Everything-as-a-service (XaaS) business model: Unlocking business growth for new-age enterprises

Due to radically transforming business anticipations and prerequisites of the contemporary clients, enterprises are in awe of adapting to the most prevailing business models such as Everything-as-a-Service (XaaS). For a present-day product manufacturer or a service provider, XaaS has to be the Business Model! They must contemplate and conceive out-of-the-box business solutions and oppugn the existing delivery models to concoct a new market trend or disrupt the current market direction. 

XaaS, also referred to as Anything-as-a-Service, is essentially a consumption-based model and a utility-based offering. The letter "X" in XaaS relates to the prospects of involving business solutions across industries and business functions. 

Modern enterprises ought to focus on their core business, invariably innovate, stay ahead of the competition and scale rapidly. This, coupled with the necessity to optimize costs, has been the primary factor driving the worldwide XaaS market. In addition, organizations worldwide are experiencing digitalization and altering how enterprises function, resulting in the accelerated advancement of these solutions. 

Digital technologies like cloud, IoT, Analytics & 5G have powered the growth of XaaS solutions across different industries. Furthermore, the falling cost of purchasing subscribed services with enhanced bandwidth and connectivity will likely boost the blossoming market. In addition, the expanding virtualization of IT systems such as data center and network functionalities along with load balancers, intrusion detection, and firewalls is fueling the market expansion. 

Contemporary XaaS Market Overview

According to research by Fortune Business Insights, particularly after the Coronavirus (COVID-19), markets have spurred XaaS adoption in various industries such as E-Commerce, Healthcare, BFSI, Retail, Manufacturing & Life Sciences. Some fundamental discernments of these studies demonstrate:

• In 2020, the global Everything-as-a-Service (XaaS) market was worth USD 349.71 Billion
• The market is anticipated to advance at a CAGR of 28.2%
• The market is envisioned to grow from USD 419.02 Billion in 2021 to USD 2,384.12 Billion in 2028
• 55% of IT professionals expressed they are inclined to invest more in the "as a service" model
• 81% of technological specialists exhibited an inquisitiveness in employing new technological models

XaaS Business Model Explained

XaaS is a business strategy in which businesses can create smart, intelligent platforms, packages, and entitlements. These XaaS business models are deployable for different products, services, and technologies. XaaS facilitates enterprises to adopt a service-oriented business model, which boosts a company's value by diminishing asset ownership expenditures, allowing management to focus on entrepreneurial prospects, attaining access to cutting-edge technology, and divesting activities with low value-creation prospects. XaaS is functional across multiple dimensions, a few of which are discussed below.

1. XaaS Model for Products

Managed Service Providers (MSP) own certain equipment/products and provision this on-demand at customers' premises. Customers employ these products per service level agreements. Computing resources are located at MSP's location and allocated to consumers per their consumption needs. This pay-as-you-go approach is akin to a utility-based offering. The XaaS Model for Products is extensively delivered across two models:

• Servitization: When a company or customer pays for a service rather than buying the equipment or seeks to bundle its service offerings into a single package, this is referred to as servitization. XaaS is built on the premise of being able to take on any IT or business activity, turn it into a product, and then add countless services to it. The hybrid approach to product and service offerings enables firms to deliver more value than siloed solutions.

• Smart and Connected Products: Smart and connected products are physical items with smart components (such as sensors) and connectivity components. They enable data exchange and analysis, unlocking value-addition for producers and end-users. Smart, linked products offer exponentially expanding prospects for new functionality, substantially greater reliability, significantly higher product usage, and capabilities that cross and go beyond traditional product boundaries. This product evolution also alters value chains, requiring businesses to rethink and retool practically everything they do internally.

2. XaaS Model for Services

Enterprises concentrate on delivering an engaging consumer experience and personalized services. This has transformed the way traditional services, as well as modern-day services, are being made available via an innovative service provider. Consequently, new companies (even existing companies are transforming their business models) are venturing into the new areas of useful day-to-day services aimed at making people's lives more comfortable and easier. Examples include Ride Share Companies, Food Delivery Apps, Essentials Delivery Apps, Courier Delivery Apps, Smart Buildings and Homes, Agriculture and Industrial Management, and Smart Cities.

The number of XaaS model-based services is projected to extend dramatically. Consumers envision value-added services to deliver more than just basic services, such as smartness, connectivity, reliability, technical assistance, ease of use, and hassle-free navigation experience. These novel and beneficial ventures are made possible by smart, linked devices powered by cloud-enabled Internet of Things (IoT) technologies.

Picking the market expert as your XaaS partner centric strategist

Devising a XaaS business model will necessitate an enterprise enlisting the assistance of digital specialists with industry expertise. The ideal technology partner provides a complete roadmap for implementing a XaaS model transition in the form of a comprehensive technological solution that spans the whole scope of the operation.

Conclusion

The XaaS model is the fastest-growing model to unlock market growth and has transcended a strategic need for enterprises that aspire to remain competitive. XaaS models require maturity, organizational preparedness, harmonizing talent profiles across business processes, and timely process automation to construct a thriving business.

The article has been written by Advait Waghmare, Vice President and Global Head for Digital Consulting, Birlasoft