Why do ecosystems make sense in the as-a-service industry?

Why do ecosystems make sense in the as-a-service industry?

An as-a-service ecosystem describes the seamless cooperation between transacting (e.g. sellers and distributors) and non-transacting (e.g. system integrators and consulting partners) channel partners that support the buyer's journey from its early stages until retention, and renewals.

XaaS Customer Journey Wheel

Traditionally, companies built their business models with the strategy of doing everything in-house: every business function to be supported and executed with internal efforts. And their growth and success depended on the skills and breadth of their own workforce. But over time, it became obvious that such closed-up business models don’t scale, especially in B2B as-a-service sales.

What would be the number of people working to support a scaling SaaS organization with only a direct to customer sales models?

The industry may still be figuring out the best ways to operate SaaS businesses. But with one of the core SaaS advantages being scalability in global reach with the independence of warehouses, logistic centers, etc., repeating the local company success at scale is not out of the question. What although has become exceptionally clear, is that trying to replicate a business strategy where all business is done centrally rarely succeeds once the company tries to expand geographically.

The suitability for centralized scaling is highly dependent on the product:

• If the product is a cheap and simple single-purpose tool marketed directly towards end-users with no advanced configuration needed, it is a very likely fit for centralized scaling.
• If the product has advanced features & integration requirements and is marketed towards organizations instead of users in a value-based solution sales approach, it is less likely fit for centralized scaling.
• If the product is a high-value strategic decision for customers and would be an integral part of customers' businesses and their value creation processes. It would require significant integration into the customer environment, making it a very unlikely fit for centralized scaling.

There is good logic as to why software vendors initially try to do it themselves:

• Having to share no revenue with partners;
• Avoiding the time and complexity of recruiting and educating suitable partners;
• The lack of documentation and high number of requirements for the software vendor to be engaged in customer projects;
• Fear that the partners will not do a good enough job and that customer satisfaction will decrease because of it.

That being said, it always becomes evident after a year or 2 trying, that the complexity involved in trying to build capacity globally, ends up taking more management time and having costs higher than the product itself. And the time zone differences really matter.

Trying to replicate the same organization in all locations always result in diminishing returns. Hence why XaaS companies will almost always end up having to look to either becoming part of an ecosystem, building their own or a mixed version is needed.

How are the jobs-to-be-done divided in an ecosystem?

In the traditional world, a vendor sells often through a distributor, then either resellers manage the simple transaction toward the customer or system integrators sell the product together with implementation into the customer’s environment.

In SaaS, the picture of who provides the end-user value is blurry because tasks and responsibilities are shared and don’t follow the traditional linear process flow. 

As a vendor, you may need to find different ways to operate in different locations.

The way an ecosystem is built depends on the channel partner’s need to delegate tasks. Different types of companies deliver different types of value in the ecosystem. And every partner comes with a different unique value proposition and expertise.Jobs to be done in an ecosystem

Example of ecosystems by delivery type

What at the end of the day is most important, is not how many partners you have or which partner has which responsibility. As customer satisfaction comes from the value provided, the number one priority in managing an ecosystem is making sure it operates as a single channel even though it is globally dispersed.

Existing cloud commerce platforms on the market still have the traditional linear channel in the genes which solves often only parts of the challenge and can't streamline the entire ecosystem management. At AppXite we are on a mission to optimize and change the way how entire ecosystems operate and succeed in the digital world and collaborate with other ecosystems.


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