On the impact of SaaS apps, part 2

As I was thinking about the example from last week’s post, I wanted to clarify something.

The impact of SaaS apps, broadly, is the ease of outsourcing parts of your company’s value chain. What used to require custom software development or a complex outsourcing process with long-term contracts now only requires an online signup and monthly billing.

This is great for many businesses.

One clarification, though. Certain parts of your value chain will be your company’s competitive advantage – the thing that you do better than your competitors, the thing that makes customers choose you. This piece can’t be replaced by a SaaS app – if it is, it’s not unique to you.

When we consider last week’s example – the tutoring business of the former student, she could outsource all of those technical pieces to SaaS apps, as her competitive advantage was herself, and her ability to tutor. Outsourcing the technology doesn’t remove her competitive advantage. If she were to hire a SaaS company to do the tutoring on her behalf, she would lose her competitive advantage.

So, SaaS apps are great, and should be widely used, especially when starting a business. However, they can’t replace your competitive advantage – only the other pieces of the value chain. If there’s a risk of that, your competitive advantage might not be as much of an advantage as you think it is.