Joining the XaaS revolution: switching to as-a-Service technology
What does it mean to own anything, when we now have the ability to use nearly anything through a subscription or pay per use model?
This simple question is the driver behind the rapid growth of everything-as-a-Service or XaaS consumption models in enterprise IT. This shift has been occurring for at least 25 years, since the advent of the modern internet, with many pointing to Salesforce offering a subscription-based CRM in 1999 as the beginning of today’s movement.
However, the cloud has been the real catalyst for offering every variety of enterprise IT - without the need to provision compute and storage resources on-premises. While the effects of XaaS adoption are now present in every facet of the technology environment, software-as-a-service or SaaS models are perhaps the biggest success story of the XaaS revolution.
According to Gartner, enterprises are set to spend around $95 billion on SaaS applications globally this year, and spending will continue increasing to around $150 billion by 2022. This currently represents around half of the cloud-based services spending, with other XaaS offerings including but not limited to:
- Network-as-a-Service (NaaS) – software defined WAN and LAN set-up and management
- Device-as-a-Service (DaaS) – remote management and maintenance of laptops and other enterprise devices
- Backup-as-a-Service (BaaS) - offsite data storage in secure cloud-based data repository
As for the IT infrastructure itself, we’re also seeing the growth of Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) for managing application portfolios. In fact, IDC predicts that consumption-based procurement in datacenters will eclipse traditional procurement by 2020, and will then account for as much as 40% of enterprise IT infrastructure spending. According to IDC’s research:
- 94% of organisations believe it is important that their traditional IT infrastructure provider has a pay per-use-model.
- 56% of organisations say they would remove an IT infrastructure or services provider if they did not have flexible IT consumption options.
From ownership to outcomes
To understand exactly why XaaS has proven so popular, we need to understand how organisations have made their IT spending decisions in the past. Traditionally, IT investments were made through capital expenditure (CAPEX) – this is the same budget for buying new equipment or buildings. Long term investments were made into owning IT assets that could then be depreciated over time – and whose value and efficiency had to be maximised over their useful lifetime.
But with the advent of cloud-based services, IT departments found they could achieve many of the same technology outcomes for their organisation through subscription-based models. Beginning with their ERP or CRM, they moved the purchase of software out of CAPEX budgets and into operational expenditure (OPEX). XaaS delivery models now meant they could achieve better outcomes for their business without the need to own the same physical technology assets.
At Softsource, we are seeing our clients realising huge benefits from switching to an XaaS consumption model for their enterprise IT, including:
Greater agility – Without the need to commit to CAPEX decisions that could last anywhere from 5-10 years, IT leaders are far more successful in convincing their boards to increase OPEX spending to achieve the right outcomes for the business today. This enables the business to invest in other capital that will create a real advantage.
Improved performance – Through outcome-based subscription models, tech providers are contractually obligated to deliver real and measurable outcomes for their clients. Rather than one-size-fits-all licensing arrangements, tech partners will customise the delivery of services to each unique business.
Reduced complexity – By outsourcing the management of enterprise technology such as networks, devices and backup, in-house IT teams can focus on other areas that drive real value for the business. Instead of focusing on managing the technology they own, they can focus on utilising every technology available for the benefit of the wider business.
Enhanced security – One of the great challenges of enterprise technology is keeping an organisation secure. By outsourcing the management of networks and devices, organisations can leverage the best available security, threat protection, and recovery practices for these areas while having more time to focus on securing their unique users and workloads.
Ultimately, every business is looking for a way to create more predictability in both the price and performance of their enterprise technology. They want the flexibility to choose the providers who can deliver the greatest value for their business without onerous lock-in contracts that could potentially hold their business back.
Softsource now provides this predictable performance and pricing for NZ businesses through our industry-leading range of XaaS offerings including Network-as-a-Service (NaaS), Device-as-a-Service (DaaS), and Backup-as-a-Service (BaaS). Contact us today to arrange a workshop to explore how your business could be shifting from a CAPEX to OPEX model for your networks, devices and backup – unlocking the agility, efficiency and security you need for staying relevant in today’s digital world.