How the XaaS model can transform your business

In the early days of the Internet, technology companies began offering digital services, such as software applications, online rather than on physical disks. This new direction, known as Software as a Service (SaaS), gave businesses and individuals an easier way to install and maintain the applications they needed. Furthermore, this system provided offering companies with a constant and reliable revenue stream.

As the Internet evolved and online capabilities expanded, it became possible for more services to be provided online. They include things that, before this technology, would not have been imaginable. Netflix, Hulu, Amazon Prime and other streaming services are a good example. On-demand movies and television shows are a completely different model than what came before – cable TV – and before that, standard network TV.

Other types of subscription services are also available. Who would have thought, before the turn of the 21st century, that prepared foods, pet supplies, clothing, plants, personal training, and many other products and services could be regularly shipped to homes and businesses, simply with a few clicks and a click? Credit card? But these services are now plentiful. The term Anything as a Service (XaaS) represents these capabilities.

Companies that are able to “sign” their products and services benefit in several ways. In the following sections, we will discuss this in detail and help you determine whether or not your company should consider creating a XaaS offering. But first, let's dig a little deeper into what XaaS is and provide some additional examples of how these services work across various industries.

What is XaaS?

XaaS is a model of providing products and services to customers on a subscription basis, using the Internet as a delivery method. The as-a-service model is nothing new, with Software as a Service (SaaS) appearing in 1999 and others – such as Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) – following in the 2000s and beyond.

The XaaS model has traditionally been deployed in the technology industry. But it can be used by any company that provides products and services that can be digitized or offered through a digital interface, including those in sectors such as healthcare, finance, manufacturing, telecommunications, retail and consumer services.

Both companies and customers benefit from the XaaS model. Customers gain easy and convenient access to products and services from anywhere in the world. And companies can have a more predictable revenue stream and increase or decrease their services depending on demand.

XaaS Examples

XaaS is being used in many industries, including those listed here.

• Agriculture. Agriculture as a Service (FaaS) tools are available to help farmers optimize their operations. The services monitor crops for moisture levels, nutrition and harvest readiness, helping farmers save time and money and increase efficiency.
• Entertainment. Well-known services like Netflix and Spotify are provided using an entertainment-as-a-service (EaaS) model. These services allow consumers to pay a fixed monthly fee and get TV shows, movies and music on demand.
• Fitness. Businesses and fitness professionals can use Fitness as a Service (FaaS) to offer online classes, personalized virtual training sessions, and personalized workout plans. An example of this is Peloton, which makes exercise equipment and offers subscription classes to go with it.
• Education. Schools, universities, and other educational institutions can use Education as a Service (EaaS) to provide learning tools, including course content, assessments, and student support services.
• Automotive. Automakers can use Automobile as a Service (AaaS) tools to help owners maintain their cars. These services include vehicle diagnostics, remote control of car features, and real-time traffic updates. According to an article published in Wired , “A connected auto industry will soon be able to create an ongoing relationship with consumers and reap the rewards of recurring revenue from sales of hardware, upgrades, apps and services.”
• Hospitality. Restaurants, hotels, and resorts can use third-party services to provide personalized guest experiences. For example, a restaurant may allow customers to register preferences such as favorite table or dietary restrictions. Hotels and resorts can offer digital concierge services, self check-in/check-out processes, and keep all guest information — including room, restaurant and spa reservations — together.
• Retail. Companies are offering subscription services for everything from clothing to houseplants. For example, Stitch Fix offers customers the opportunity to receive a box of five pieces of clothing as many times as they want. They try on clothes and only keep and pay for the ones they like.
• Manufacturing. Some providers are using retail as a service (RaaS) to offer manufacturers checkout, point of sale (POS), inventory management, staff scheduling and other tasks, all for a monthly fee. As a result, manufacturers get feedback on the products they are developing based on customer response, without having to go through the process of opening a retail store.
• Energy. Energy utilities can offer energy on a subscription basis, allowing consumers and businesses to know how much they will pay for their energy consumption throughout the year. This service is useful for customers because it makes budgeting easier. It is also useful for energy companies because it promotes a partnership approach with customers that can serve them well when they need to ask them to reduce energy consumption during peak periods.

How XaaS can transform any business

The XaaS model can provide transformational benefits for companies that prepare to take advantage of it.

Increase scalability

Because XaaS is delivered electronically, it offers the opportunity to scale up or down delivery based on demand and without additional physical infrastructure. However, it is important to note that if what is being offered is a physical product or personalized service, additional infrastructure, equipment or personnel may be required to meet demand.

Another aspect of increased scalability is the opportunity to access new markets. Companies using the XaaS model can reach potential customers anywhere in the world and present their offerings to them.

Reduce costs

A big part of the XaaS model is automating various aspects of the product or service delivery process, including customer support and billing. This automation can contribute to greater efficiency and, therefore, reduce labor costs.

Companies can also reduce costs by using the pay-as-you-go pricing model, which is common in the case of digital offerings. For example, a company might offer an online accounting tool to make year-end taxes easier for businesses. To do this, you can use different cloud offers that charge a variable fee based on the resources used, eliminating the wasteful phenomenon of buying equipment but not using it or underusing it.

Increase the sales

Reducing the need for manpower to address issues such as customer support and billing can allow companies to focus on core competencies, leading to a focus on marketing and sales. With this focus, companies can generate interest, drive prospects through the sales funnel, and produce more sales and revenue.

Additionally, the service model itself generates more sales because it provides a low barrier to entry for customers who may be willing to try new products and services without the obligation to continue. Allowing customers to cancel their subscriptions at any time contributes to this factor.

Reduce time to market

Using the XaaS model allows new companies to innovate and launch their offerings more quickly, often without the need for extensive physical infrastructure. They can quickly test their products and services and improve them based on real customer feedback, allowing them to enter the market and compete with similar companies.

Serve customers

Another aspect of the XaaS model that can help businesses is the ability to provide customers with a more personalized experience.

• Companies can offer several levels of the product or service to be delivered.
• They can use analytics and machine learning to learn about customer behavior, preferences, and responses. This information can help organizations improve their offerings, increase customer satisfaction, and gain more customers and revenue.
• Customers get an enhanced experience through features like self-service portals, 24/7 support, and regular product and service updates.

Increase security

Product and service providers using the XaaS model typically include strong security features, such as encryption, firewalls, and access controls, that help protect sensitive customer data and prevent data breaches. Additionally, these companies must comply with industry standards such as HIPAA, PCI DSS, and GDPR, which also help protect customer data.

With digital offerings, these providers offer regular updates with the latest security patches, which can also help prevent security vulnerabilities for customers. Additionally, these companies are likely to have dedicated security teams available to quickly respond to any security incidents.

Reduce the risk

With increased security comes reduced risk. For example, companies using the XaaS model are less susceptible to data breaches and penalties imposed as a result of not complying with industry standards. Additionally, these companies typically use regular backup and disaster recovery services, which can help them recover quickly in the event of data loss or system failures.

Improve analytics

With increased automation, companies that provide products and services using the XaaS model are able to analyze large amounts of data and gain valuable real-time insights that help them make informed decisions about research and development, sales and marketing, and internal operations. . The tools they use may include predictive analytics, machine learning and data visualization, as well as integration with other tools and systems, such as CRM and ERP, which offer the possibility of more detailed analysis.

Reduce carbon footprint

When companies implement the XaaS model, they often utilize energy-efficient data centers and cloud infrastructure, which reduces energy usage and carbon emissions. Using these services also reduces the need for companies to purchase and maintain hardware, which minimizes electronic waste and carbon emissions associated with hardware disposal.

Additionally, these companies can often operate with all or most of their employees working from home. This agreement further reduces carbon emissions by eliminating the need for carbon-producing transportation.

Does your company need XaaS?

So, is XaaS right for your business? The answer may be yes if the following statements are true.

• You want to provide customers with more flexibility and customization.
• You want to provide improved customer service.
• You want to be able to easily adjust your offerings as customer needs change.
• You want to reduce costs associated with physical infrastructure.
• You want to reduce the risks associated with traditional infrastructure, especially IT infrastructure.
• You want to reduce labor requirements for things like billing and customer service.
• You want to increase the security of customer data.
• You want to minimize data loss, downtime, and security breaches.
• You want to reduce time to market.
• You want to increase revenue and customer engagement.

Getting started with XaaS

If you're ready to get started with a XaaS offering, here are some potential next steps to consider.

1. Form a team to define the project, start it, and create a plan. This step should include defining business requirements and non-functional requirements, as well as identifying interested parties and recognizing their needs.

2. Determine the appropriate XaaS business model. They include the following options.

• Free – limited options available for free, more available with a paid account
• Fixed price – a certain volume of service per period of time available with a paid account
• Pay as you go – usage based on volume of service used per period of time
• Tiered pricing – additional features available at an additional cost
• Per-User Pricing – Unlimited usage based on per-user subscription price.

3. Determine service offerings, features and resources. This step includes a thorough examination of customers and their needs. It also includes determining your value proposition – that is, the value customers get in exchange for what they pay.

4. Identify the resources needed to create a minimum viable product (MVP). The MVP will be what you test in the market to determine whether to move forward with the project or how to modify it to better meet customer demands. The following video explains why you shouldn't skip this step.

5. Determine the tools and resources needed to consistently build the product. It may include specific technologies, equipment or cloud services.

6. Implement the project, planning in advance for items such as methodology, cost estimates, task dependencies, project schedule, human resources, communications, and how you will measure success.

7. Create a marketing and sales team to generate excitement for the product before its launch. Create marketing campaigns for before, during and after launch.

8. Launch the product and continue to use marketing and sales to generate revenue. Create key performance indicators (KPIs) so you can measure results. KPIs may include customer satisfaction, customer churn, retention rate, customer lifetime value, conversion rate, customer acquisition cost, number of support tickets, daily active users, monthly active users, tenure, duration session, bounce rate, number of actions per session, monthly recurring revenue and Net Promoter Score.

Throughout the process, be aware of the challenges of creating an XaaS offering. According to a recent research report published by business consulting firm OLHO, a challenge is creating an effective product strategy for XaaS offerings, “such as developing product enhancements for XaaS, understanding what customers want, and defining monetization and pricing.” XaaS.” Another is “bringing XaaS offerings to market, including defining the path to market, training and incentivizing sales teams, and marketing XaaS offerings to different segments.”

XaaS Results to Expect

So what happens after you adopt the XaaS model? In the survey report, EY notes that “more than 90% of companies have some revenue generated from XaaS models,” 60% of organizations use subscription-based pricing models, and “9% of all companies have fully moved to of XaaS business.”

For these companies, “XaaS is expected to contribute an increasing share of overall revenues.” Significantly, “The proportion generating more than 80% of their revenues from XaaS is expected to increase from 3% today to 19%…in three to five years.” SaaS companies are leading the XaaS revenue share, with life sciences and healthcare next.

The report also states that a significant number of organizations are driven to adopt XaaS offerings based on customer expectations and evolving buyer behavior. They expect their XaaS deployments to have a positive impact on engagement with end customers.

An increase in revenue and customer engagement are two of the most important results companies can expect when adopting a XaaS model for at least part of their operations. Therefore, while the challenges of configuring XaaS offerings can be formidable, organizations can expect positive results to make overcoming these challenges worth the effort.