription, monitoring tractors remotely and providing agronomic advice.
Even fitness trackers have been servitised: companies like WHOOP give away devices for free, charging instead for access to analytics platforms that promise to optimise sleep and exercise.
The Covid-19 pandemic accelerated these trends. As businesses scrambled to support remote workers, demand surged for cloud-based services of every stripe. Desktop-as-a-Service allowed employees to access their work computers from kitchen tables. Security-as-a-Service protected them from the cyber-criminals who prospered during lockdowns. Communications-as-a-Service kept far-flung teams connected.
But the real growth lies in vertical applications—services tailored for specific industries. Healthcare-as-a-Service platforms manage patient records and appointments. Education-as-a-Service delivers online learning.
Stretching the service model
The more that the ‘as-a-service’ model has conquered the business world, however, the more the concept has begun to stretch beyond recognition.
Transport-as-a-Service sounds impressive until we realise it is simply a rebrand of taxis and ride-sharing. Experience-as-a-Service promises to revolutionise customer interactions but often amounts to little more than consulting dressed up in digital clothes.
The proliferation of acronyms betrays a certain desperation. Business Process-as-a-Service (BPaaS), Function-as-a-Service (FaaS), Container-as-a-Service (CaaS)—each promises to be the next big thing, yet many solve problems that barely existed before they were invented.
When even ransomware can be offered ‘as-a-service’ (a genuine, if unsavoury, example), one begins to suspect that the suffix has lost all meaning.
The limits of servitisation are becoming apparent. Not everything benefits from being bundled into a subscription. Some products work better as one-off purchases. Others require such deep integration with existing systems that the theoretical benefits of ‘as-a-service’ delivery evaporate in practice. And customers, having been burned by subscription fatigue and vendor lock-in, are growing more discriminating about which services justify ongoing payments.
The subscription ceiling
The greatest constraint on the ‘as-a-service’ economy may be consumers themselves. The average enterprise now uses more than 100 SaaS applications, up from just a handful a decade ago. Managing this sprawl has become a full-time job for chief information officers, who must track licenses, manage integrations, and prevent data silos from forming between competing platforms.
Subscription fatigue is also setting in. Just as consumers have grown weary of juggling memberships to Netflix, Spotify, Amazon Prime, and a dozen other services, businesses are questioning whether they really need separate subscriptions for project management, customer support, marketing automation, and expense reporting. The result is a push towards platform consolidation, with super-apps promising to bundle multiple services under a single subscription.
Meanwhile, regulatory scrutiny is intensifying. Banking-as-a-Service has attracted particular attention from financial regulators, who worry about consumer protection when traditional banks partner with fintech upstarts.
Data-as-a-Service faces questions about privacy and data sovereignty. Even seemingly benign offerings like SaaS are subject to increasing compliance requirements.
What’s next for XaaS?
Despite these challenges, the ‘as-a-service’ economy shows no signs of slowing. Artificial intelligence is creating new opportunities for servitisation, with AI-as-a-Service platforms offering everything from machine learning models to automated customer service. The Internet of Things promises to connect everyday objects to service networks, enabling predictive maintenance and usage-based billing for everything from cars to coffee machines.
The most interesting developments may come from unexpected quarters. Could Healthcare-as-a-Service evolve beyond telemedicine to include AI-powered diagnosis and treatment? Might Education-as-a-Service replace universities with personalised, competency-based learning platforms? The boundaries between products and services continue to blur as digital technologies make remote monitoring and updating commonplace.
The question is not whether more industries will embrace ‘as-a-service’ models—they will. Rather, it is whether the current exuberance represents a sustainable transformation of commerce or a speculative bubble inflated by cheap capital and pandemic-driven digitalisation.
History suggests that revolutionary business models often overshoot before finding their natural limits.
The everything economy
Perhaps the real innovation of the ‘as-a-service’ economy is not technological but psychological. It has convinced businesses and consumers alike that ownership is passé, that access matters more than possession. This represents a fundamental shift from the industrial economy, where value came from manufacturing things, to a post-industrial economy where value comes from providing ongoing relationships.
But this transformation carries risks. As more economic activity shifts to subscription models, consumers and businesses become increasingly dependent on service providers. Platform lock-in replaces product ownership. Monthly fees accumulate into substantial long-term costs. And when services fail—as they inevitably do—users have little recourse beyond switching providers and hoping for better luck next time.
The ‘as-a-service’ economy has undoubtedly created value, enabling innovation and reducing barriers to entry across countless industries. Its greatest achievement however may be semantic: transforming rental agreements into revolutionary business models, and subscription fees into cutting-edge technology. In a world where everything is ‘as-a-service’, perhaps the real service being sold is the illusion of progress itself.
As the XaaS market barrels towards 2.4 trillion US dollars by 2029, we can’t help but wonder what the ‘as-a-service’ entrepreneurs will tackle next.
Air-as-a-Service? Gravity-as-a-Service? At this rate, even existence itself may soon be available on a subscription basis—monthly payments required, terms and conditions apply.
Photo: Dreamstime.
