How we solve for the key data challenges for “everything as a service” (XaaS) business models

XaaS models provide mouthwatering potential. They?provide untapped revenue opportunities and reflect a growing desire among customers: to pay?only?for what?they use. However, making the switch?to XaaS comes with major?data challenges. Let's look at what they are?and more importantly, how to overcome them.

XaaS is here to stay – and that’s a good thing??

Take a quick glance at almost any industry and you’ll spot a common trend: companies of all sizes are adopting a XaaS model. Short for “everything as a service,” this business model fills gaps that others can’t.

XaaS models reflect a more general shift in preference: from ownership to usership. And the concept is simple: instead of purchasing products, users access what they need as a service.?

Software companies pioneered this approach with SaaS. But a wealth of new “as a service” acronyms, for IT services, hardware and vehicles, show just how universal XaaS’ advantages are.

Companies using XaaS enjoy more scalability than traditional models, since they can rent and scale what they need on a flexible basis. They also save costs, by ditching capital outlays for IT and other products, and experience greater corporate agility.

The switch to XaaS isn’t so simple however

Switching to a XaaS model, or even scaling up your existing services, requires changes across your organization. You’ll need to have the right technologies and integrations, an always on approach to customer experiences, a new go-to-market strategy and, not to forget, the organisational strategy to make it work.

Ultimately, what the XaaS model boils down to however, is your ability to capture and process all the data about how customers use your services. This usage data is the fuel that drives your revenue growth, customer insights and experiences, and product innovation.

6 data challenges you must overcome to win at XaaS

XaaS pricing comes in all kinds of formats, including flat-rate pricing, usage-based pricing, tiered pricing, and per user or per feature pricing. Whatever pricing you offer, you’ll need to keep track of how customers use your services in order to bill them correctly and make sure they don’t use more of a service than they are entitled to. This leads us to the six data challenges for XaaS.

Dealing with increasing speeds and volumes of data

XaaS models will require of you to deal with more data – at a faster rate and in higher volumes – than ever before. Whether you’re a large cybersecurity firm or a retail startup, you’ll have to process thousands or millions of what we refer to as usage events every minute. And you’ll need to do so in as close to real-time as possible, otherwise you can lose revenue, miss upsell opportunities and deliver poor customer experiences.

Data transfers between?legacy systems?increase the risk of lost, siloed and outdated data.

Handling diverse data sources and types

Volume and speed aren’t the only data-processing issues you’ll face. The fact is, the more digital services you offer, the more varied the data sources will be to deal with as well. But you can’t feed that into your billing system. You’ll need to transform it into something structured. And that’s not all. Throw in handoffs between middleware and legacy systems, and you increase the risk of lost, siloed and outdated data.

Using dirty data

A combination of the above two issues results in “dirty” data. Unless you’re equipped to deal with its components (an inability to handle data volume, speed and variety), you risk infecting your systems with incorrect, outdated information. Any effective XaaS model relies on accurate billing to avoid revenue leakage. What we aim for is of course Zero revenue leakage. Why leave money on the table that are rightfully yours. We are also looking for optimal insights for decision making.

Lack of precise data

No two customers share the same usage fingerprint. Acknowledging this is especially relevant in XaaS environments, given it informs billing accuracy, which can make (or break) customer experience and trust. Mapping the right data to the right service and customer is non-negotiable. So is the ability to show customers how their consumption impacts their costs. A lack of data precision can quickly kill your XaaS business.

It’s all?too?easy to overlook or miss records when data arrives out of order.

Complex data sequencing

Data sequencing can leave XaaS business leaders scratching their heads. Incoming data must be checked and any gaps accounted for, and then resequenced before being passed to your billing system. It’s all too easy to overlook or miss records when data arrives out of order. That’s a fast route to sloppy billing, leaked revenues and frustrated customers.

Outdated legacy systems

Even the most forward-thinking companies still rely on a blend of legacy IT systems they can’t afford to migrate. And this makes handling data challenges harder, not easier. When it comes to XaaS, you?need?to be able to integrate your systems in order to attribute specific data records to specific customers. Otherwise, you’re liable to misinterpret the data that makes your “as-a-service” format a success in the first place.

A usage data solution for your XaaS business?

We've already emphasized that if you control your usage data, you control the outcome. The trick is having a solution in place that can do that without adding to your problems.

Too many try, and unfortunately fail to build their own platform to process all that usage data. Most of those scenarios end badly. Manually adding an XaaS-based model to your revenue system results in huge costs – not to mention massive revenue leakage. Our experience with our customers is that revenue leakage ranges between 4% all the up to +10%. There is absolutely no need for this to occur. There is a better way to do this.

At DigitalRoute, we’ve spent decades helping companies make the switch to “as a service” models. Our software, combined with out experts can help you automatically collects usage data from any system or device, processes it into clean data records, then sending the data to your billing and business systems. It also has built-in error correction and can even send data back to systems and devices to control consumption in real time.

Get in touch to discuss how we can help you and your business.