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Why is XaaS Adoption a Strategic Move for Businesses?

XaaS which includes popular delivery models like SaaS, PaaS, and IaaS has arguably been the most remarkable contribution that cloud computing has given to the digital world.

Cloud computing has changed the way the world conducts its various activities and performs tasks. Until a few years ago, most organizations were using in-house developed or licensed software applications and tools installed on a server in their office premises. Today, the cloud computing marketplace has become the go-to place for their requirements of new technology tools that can be accessed on any device from anywhere on the earth. 

The global cloud computing market size is expected to grow to USD 947.3 billion by 2026, at a CAGR of 16.3%. Nasscom forecasts that cloud spending in India will exceed $7 billion by 2022. According to an IDC report, the overall Indian public cloud services market is estimated to reach $10.8 billion by 2025, growing at a CAGR of 24.1% from 2020 to 2025.

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What does Anything-as-a-Service (XaaS) mean?

In simple terms, cloud computing means storing, hosting, and accessing data, software programs, tools, and applications over the internet instead of the server or desktop on the premises. Cloud computing involves hosting and delivering services on usage-based, on-demand, or subscription modes over the internet, which can be classified into three general categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS). 

XaaS - Everything-as-a-Service or Anything-as-a-Service - is a term coined to refer to the process of delivering Anything as a Service. It represents the delivery of not only software products, tools, and platforms as a service over the internet, but can even mean physical assets and equipment made available for organizations or individuals to use by paying on usage rather than buying them by investing full price upfront. One of the earliest XaaS models - even before the emergence of technology - is leasing and renting.

According to research firm Research and Markets, the market for XaaS is poised to grow to $680.03 billion by 2027. Cloud computing is no more a choice for businesses but a necessity, and the acceleration of digital initiatives across organizations makes XaaS pivotal for a business.

The transition from Saas to XaaS

SaaS, unarguably the most popular of cloud delivery models, has completely transformed the way companies do business. Taking a cue from the SaaS model that delivers several products and services, companies have started leveraging the cloud environment to deliver anything as a service; hence XaaS is becoming an integral part of their solutions offerings and delivery models.

In a broader framework, cloud computing has three models: SaaS, PaaS, and IaaS. Outside these three categories, there are other examples such as disaster recovery as a service (DRaaS), communications as a service (CaaS), network as a service (NaaS), database as a service (DBaaS), storage as a service (STaaS), desktop as a service (DaaS), and monitoring as a service (MaaS), transportation as a service (TaaS), car as a service (CaaS), to name a few. Other emerging industry examples include marketing as a service and healthcare as a service, among many others.

How does XaaS benefit businesses? 

The XaaS model can help businesses improve cost efficiency, streamline business processes, and allocate IT resources for projects of higher value. One of the important benefits of using XaaS for small businesses is that XaaS allows them to access digital applications and services that only large enterprises could afford before the advent of cloud computing. This has also provided a level-playing ground for small to medium businesses to sustain and scale by competing with large enterprises.

  • Improve the expense model and cash flow

The Pay-as-you-use, subscription, or on-demand payment models of XaaS help businesses reduce costs by changing the model to pay only for what you use and not idle resources. XaaS model has also transformed the expenses from capital expenses (CapEx) nature to operating expenses (OpEx), enabling small businesses to accelerate digital transformation, a privilege of large cash-rich enterprises till recently. This helps organizations improve their cash flow so that they can instead invest the free cash to grow and scale their business.

  • Accelerate adoption of new apps and processes

It used to take a long time to get an app or application developed to transform the businesses to the dynamic market conditions and demands, but XaaS has changed it. Multitenant approaches, resource pooling, and scalable provisioning mean that businesses can access new technologies and infrastructure as and when needed, and abandon whatever is not needed anymore. For example, the XaaS strategy can help a retailer transform their businesses to an online or hybrid model, facilitate businesses to transition to work from home from anywhere, or provide online support service to the customer, among others.

  • Allocate IT resources for high-value projects

The current trend of businesses resorting to XaaS for their technology needs allows IT organizations to free up resources for innovation and high-value projects. XaaS also helps transform businesses to become more agile. In a recent survey by Deloitte, 75% of companies report that XaaS now constitutes more than half of their company’s IT spend. 

  • Reduce Time to Market

Before cloud and XaaS emerged, companies had to wait for a long time to set up new hardware and software to deploy and implement the software applications. They can now use the services provided by the cloud ecosystem to develop, implement, and use applications easily and quickly.

Factors to be considered before implementing the XaaS strategy

Adopting the XaaS model is a strategic move for any organization. The change can involve a lot of time and effort and can be distressing from start to end. Proper due diligence must be done before adopting cloud computing services and applications including XaaS.

  • Map your IT strategy

Your XaaS IT strategy and business goals must be mapped to the quantitative and qualitative measures that you have identified as the objectives of adopting XaaS. In other words, your XaaS plan must help improve your business in line with the company’s vision and mission.

  • Decide and plan where to start

It is not advisable for companies, particularly small businesses, to go for XaaS adoption in one go. It is inevitable for them to plan carefully where to start the XaaS project; a starting point that offers a high return, but with low risk is an example of the ideal starting point.

  • Change management

Since XaaS implementation can affect the functions across an organization, all the organizational stakeholders must be involved in the planning and decision-making of the XaaS project. Their active participation and support are essential for the success of change management.

  • Measure performance

Measuring and sharing the KPI performance results of all the functions in your business is crucial to imbibe enthusiasm in the implementation of the XaaS strategy. The measures can include various metrics related to customer growth, customer experience, profitability, and more.

  • Downtime management

A backup plan is inevitable for the business to manage the breakdown of the internet connection, bandwidth issues, and problems related to latency, data storage, and data retrieval times. 

The future of XaaS

For sure, XaaS will be one of the driving factors for most businesses in the coming days with emerging technologies like AI/IoT, making the XaaS model a preferred business model.  The success of the innovations and adoptions to suit each business will depend on technology leaders and teams who understand XaaS well. Companies, especially small and medium businesses, must plan their IT strategy in such a way that their business needs are mapped to the XaaS strategy to sustain and grow their business. Talent as a Service or Task as a Service (TaaS), itself a XaaS model, can be a beneficiary and as well a facilitator of various XaaS models.

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