At a Glance – Product as a Service (PaaS)

An increasingly popular business model

Product as a Service (PaaS) is a pragmatic and increasingly popular business model which provides the computing platform for cloud applications. The services developed within this model differ from the conventional process of simply selling a product. Instead, PaaS transforms the product into one that can be reused, repaired, recycled and redistributed. The user pays as and when they access the service, as opposed to paying a single lump sum for a single usage. PaaS indicates a business trend that favours practicality over conspicuous consumption. As well as making companies more efficient, this is contributing to overall sustainability. It also demonstrates the shift towards a circular economy.

Examples of PaaS include pay as you go, renting and leasing. Carpooling, for instance, is a service enabled by a product. Instead of buying a car, customers can get the best of both worlds by accessing transport on demand, but without the financial burdens of tax and maintenance. Computing services are an example of pay as you go PaaS, as businesses pay for IT support according to their needs at the time.

There are a number of obvious advantages to pursuing a PaaS business model. In terms of CRM, it encourages more cohesive exchanges between client and company. As usage occurs over a period of time, businesses can gather more complex data about their customers. These insights can, in theory, enhance the relationship. With PaaS, provision also matches demand. This means reduced consumption of materials, energy and cost, resulting in less waste. However, PaaS can be difficult to scale up. As PaaS is a cloud based solution, clients and companies should take extreme care with sensitive data. Despite these setbacks, it’s clear that Product as a Service is an attractive strategy that will flourish in the changing business economy.