Diligence-as-a-Service

One of the most intriguing business trends to watch 2015 is the evolution of service delivery, and in particular, the way that discussion of ‘cloud’ has morphed into more general excitement about ‘XaaS’.

Within IT circles, this change may not be especially meaningful. Technologists have been talking about various ‘aaS’ delivery frameworks – SaaS, PaaS, IaaS – for the better part of a decade. A quick web search shows that IT experts consider XaaS to be more of the same: one defines XaaS as “cloud services…that make use of IaaS, PaaS, and SaaS all neatly delivered in one package…[like] desktop as a service;” another, as “the delivery of IT as a Service through hybrid Cloud computing.” Wikipedia defines XaaS as “a concept of being able to call up re-usable, fine-grained software components across a network…a subset of cloud computing.”

Matthew Eyman, founder and president, 3Quotes

 

In 2015, we will see that this is a needlessly narrow – and fundamentally mistaken – view of XaaS. XaaS has its roots in technology, but over the past several months it has become clear that, as important as XaaS is within technology, it has vastly more potential in the business world at large. Without much effort, we can find examples of ‘automobile rides-as-a-service’ (Uber), ‘places to stay-as-a-service’ (Airbnb), and even ‘money-as-a-service’ (Lending Club).

It can be difficult to compare these various flavours of XaaS to IT-centric versions. An InsightaaS forecast shows that in the Canadian IT industry, XaaS spending will go from $.04 per $1.00 allocated to on-premise hardware and software in 2012 to near parity by 2020, but it is more difficult to quantify the impact Airbnb has had on the hotel industry. It is possible to use company valuations as a proxy, and this provides interesting insight into how fast XaaS is growing inside and outside IT: Salesforce.com was launched in 1999, and Uber won’t celebrate its sixth anniversary until next month, but both companies are valued at just over $40 billion. Salesforce is unquestionably a tremendous success story within IT, but it would be easy to argue that there are fewer Salesforce-sized niches within IT than there are opportunities for services like Uber in the economy at large. As XaaS progresses, we will find (as “The Death of Core Competency” argues) that most of the economic potential for cloud lies in its ability to enable frictionless delivery of specialized services to buyers of all types, and not in its ability to provide superior IT infrastructure and software delivery options.

Although Uber, Airbnb and Lending Club all appeal primarily to consumers, there is pent-up demand for many different kinds of services in the business community as well. The success of Canadian startup 3Quotes.com illustrates how XaaS delivery of an in-demand business service can expand XaaS use into the B2B market.

3Quotes, which launched in 2009 but first appeared in its current incarnation in September of 2014, provides a form of “diligence as a service.” The company ensures that clients purchasing hardware, software, and/or IT services (including cloud) receive valid, competitive quotes from credible, qualified suppliers. The brainchild of Matt Eyman, who developed the concept during the course of a decade spent working in the Canadian IT channel, 3Quotes operates on a risk-free, shared-reward model. Customers bring their current requirements and the associated price to 3Quotes, and Eyman’s team uses its “CaaS” (certified alignment and savings) methodology to align the requirements with market-relevant configurations, dispatches these standardized RFPs to obtain multiple bids, and then analyzes responses to deliver the three best quotes to the customer. 3Quotes is paid a proportion of the savings that result from the CaaS approach. In 90% of cases, customers are able to reduce expenses by an average of 20%. In the remaining 10% of cases, Eyman says, the customer is not billed by 3Quotes, but gets “the validation they need that they indeed have the best price in the market. Sometimes it’s the information that we provide that is our value.”

The process itself – as is the case with Uber and other XaaS offerings – combines traditional hard work with the reach and immediacy of the cloud. Eyman’s 3Quotes advisors use a proprietary system to analyze, parse and standardized descriptions of the needed products and services, adding expertise with respect to configurations, support agreements and other related issues – drawn from both the advisors’ experience and 3Quotes data from similar transactions. Once the requirements description can be fairly evaluated on an ‘apples-to-apples’ basis by multiple firms, 3Quotes puts the RFP out to its network of qualified suppliers and solicits bids; the bids are then analyzed and scrubbed, and the best three are presented to the client. This process provides an excellent illustration of how cloud and “old fashioned work” connect: the cloud allows for the rapid dissemination of requests and collection and analysis of responses, but vetting suppliers for product competency and geographic coverage is a painstaking task that 3Quotes needed to undertake before it was able to assure clients that all of the prospective suppliers it approaches to address a particular need are able to meet/exceed the requirements detailed in the firm’s RFPs, and distilling as many as 150 responses down to the three ‘best fit’ quotes requires the intervention of advisors experienced in IT transactions.

Although 3Quotes provides other specialized consulting services to large customers, the risk-free, shared-reward CaaS service is its most prominent offering. 3Quotes president Eyman attributes his company’s success to serving a need that exists in virtually every business, but which is difficult to address. “The companies we work with know that they should apply proper diligence to IT acquisitions,” he said, “but most IT managers don’t have the time to check supplier references and get competitive quotes for each acquisition they do – they tend to work with a single supplier. And most finance people want to make sure that the process works correctly, but they don’t have enough expertise in IT to ask the right questions and understand how they can structure their requirements to get the technology they need at the best price.” 3Quotes succeeds, Eyman believes, because it understands how to best frame deals to meet IT requirements, while also understanding how to structure the acquisition process to meet the expectations of CFOs and executive management.

Though it has been operating for less than a year, 3Quotes has delivered very impressive results. The company has built a network of 20 sales agents across Canada, and claims to have worked on more than 800 transactions for 105 customers; through the course of these engagements, 3Quotes has analyzed $100 million in IT assets, and identified nearly $5 million in savings for its clients.

3Quotes’ growth and increasing demand is spurring Eyman to expand: the company is planning to enter the US market before summertime. Further expansion seems likely. After all, it took Uber more than a year to expand beyond its home market, and five years later, it was operating in 53 countries.  3Quotes may not be Uber today – but for its midmarket clients, diligence-as-a-service sure beats being taken for a ride!

Disclosure: In 2014, InsightaaS provided consulting services to 3Quotes in support of its launch. You can see a YouTube video describing the CaaS process by clicking here

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