Next year, Salesforce will celebrate a quarter century since the launch of its Customer Relationship Management (CRM) Platform. It was the first software application to be sold under a Software-as-a-Service (SaaS) model from its inception; Salesforce was the first to be “born in the cloud.” Today, SaaS models are the standard way of acquiring software across the business world.
Under a SaaS model, the provider operates, manages, and maintains the software and the infrastructure on which it runs. Users subscribe to an application rather than purchasing it once and installing it. They can log into and use SaaS applications from any compatible device over the Internet. Cloud service providers support all aspects of the application, with the notable exception of user data.
Enter Robotics-as-a-Service (RaaS), leaning on many of the same principles that SaaS does.
RaaS allows companies to rent or lease robots on a subscription or pay-per-use basis, rather than purchasing them outright. ABI Research predicts there will be 1.3 million installations of RaaS by 2026, generating $34 billion in revenue.
RaaS isn’t for every company. A large business with significant warehouse volume likely has the scale and engineering expertise to purchase, install, and upgrade its own robotics fleet as business needs and tech capabilities change.
Yet what may be an unnecessary service for a large business can be an enabler for small and medium-sized firms. Lacking scale, funds for capital investment, and in-house expertise, they can avoid the upfront costs of purchasing expensive robots by opting for a subscription model. Effectively, the barriers to entry are lower with RaaS than with conventional equipment purchases.
As the chief procurement officer or CIO, should you be bringing RaaS into your firm? Here are some scenarios in which it’s a good idea:
- Where investment funds are tight. RaaS enables businesses to access the latest and most advanced robotic technologies without the need for continuous investments in new hardware.
- Where there is insufficient internal expertise. Maintenance and updates are typically handled by the service provider, reducing the need for a company to manage the technical aspects of robotics.
- Where demand is seasonal or uncertain. RaaS allows businesses to scale their robotic workforce up or down based on their needs. This flexibility is beneficial in industries with fluctuating demand or in businesses that are on a strong upward trajectory but don’t have a good handle on future needs.
- The business is looking to lower costs. Implementing RaaS in high cost or “bottleneck” parts of the business is a new way of achieving labor savings or productivity gains instead of relying on supplier cost reductions again and again.
As with any technology, there are downsides as well. Here are a few to look out for:
- Long-term costs: While RaaS can be cost-effective in the short term, the cumulative costs over an extended period will likely exceed the upfront cost of purchasing robots.
- Dependency on service providers: Companies relying on RaaS are dependent on the service providers for ongoing support, maintenance, and updates. If the service provider faces issues or goes out of business, it could disrupt operations.
- Limited customization opportunities: RaaS offerings may have limitations in terms of customization to specific business needs.
The limited customization point warrants further discussion. To date, RaaS has been most frequently used for standalone robots assisting with functions like security, delivery, warehousing, and cleaning. Purchasing robots outright allows for greater customization. If you are looking for a robot to be integrated into a production line or perform a highly customized function, RaaS may not be the smart way to go.
RaaS provides a flexible and cost-efficient approach to incorporating robotics into business operations for companies that might not otherwise be able to do so. The “as a service” model has worked for software for 25 years, and the indications are that it’s a winner with robotics as well.
