What Deloitte’s Everything as a Service report tells us about what's to come

Deloitte’s second Everything-as-a-Service (XaaS) Study shows that enterprise use of IT-as-a-service is increasing, helping organizations quickly scale IT usage and costs up or down as needed. However, for XaaS providers to succeed, they must work more closely with their customers to fully understand how customers use their services in order to optimise their service delivery.

Let's dig into some of the highlights from Deloitte’s report, discuss the key challenges for XaaS providers, and show why accurate data is the foundation for any XaaS model.

The good news is that three-quarters of respondents in the report said their organization already runs more than half of its enterprise IT as-a-service. The COVID-19 pandemic rapidly accelerated the adoption of XaaS, as enterprises needed more flexibility in their IT operations and new IT tools to support remote working.

The report,?Enterprise IT: Thriving in disruptive times with cloud and as-a-service, is based on a survey of 600 IT and line-of-business professionals responsible for XaaS at large US organizations where at least 15% of enterprise IT is consumed as-a-service.

XaaS is here defined as products, tools, and capabilities that are delivered to users as services. So, instead of requiring up-front purchases or licensing, the XaaS model allows customers to consume and pay for IT services based on what they need and use, typically through a subscription or pay-per-use.

Overall the report shows that enterprises are increasingly using XaaS for their IT operations, however, adopters want more out of the services and relationships that vendors currently provide.

Three key trends from the report

1. The COVID-19 pandemic has accelerated the shift to XaaS

The COVID-19 pandemic led to rapidly changing IT needs, which meant that enterprises needed to become more agile and flexible to respond to these fluctuations. In 2020, 75% of those surveyed reported their organization consumes more than half its enterprise IT as-a-service, up from 71% in 2018. And 25% reported over three-quarters of their enterprise IT is XaaS, up from 16% in 2018.

2. Enterprises use XaaS to increase agility and become more competitive

82% of respondents believe XaaS has accelerated experimentation by allowing their company to rapidly try out and evaluate new solutions. It allows enterprises access to cutting-edge features and technologies, helps them create new business models, and enables new services to be launched faster. Six in ten said XaaS gives them a competitive edge.

3. As XaaS grows, enterprises will need to work harder to differentiate their offering

More than eight in ten of respondents said their companies already use software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and/or platform-as-a-service (PaaS). While XaaS gives enterprises a competitive edge, this rapid adoption will require them to adopt more advanced or emerging XaaS technologies to stay in the lead, such as using edge computing as a service.

The challenges XaaS providers must overcome

Despite the growing adoption of the XaaS model, 93% of customers report challenges scaling up their efforts. The four top concerns of customers are: data security and privacy, inadequate IT skills to deploy and manage XaaS, unpredictable costs, and difficulty integrating with other systems.

Two-thirds of XaaS customers said their provider could do more to continually improve services based on what they learn from an organization’s usage. And that they are considering alternatives.

In addition, only three in ten customers consider their needs being met by their current providers. This should be an alarm bell to any provider given 70% of the customers flag they are looking for better providers. The reporter further shows that customers are seeking more consultative relationships with their providers that can help them solve their ongoing issues.

In fact, a total of 82% of adopters agree their organization could achieve better outcomes if their providers behaved more as consultative partners. That means, even for those who are consider their needs are currently being met, they see room for improvement looking ahead. And that's only natural as businesses evolve, and so do their needs. And who doesn't want a provider and partner to learn from, and that can help plan ahead.

Key to success: Correct data, easy integrations and understanding usage

At DigitalRoute, we’ve seen how impactful it is for enterprises when they manage and leverage usage data. We’ve seen how our customers have accelerated their ability to creating new business models, offering new services, and building stronger relationships with their customers by understanding how services are used.

But we also recognize the challenges outlined in the Deloitte report, and we’ve seen what can go wrong for XaaS providers when they aren’t solved – dissapointing revenue growth, lost revenue due to incorrect data processing, lack of control of how much of a service is used, compliance issues, and subpar customer experiences that lead to lost opportunities.

The foundation of any digital service is data, and if you don’t have accurate, real-time data that you can trust, your revenue and customer relationships are at risk.

There is a way to solve for this however. Make sure you focus on the data, and specifically the usage data that allows you to learn from your customers. Ensure you have the right tools/software, and a partner with the experience, meaning who've done it before. Usage data is complex, and it directly impacts revenue.

Customers who do this right are able to track how customers use their services, and turning this usage data into clean records that can be used across their operations. With accurate usage data they can improve customer experiences, offer upsells at the right time, and speed up invoicing.

As enterprises look to diversify their XaaS offering, integrations across platforms and ecosystems will be essential. So again, the enterprises who nail this have a Usage Engine at the core of their business system, that acts as a data processing hub connecting all of their operations, sending clean data back and forth between ERP, CRM and CPQ systems, IoT platforms, billing platforms, entitlement management systems, and business intelligence systems.

Get in touch?to discuss how we can help you and your business. And?check out our podcast?where we go deeper into these topics.