XaaS: Finding the Right Go-to-Market Strategy

As I have discussed in previous blogs, XaaS is all about transforming the way you deliver services in order to increase revenue and share price. In my experience, companies can receive a 5X growth and 7 percent[i] shareholder return.

To get started with XaaS, you must consider how you will go to market to monetize and deploy your XaaS offering.

Let’s look at the different options.

Monetization/Ownership

First, a quick reminder on the basics. There are several ways to monetize your offering, ranging from a flat recurring payment(monthly/annually) to charging based on consumption and usage. All XaaS offerings require some type of subscription to ensure the revenue is recurring. For the customer, many of these models require lower upfront costs to utilize the service. For the company, the total customer value is higher and guaranteed over the course of the contract due to the recurring payments over the duration.

XaaS Offerings Today

There are multiple types of XaaS offerings that are relatively mature and growing today. More traditional offerings such as SaaS, IaaS, DaaS, and PaaS (explained below) have been around for a while and are continuing to grow. In fact, Gartner predicts XaaS and IaaS to reach double digit growth.[ii]

More and more companies are showing continued shifts of legacy products to XaaS. HPE is pledging to deliver all of its services through XaaS off premise by 2022, and Dell and many other companies are making similar commitments in that space.[iii]

Below is a quick overview of some of the more common types of XaaS offerings:

Software-as-a-Service (SaaS) - Enables customers to use the software applications running on the provider’s cloud infrastructure. (Examples: Adobe, Google, LinkedIn, Salesforce, LinkedIn, Workday)

Platform-as-a-Service (PaaS) - Deploys customer-created or acquired applications on the cloud. Supports an ecosystem of partners who build on top of the platform (Examples: AWS Elastic Beanstalk, Heroku, OpenShift, Microsoft Azure)

Infrastructure-as-a- Service (IaaS) - Provisions processing, storage and other fundamental computing resources to deploy operating systems and applications (Examples: Amazon Web Services (AWS), Cisco Metapod, Microsoft Azure, Rackspace)

Data-as-a-Service (DaaS) - Data that is sourced, refreshed, accessed and managed in the cloud. (Examples: Actifio, Dun& Bradsheet, SAP HANA Cloud, GuideStar Pro, Nielsen, Oracle, Spectrum Geocoding on Demand, Qlik DataMarket)

Device-as-a-Service (Daas) - Hardware, operating system, support, and maintenance all for one subscription. Hardware refreshes are a major benefit. (Examples: HPE, Lenovo, Microsoft)

Networking-as-a-Service (NaaS) - Networking hardware, software, and support all sold as a single subscription, with hardware deployed on premise and software deployed in the cloud. (Examples: Akamai, Aryaka, Cisco, Cumulus, Juniper, Pertino)

Beyond the Traditional: New Emerging Offerings

In addition to these traditional offerings, some companies are experimenting with some unique less common offerings that you should consider to reinvent the way you go to market to capture similar benefits. 

Outcome-as-a-Service to Align Fees to Outcomes

One of the more exciting offerings for many industries is outcome-as-a-service where companies are so confident in their products and services that they are willing to tie their fee to outcomes. This places the focus on what customers are looking to achieve and jointly aligns incentives.  

For example, Boeing is offering their engine uptime-as-a-service to promise a certain degree of outcomes to their end customers for their purchase. Michelin delivers a similar promise on their tires. Instead of an upfront purchase without the same guarantees and protections, this offering de-risks certain purchases for the consumers and provides them with options.

IoT-as-a-Service based on Usage

This model offers a great opportunity to charge based on usage or consumption. There are natural synergies with IoT devices offering a higher degree of monitoring and visibility into how customers use their devices so you can charge customers based on usage and/or within specific parameters of how they use a device. For example, you could tie and monetize monitoring of health conditions via a mobile device that tracks a user’s heart rate and offers emergency support services based on readings from the phone and wearable devices.[iv] JCI is experimenting with the application of IoT devices in how they monetize and GTM with their AC and security units, helping deliver specific outcomes for their customers. This can be further empowered by the use of 5G to make it easier to collect data.

XaaS is the future. Its range of benefits are significant and the use cases are growing outside of the traditional software and technology space. However, XaaS transformations are complex as they impact the fundamental business and operating models in almost every facet.

Which model is right for you? Accenture can you help you accelerate your journey and find the right model for your unique business needs.

[i] https://www.dhirubhai.net/pulse/top-8-tips-building-successful-product-platform-strategy-viniak/

[ii] https://www.gartner.com/en/newsroom/press-releases/2020-08-10-gartner-says-worldwide-iaas-public-cloud-services-market-grew-37-point-3-percent-in-2019

[iii] https://www.datacenterknowledge.com/hewlett-packard-enterprise/hpe-ceo-pledges-sell-everything-service-2022

[iv] https://www.sciencedirect.com/science/article/pii/S2542660518300350#:~:text=4.-,IoT%20as%20a%20Service%20(iTaaS),side%20(back%2Dend).&text=The%20sensors%20are%20embedded%20or,send%20data%20to%20the%20cloud

Copyright ? 2020 Accenture. All rights reserved.

Disclaimer: This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.

Disclaimer: This document may contain descriptive references to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.