Software as a Service (SaaS) versus Service as Software (SaS)

Software as a Service (SaaS) has been around for awhile, made popular by the likes of Salesforce. This article, 111 Unmissable SaaS Statistics for 2025, has a bunch of information related to SaaS.

But there is a new acronym in town, Service as Software (SaS).  Both SaaS and SaS might represent a fundamental shift in how businesses work.

The article, AI leads a service as software paradigm shift, helps to under this new emerging paradigm. The article calls this a $4.6 trillion opportunity.

A quick analogy helps you understand the difference between Software as a Service (SaaS) and Service as Software (SaS).  Think of TurboTax. TurboTax is a product of Intuit which someone can use to create a tax return; Intuit provides TurboTax, software, that you can use to create your tax return.  You use the software to perform work. That is SaaS.  With Service as Software, SaS, the product is a completed tax return (the result or outcome), the service, which is created by an artificial intelligence agent accountant that creates the tax return for you.  This is as contrast to taking your tax return to a CPA who uses some sort of software product to create the tax return for you.

So, to explain this in a little more detail:

Software as a Service (SaaS)

In the traditional Software as a Service model, the software vendor provides you with a software tool and you use that software tool to perform some task you need to perform; this is a software product delivered over the internet as contrast to software which runs locally on your computer desktop.

  • You still do the work
  • The value is from the efficiency derived by a human working being able to work better, faster, and/or cheaper
  • The business model is that you "pay per seat" for a software license; the more seats you use, the more you pay
  • Example: Intuit's TurboTax software application used to create your tax return by you entering the information into the software application

Service as Software (SaS)

Service as Software is an emerging model typically powered by artificial intelligence. Another name for this is computational professional services.  With this model you get more than just software; the software performs the task or process for you. Service as software turns a labor-intensive service task into an automated software process. Software does the work assisted by an AI agent or agents and machine interpretable metadata.

  • You provide information but are much less involved in performing the work
  • The value is the result, the outcome; you aren't buying a "tool" to do work; you are buying the end "result"
  • The business model is that you "pay-per-result" (e.g., per tax return prepared, per financial statement created, or per investment idea generated)
  • Example: You take your the information needed to complete your tax return to a CPA and the CPA uses TurboTax to complete your tax return; or, you tell your CPA they have authorization to complete and file your tax return and the CPA uses software agents to access your bank account information, your investment account information, mortgage information from your mortgage company, property tax information from county government, and so forth.
One important legal change which enables certain types of Service as Software is the open banking regulations. In financial services, open banking allows for financial data to be shared between banks and third-party service providers through the use of secure and encrypted application programming interfaces (APIs).

Artificial intelligence is one big enabler of Service as Software. Another enabler is structured information that is reliably interpretable by machine based processes. And obviously our ability to be all cheaply connected via the internet is a significant enabler. In the past, software was "dumb" and it took a human to tell software exactly what to do.  In the future, software will be "smart" or knowledge based software.  That smart software will be able to reason, make certain decisions, and  complete workflows.

It is incredibly unlikely that many types of Service as Software products could be created at scale without some sort of global open industry standard or standards.  Standards make markets. In order to scale Service as Software; you need agreed upon standards similar to inter-model shipping containers and universal product codes. Without those global open industry standards, what can be achieved will be very limited.

Being overly optimistic and believing that now everything can be automated is foolish. However, it is also foolish to believe completely pessimistic and think nothing else can be automated.  The real answer is somewhere between the two extremes; certain additional automation can be effectively realized.  It is likewise foolish to think that a tax return would be filed with the government without a human having a quick look at that tax return to make sure something did not go terribly wrong with the automated process. Humans will very likely be in the loop somewhere keeping an eye on things.


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