This episode in Bramasol's continuing series on the Digital Solutions Economy™ focuses on the business model called Anything-as-a-Service (XaaS), which is also sometimes referred to as Everything-as-a-Service. As discussed below, the next wave of XaaS will have benefits for both end customers and companies providing products and services.
Over a decade ago, the Dutch futurist Marcel Bullinga predicted, “The key to the future is not ownership, but access.” As the evolution of XaaS has unfolded, leaders of many companies using this new disruptive approach have echoed Bullinga's prediction in various ways.
- Airbnb co-founder Brian Chesky said, "We have an ownership society now, but we’re moving toward an access society, where you’re not defined by the things you own but by the experiences you have."
- Spotify founder Daniel Ek said, "Ownership of music is great, but access is the future."
- Jennifer Hyman, co-founder and CEO of Rent the Runway said, "I’m saying the pride of ownership is dead, and the pride of access is the new luxury.”
The roots of the XaaS model actually lie in the computer software and services sector where the economies of scale and efficiency favored collocation of thousands of computers in server farms within massive network operating centers. This approach gave rise to the ubiquitous usage of cloud-based software solutions for everything from websites to CRMs to operations and finance systems.
Variations on the XaaS theme include Software as a Service (SaaS), Platform as a Service (PaaS), Infrastructure as a Service (IaaS), Storage as a Service (StaaS), Database as a Service (DBaaS), Disaster Recovery as a Service (DRaaS), Communications as a Service (CaaS), and Network as a Service (NaaS).
In recent years, XaaS has proliferated into an ever-widening range of B2B and B2C business models across the Digital Solutions Economy. For example, various subscription models where a customer purchases access to services or products on an ongoing basis have become extremely popular, and recently have seen accelerated adoption rates during global pandemic lockdowns.
These types of XaaS models boost customer retention levels by delivering better value and also offer other major benefits for providers by increasing the growth, stability and predictability of their revenue streams.
An excellent example can be found in the transformation of Apple, which entered the computer market in the 1970s as a hardware vendor. After three decades of market success, and with some setbacks along the way, Apple began offering services in 2008 via the App Store selling third-party applications for iPods, iPhones and iPads. By 2019, Apple's service business was posting gross margins of 63.7% that were double the margin of 32.2% for it's product division.
A summary of key benefits from XaaS include:
For your customers:
- Greater range and availability of products and services
- Lower costs and more flexibility
- Focus on outcomes, experiences and results rather than ownership
- Easier options for upgrades, changes and add-ons
For your business:
- New fast-growth revenue streams
- Improved stability and predictability of revenues
- Enhanced customer loyalty
- Stronger competitiveness and business agility
Another important global benefit of XaaS comes in the form of inherently higher utilization rates over a product's live-cycle and better alignment with changing market needs. Instead of manufacturing products to achieve one-off sales events, in this broader XaaS perspective, companies are shifting their emphasis to encompass the end-to-end process of manufacturing, longevity of use, maintenance, service, and disposal/recycling. This holistic end-to-end view helps foster a "circular economy" mindset that minimizes waste and boosts sustainability.
As the leader in helping companies implement a range of XaaS models and other Digital Solutions Economy offerings, Bramasol has brought together a targeted portfolio of solutions that address the full spectrum of requirements in the Business Cycle for the Digital Solutions Economy. As shown below, these include Customer Engagement, Order Creation & Management, Delivery & Fulfillment, Billing & Invoicing, Payments & Collections, and Revenue Compliance.
For more info, check out the resource links below:
Podcast: SAP’s Pete Graham on Anything-as-a-Service and How SAP Enables XaaS
Webinar video: Managing Entitlements in the Digital Solutions Economy
Webinar video: Power Transition to DSE with SAP Cash and Treasury Management
Webinar video: Automating Revenue Management for the Digital Solutions Economy
eBook: Understanding DSE to Create Integrated, Scalable & Sustainable Business Models