Apart from the traditional offerings like SaaS, PaaS and IaaS (a.k.a the SPI model) in cloud computing, the new trend XaaS is growing at the rate of 40% from 2016-2020. The “X-as–a-service” novelty has ushered in new business models wherein cloud components (databases, networking, monitoring, containers, storage – anything, actually) are now being delivered in a need-based, subscription fashion. These not only reduce the need to own infrastructure, but have also brought about a paradigm shift in how businesses view and adopt technology.
- The XaaS model allows the customer to selectively choose only what (s)he wants as a service and customise it to his/her requirement.
- Since companies are resorting to the cloud to manage their IT and infrastructure, there is a quantum shift in their functioning to a no-server or no-ops model. This facilitates the entry of XaaS as the next preferred cloud business mechanism.
- Selling ‘as-a-service’ also offers scalability, location and device independence, cost reduction via subscription billing, multi-tenancy and online or automated provisioning.
XaaS and new business opportunities
The arrival of XaaS as a business model offers a massive opportunity to cloud service providers (CSP). The CSP only has to look for and identify the potential areas for cloud deployment for the customer. This, in turn, gives rise to lucrative business opportunities.
Let us consider these scenarios and business prospects, for instance.
- With the proliferation of web usage, there is a huge demand for internet connectivity and support services in hotels, airports, coffee shops, restaurants and even metro stations all over the world. This has opened up a vast requirement for quick Wi-Fi installation, connectivity and support services.
- Customer-centric data has become vital in evaluating brand loyalty and user satisfaction. The spotlight is on the user experience now. So the need of the hour is to provide customer dashboards to record and evaluate the customer experience. Most enterprises employ cloud providers to offer logistics for this UX. Amassing, assessing and analysing this data creates a business case for analytics.
- Optimization is also looming large as a service. Enterprises want CSPs to optimize their software, data or media content. CSPs can offer this as a service to meet the customers’ ad-hoc requirements for optimisation.
- DaaS or “data-as-a-service” is another lucrative business opportunity where the CSP provides data in a form convenient to the user irrespective of his/her geographical location or organization system. The data and the software required to interpret it constitute a combined offering as a service bundle with a middleware.
Modelling XaaS on pricing
One of the highlights of XaaS is it’s attractive positioning in terms of pricing. Some common XaaS pricing models get credit for popularising the traditional SPI models. For example,
- Recurring revenue model – Customers are billed by monthly or annual subscriptions, metered use or pay-per-use.
- Try-buy model – Customers get a no-strings-attached fixed trial period (usually 15 or 30 days) before paying for it.
- Freemium – A ‘free’ version of the restricted-use service, with the customer having to pay to use the ‘full’ service.
What gives flavour to XaaS is the flexibility it offers in up-selling or further innovating pricing purely on the basis of ‘service levels’ being offered. For example, pricing a service as a combination of a one-time setup fee and monthly recurring charges. Or, packaging subscription plans as monthly fixed charges with support fees for extended or premium support.
In either case, selling in a XaaS model allows for greater predictability in revenues and tighter control on costs, and is, therefore, shifting business paradigm across tech verticals.
XaaS as a business tool
The strength of XaaS lies in its “self-service” component, which is of interest from two viewpoints. The first one, being the component of do-it-yourself, allowing users to carry out core tasks by themselves, without any external assistance. Providers only need to focus on providing support, thereby offloading the experience footprints on the actual system users. The second viewpoint is the extensibility provided by way of APIs. Web service APIs allow unstructured data stored at a remote location to be used by the user to his/her purpose. Users can, in turn, use this data for various functions, such as collaboration, integrations, or even building their own interface as a wrapper.
XaaS has revolutionised the business landscape and is going to be the yardstick for future organisational management. XaaS portends great value as a ‘commodity service’ to organisations, with the ‘personalised touch’ paving way for higher revenues. The transformation to XaaS, however, is a mindset change and not one that will come overnight. Nor will this come as a result of your next sales meeting. CSPs need to analyse various aspects of XaaS and see it as a marriage of product, technology and sales.
As a cloud solutions provider specialising in enabling CSP and telcos to sell better, we have extensive, hands-on experience with all aspects of XaaS. IndiQus arms CSPs with the required training, knowhow, education and the technology to sell vertically as well as horizontally. For more, hit us up for a chat over a cup of coffee.