Friday, May 8, 2015

HaaS - Housing as a Service

HousingaaS vs. SaaS

How things used to be...

A growing and growing trend in software, is Software as a Service (SaaS). While it's a little old, there's a good high level, non-techy White Paper by Grant Thornton here. Microsoft's Office 365, which is a subscription based service that runs partially in the cloud, is an example of SaaS.

In the olden days of software, if you needed a program, ie. something to track your customers and your sales people, then you would:
  1. Buy a computer or computers to run the software on, maybe servers or mainframes if this is software that an entire company uses
  2. Buy the software
  3. Install the software on the computer and configure it
  4. Maintain the computers that run the software
So now, just to get the sales tracking software that you wanted for your sales people, you have to have an IT department which maintains servers and has to have somewhere to physically put these servers. If for some reason you need to have more users accessing the software then maybe you need to go out and buy more servers.

What if you don't have anyone who knows about computers in your company? Or you don't care? All you really wanted was some sales software and now you've got a full IT department in your company. IT may not be a strong point of your company, but now your company's success may hinge on how well your IT department can deliver.

Software as a Service

The modern solution to this, is software as a service. Instead of hosting the software on your computers, the software company runs it on their computers. This is most likely done over the Internet, so continuing with our sales example, all you have to do is give your sales people computers that can get on the Internet and from there you just pay a monthly fee for each person who needs to access the application.

If you company needs to rapidly expand no problem, just call up the software company and tell them you need more accounts this month. You don't need to worry about your existing server capacity, or whether you have enough IT people to keep it all going. You also don't need to worry if you've bought 500 copies of the software for your 500 employees, and then after layoffs only need 380 copies, leaving you with 120 licenses that you paid for but aren't using. By paying for things as a subscription, rather than buying licenses outright, you can add and remove licenses as needed.

If you decide that you don't like the software and want to switch to something else, you haven't invested in it beyond a monthly fee. You haven't spent thousands buying software licensing, and aren't necessarily financially locked into one vendor.

You leave the IT heavy lifting to the software company, rather than having to do as much (or any) of it in-house. This lets you stick with what you're good at, and have the ability to rapidly expand (or contract) the amount of software you're buying.

HaaS - Housing as a Service - the 21st century name for renting

Canada, specifically Toronto and Vancouver are in the midst of a real estate boom. In Toronto, where I live, the average home cost is now $601,500, with many first-time buyers unable to get into the market without help from their parents. Anecdotally, I've heard radio ads for house flipping seminars, and all the young people (23 year olds) at work are dying to enter the real estate market. Two 23 year old guys at work, who aren't romantically involved, are looking at buying a house together to make it more affordable. Another young guy at work, says "why would I need a tax free savings account? I want to buy a house". Interest in real estate is very high versus other types of investment. The conventional wisdom seems to be: "renting is throwing your money away".

This is the first post, in a series on HaaS. For some of the same reasons that it makes sense to buy Software as a Service, shouldn't it make sense to buy HaaS?
  1. What are the maintenance costs associated with owning a home? Are these high for you to keep your one home, but low for someone who would have economies of scale by maintaining many properties/dwellings?
  2. Is maintaining a house something that's very far outside of your core competencies? Like our example of a sales organization now having to add IT just to get sales software to run, is keeping your home together something you're really not good at, so it costs you more and you wind up doing a poor job?
  3. Does owning prevent you from scaling up, or scaling down your housing needs as required?
  4. Does owning prevent you from changing housing when you want to? Due to bad neighbours, job change, traffic changes, etc.
What about some of the risks and issues with HaaS?
  1. Your housing is now 100% provided by an outside service, what if they don't respond to maintenance issues? What other risks are there?
  2. What happens if your landlord goes bankrupt?
  3. Is there an inability to customize as much as if you owned the place? How important is this?


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