Where is the difference between Business Process as a Service (BPaaS) and Outcomes as a Service(OaaS)? — BPaaS vs OaaS
I’d like to clarify this question as it confused me a lot in the past. Is Outcome as a Service the same as Business Process as a Service? Is it different? Is it a subset? To prevent further confusion and discussion here my framework. Please feel free to comment, improve, or extend it.
What is Outcome as a Service (OaaS) also known as Outcome-based Service Delivery Models?
Historically service providers have been charging by input factors like effort measured in hours, person-days, or material. Sometimes this get’s measured on agreed quality criteria for the wished output which can end in some kind of negotiations. The example in IT is the Service-Level-Agreements for response rate on customer support tickets or uptime of cloud services.
Outcome-based Service Delivery Models flips this concept upside down. Instead of selling a service and negotiate the “cost per hour”, it’s possible to sell the outcome. A very simple example. Simon’s Lawn Mowing Company charges usually per hour until the job is done. Now with the outcome-based service delivery model, Simon’s Lawn Mowing Company charges only by finished mowed lawn.
Characteristics of outcome-based service delivery models are:
- Business Outcomes aligned with customer needs (Job-to-be-done) rather than the activity and input.
- Constant innovation to achieve a better and more efficient outcome.
- Quantifiable standards which are part of the agreed outcome.
- Rewards, penalties, and risks are included in the pricing and procurement model.
How do BPaaS and OaaS come together?
Business Process as a Service and Outcome-based service models are different sides of the same coin. Business Processes always strive to create a well-defined outcome. Outcome as a service is charging per outcome. Therefore is the outcome as a service the natural pricing model for business process as a service. Put simply in a formula:
Software as a Service + Outcome as a service = Software and Outcomes as a Service = Business Process as a Service
Where are the advantages and disadvantages to price software outcome-based?
The advantages are simple if we take a look at our familiar stack picture below. Here an example in the Lead-to-cash process. While to enable a Lead-to-Cash process with SaaS it commonly charged on user per month/ year bases. So basically just an input factor. If we think of BPaaS it’s getting interesting. Basically you could charge at every process step for the outcome. For leads generated you could charge a certain amount, for opportunities scored a certain amount, and so on and so on. Why would somebody actually want to pay for the outcome? Covid-19 is a perfect example. If you can’t create quotes because you don’t have any opportunity you can sell to you wouldn't pay a single dollar. On the SaaS layer even if you wouldn’t use the process at all you would still need to pay the monthly fee.
What are some disadvantages for the operator of the software? All the risks to create the outcome with input and effort now lays with the operator. Also for the customer, it might get annoying to pay at every process step again. Just a thought, maybe it can be bundled in a clever way.
Have a look at already published articles:
- Business Process as a Service (BPaaS) vs Software as a Service (SaaS)
- Business Process as a Service (BPaaS) vs Business Process Outsourcing (BPO)
- Who is offering BPaaS and how does the market look like?
- Why can BPaaS profit so much from Business Process Reengineering?
- Why will process mining change the game for BPaaS?
- BPaaS loves RPA. A power couple!
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