What is XaaS?

XaaS is an acronym for Everything or Anything as a Service. Technically, XaaS means a service delivered to the end user via cloud computing, for a monthly subscription instead of paying up front. 

A brief history of XaaS

The evolution of XaaS goes back to the 1990s, when the internet was just beginning to become a vehicle of innovation. That was the era when technology solutions began to be delivered remotely as an application service provider (ASP).

The ASP would host or build an existing application, provide all the software maintenance, and make it available to businesses for a monthly or annual fee. Business users would access the application from their networked computers.

In a way, ASP was the forerunner of the SaaS (Software as a Service) model because, within two decades, ASP metamorphosed into a full-service, web-enabled service provider, aka SaaS. IT eventually caught on to the idea, which led to ITaaS (IT as a Service) and PaaS (Platform as a Service)

In short, XaaS has its roots in the cloud services model. It began as a way of reducing costs to run IT, by providing services like email, ITSM, CRM, and business intelligence via software-enabled cloud computing. Over time, these services began to be referred to as XaaS, and it's bringing unprecedented value to businesses. 

What is the XaaS Model of Business? 

In the XaaS model of business, products are sold in the form of service. Users do not pay for the product or own it. Instead, they pay a monthly fee or subscription to avail of the benefits of a product. 

The XaaS model allows businesses to focus on providing value instead of selling items.

The fundamental concept behind XaaS is that there is no longer a one-off selling of products. Companies are turning into service providers instead of just manufacturers. Instead of selling products for an upfront payment, companies sell the benefits of a flat monthly subscription or a pay-per-use.

The ramifications of this model are that customers can now buy almost anything without having to own it, including software, music, movies, electronics, furniture, household appliances, sporting equipment, tools, vehicles, and even real estate.

In short, anything can be bought and sold as a service. This includes both tangible and intangible assets.

How does it differ from traditional business models?

XaaS vs Traditional Business Models

Traditional business models include B2B (Business-to-Business), B2C (Business-to-Consumer), C2B (Consumer-to-Business), and C2C (Consumer-to-Consumer). The key difference between XaaS and traditional business models is that there is no product ownership. Instead, you purchase access to a product and pay for it for as long as you use it. 

What are some examples of XaaS?

Examples of XaaS include:

SaaS : Salesforce, Google Apps, Zoho, Office 365, Dropbox, Box, etc.

IaaS (Infrastructure as a Service): Amazon Web Services, Rackspace Cloud, Microsoft Azure, DigitalOcean, Linode, Vultr, etc.

PaaS (Platform as a Service): Heroku, AWS Elastic Beanstalk, Google App Engine, OpenShift, etc.

AaaS (Analytics as a Service): Google Analytics, Adobe Analytics, Chartbeat, etc.

Benefits of the XaaS Model to the Consumer

The end user or consumer enjoys the benefit of easy and affordable access to services via a subscription model. It also offers more choices and flexibility, and better customer satisfaction.  Moreover, the XaaS model gives consumers greater control over their data and privacy.

Benefits of XaaS to Businesses

From the perspective of a business, the service model provides several advantages:

Reduced capital expenditure

The cost of buying hardware and software is reduced because you don't have to buy them up front. You only need to pay for what you use.

Increased productivity 

With the ability to scale up or down based on demand, you can easily adjust your resources to meet changing demands.

Lower operating expenses 

Since you're not paying for the infrastructure, you save money on electricity, maintenance, and other operational costs.

Leaner operations 

Because there's less inventory, hardware, and infrastructure, fewer employees are required to run and manage the operation. In fact, they don't even have to have an IT department. Instead, they can get the services of an XaaS partner and keep operations lean. 

More efficient processes 

By eliminating the need to maintain and support physical assets, businesses can streamline operations, reduce downtime, and increase operational efficiency.

Increased revenue 

As a consequence of the above-mentioned benefits, businesses can save costs and increase their revenue. 

Faster scalability 

With XaaS, businesses can quickly scale up or down their operations based on market conditions. They can also add new products and services at any time. 

Better customer experience

Customers enjoy a seamless experience when using your services. They get to choose how much they want to consume or spend, and can cancel or resume services anytime.

The XaaS model also makes it easier for small businesses to compete against larger corporations. The reason is that while smaller organisations often lack the resources and expertise to build and maintain their own IT infrastructure, by leveraging the power of the XaaS model, even the small players can compete effectively in today’s marketplace.

Furthermore, many companies that have adopted the XaaS model report that it has helped them build new products and services, business processes and business models. Consequently, this has changed how and what they sell to their customers. 

Perhaps the XaaS model's biggest benefit is the innovation it spawns. 

Disadvantages and Challenges of XaaS

Security threats

One of the biggest challenges in adopting the XaaS model is ensuring the safety of sensitive information. This challenge stems from the fact that you don't own the underlying infrastructure. Therefore, there is no guarantee that your data will be safe from hackers or malicious attacks. However, this problem has been addressed by many companies offering XaaS solutions. For example, Google uses its G Suite platform to provide secure email, file storage, collaboration tools, and more. It also offers additional security features such as two-factor authentication, encryption, and malware scanning.

Performance issues are beyond one's control

Because your business has to rely on other companies, you will be at the mercy of your service provider if there are outages and performance issues. This may also impact your customers, who may experience disruption and delays in accessing your services. A contingency plan should always be in place in anticipation of such events. You may also need to have a customer communication strategy in place so that your users don't end up having a soured customer experience. 

Hidden Costs

There may be hidden costs associated with XaaS. These include the cost of implementing the solution, maintenance fees, and any upgrades or changes made to the system. Also, there could be unexpected expenses incurred due to unforeseen circumstances. For instance, if you decide to move your application to another provider, you will incur additional costs.

Conclusion - The Shift to Service Economy

Although gradual, the shift to a service-based economy is happening, and it's real. We can almost envisage a future where selling products or goods will be just a relic of the past. But a change like this requires an upheaval right from the grassroots level. Businesses should rethink their service strategy to brace for the impending digital transformation and economic shift.