Material Handling Ops Increasingly Optimize by Using Virtually Anything as a Service (XaaS)
From EaaS to PaaS and SaaS to XaaS and beyond, an alphabet soup representing an array of “as a service” providers have rapidly entered the supply chain vernacular at a speed so fast that even the most knowledgeable of industry insiders have, at times, been befuddled with the smattering of consonants and vowels preceding “aaS.”
“These acronyms have all crept up, even in the last year or two, so I think we are all in the dark on some of these,” said Gabe Grifoni, CEO and co-founder of MHI member Rufus Labs, one of the MHI 2022 Innovation Award finalists in the Best Innovation of an Existing Product category. Rufus provides PaaS—otherwise known as a platform as a service—through the use of its WorkHero wearable technology platform.
“These terms have been invented by whoever is selling the service for the most part,” Grifoni said, and tongue-incheek quips, “If I could buy a subscription to get fruit monthly, I would have an ‘FaaS,’ right? I would have ‘fruit as a service.’
All joking aside, multiple brands of “aaS” have evolved with much success in recent years. Statista, a provider of market and consumer data, reports that 74% of respondents from a global survey indicated that a primary reason for pursuing “aaS” offerings is that the business requires more flexibility while still maintaining optimal IT operations. Other reasons include the shift from CapEx to OpEx or a lack of expertise to manage themselves.
“It is a little out of control, but the main part of ‘as a Service’ is that you no longer really have to own certain things,” Grifoni explained of the dominantly cloud-based ‘aaS’ offerings. “You have everything lumped into one, and that hopefully gives you whatever that ‘as a Service’ is so you don’t have to think about what other tools are needed to make an offering complete. If it is ‘as a Service,’ it is always going to keep you up to date.”
While the popularity of all “aaS” has undoubtedly skyrocketed of late, it wasn’t always so readily embraced. When Rufus WorkHero debuted as an all-in-one monthly subscription and service platform in 2019, Grifoni recalled pushback from an industry set in its ways. By and large, companies were then accustomed to the traditional business model of buying a $4,000 piece of equipment for every worker—that would inevitably need to be replaced.
Grifoni explained that customers that were accustomed to a routine of cyclically financing such capital expenditures and then depreciating the assets every five to seven years. “It was really hard to get people to buy into a platform until the world changed in 2020 with COVID. Logistics got even busier over the last few years and it has been a very quick acceleration to customer adoption.”
Today, Grifoni mentioned customers ranging from J. Jill women’s apparel to Jay Group’s third-party logistics provider have successfully shifted from traditional CapEx hardware to PaaS. Bio-med manufacturer Thermo Fisher Scientific posting 99% employee satisfaction ratings from workers, as well as an estimated savings of $2,000 per year per worker from the elimination of low-level and non-value-add work alongside increased pick performance.
Software as a service is also trending as evidenced by Blue Yonder’s year-over-year SaaS-specific revenue growth of 44% in 2021. In total, the company topped $1.1 billion in annual revenue as ongoing supply chain challenges have driven significant demand for smart supply chain solutions.
Blue Yonder’s corporate vice president of industry strategy, Chirag Modi, explained the seamless role SaaS offers the marketplace.
“In 1997, imagine having Microsoft Office version 1997 installed on your computer, and then in 2001-2002, you’re still using 1997 version because your company may not have upgraded you to 2001 version,” Modi said. “What this SaaS model does is make it version-less. Every single month, new updates are coming up—these updates could be the patch fixes, feature functions, or a new graphic user interface. It could be anything and everything above. It just makes the process of upgrade, if you will, seamless, because there really is no upgrade because upgrades are happening on a continuous basis.”