Mark Johnson

    The problem with software as a service

    Sunday 29th November, 2020 - 7 min read

    The shift from products to services

    Back in the day, products would function for many years before breaking. Consumers and producers were both getting a fair deal.

    But producers realised they could increase their profits by reducing product lifecycles, forcing consumers to purchase products more frequently. This increased producers profits, but it gave consumers the opportunity to swap to a competitor’s product at each purchase decision.

    So producers transitioned from selling products to selling services. Producers could receive recurring payments for providing the product on a continual basis, generating stable revenue streams by locking consumers into their product under the guise of convenience.

    You’ll have seen this change in your own life; where you used to buy music, films, and software, you now subscribe. You might have gone further, from fitness trackers to meal delivery kits, and you’ll see more products coming available as service offerings every year.

    From assets to liabilities

    Subscriptions aren’t inherently bad, I like having access to all the music I want to stream without having to buy individual tracks. What I don’t like is when the product I’ve purchased changes underneath me.

    Product used to be assets, you bought a washing machine and it did the job you needed until it broke, then you bought a new one. A fixed payment for a fixed good, known at the time of purchase.

    But today, products are liabilities. You purchased your iPhone based on the current product truth, but then it started auto-playing your texts, showing ugly on screen pop-ups, and completely breaking setting times for calendar events. The product you own is no longer the product you bought. And worst of all, you had no control over how it changed.

    As software continues to eat the world, arbitrary software changes will continue to enforce their will on you, leaving you as a helpless participant. Picture unboxing your artificial Christmas tree after a year in storage, and as you turn it on, it’s LED lights shine the colours of the rainbow, replacing the white colour you’d purchased last year. You stand there, helpless to the new colour scheme the companies service has decided to serve to you. You exhale in frustration, before promptly leaving to the shops to buy new decorations to match.

    Delayed user feedback

    In addition to making users feel ‘used’ers, as companies continue to modify their products to meet business objectives, the subscription business model also delays the feedback loop between consumers and producers.

    If Blockbuster had swapped their catalog to in-house movies, people would stop making rental purchases that Friday night. But if Netflix do the same, you’ll stop watching but you’re unlikely to cancel your subscription immediately. This means the most important signal for business health is a lack of engagement, not a lack of purchase; while Blockbuster could identify the issue and fix it immediately, if the equivalent SaaS isn’t looking at the metrics and identifying this user sentiment early, they might not fix the problem before it’s too late.

    As the products we own are no longer the products we bought, I’m finding my purchase behavior changing. Take Apple’s new laptops - while the M1 chip makes it the quickest laptop today, I see the precedence macOS is setting with a closed desktop ecosystem, so I won’t be buying a new laptop for fear of what I’ll be locked into in years to come.

    The future of SaaS

    I wonder how this will evolve as more user’s feel trapped by their subscriptions in future. SaaS products are already sticky due to the automated payments, and their only becoming more sticky with user-powered experiences; think of the time you’ve spent building Spotify playlists which you can’t easily port to Apple Music, or the history of how many miles you’ve run this year on Strava which will be lost towards your yearly total if you switch to another offering.

    I wonder if legislators will introduce requirements for transfer services to allow users to seamlessly switch between SaaS providers in the same way UK banks must facilitate switching bank accounts today. If user’s feel helpless with changes imposed in SaaS, at least the switching costs could be reduced.

    A note: I’m not against SaaS, the ability to iterate and continually ship value can be extremely positive, see Tesla’s OTA updates. But products should serve it’s user’s first, and business needs second, and the subscription business model can cause user’s voices to be ignored. This post was inspired by No config for old men.

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