More than software, as a service

I have always disliked the term 'software-as-a-service' because to my mind it misses the point. No one (except for a few code-crazed developers) actually wants software, either as a product or as a service. It's a means to an end. What people actually want are answers, results and outcomes. Therefore, what they want delivered from the cloud is rarely software on its own, but software in combination with other non-software components that add up to a useful outcome.

A case in point comes in Concur's announcement today of an add-on to its travel and expense management SaaS offering that guarantees compliance with UK tax rules on value-added tax (VAT). If you don't do bookkeeping for a UK or European business, you will have no inkling of the wilful complexity of VAT rules, so you'll just have to take my word for the daily tear-your-hair-out impenetrability of the regulations inflicted on us by the tax authorities here.

The new Concur service removes that entire burden, automatically ensuring compliance as well as making sure the business reclaims all the tax it's entitled to. But what caught my eye in Concur's press statement was the description of what lies behind the automation: "...a dedicated team of compliance experts focused on ensuring VAT rates and rules are constantly monitored and updated. This combination of best-in class technology coupled with deep tax and compliance expertise is unique in the marketplace and provides SMBs with a distinct advantage over traditional technology solutions."

This is using the cloud to do what it's best at — providing access to a pooled, specialist resource that would be hugely more costly to implement separately for each individual business. It wouldn't be possible to do this without the software (nor the cloud), but it's the addition of live expertise that completes the service. Too often, SaaS providers make the mistake of stopping short of going that extra distance. They provide the software and leave it to their customers to add the final touches that deliver a business outcome. But that's an old, traditional-technology approach that fails to exploit the real competitive advantage of the cloud.

Instead of thinking about software when designing a service, cloud providers would do better to think first about the business outcomes they aim to deliver. The cloud allows you to rethink entire business processes rather than simply replicating traditional technologies as SaaS. True innovators see software as just one part of the means to the end. When payroll provider ADP's founder Henry Taub first started processing payrolls as a service, the company didn't even use computers, as Tom Foydel wrote last year: "They were actually doing payrolls on adding machines and delivering them by bus in the earliest days."

There's something else worth highlighting in Concur's new tax compliance service: it's guaranteed. Back in the days of conventional on-premise software, the only warranty you got was for the disks it came on. Getting it working was at the customer's own risk, let alone achieving a productive result. The move from software products to cloud services introduces an entirely new relationship with customers in which providers not only deliver outcomes but are even prepared to guarantee them.