The Rise of XaaS: Your Product-as-a-Service Business Model

Is your company struggling to find solid answers to questions such as: How do we support our customers? How do we improve our services as we learn how our customers use them? And how do we deliver innovations as quickly as possible to the market? If yes, then it’s most probably the time to make the shift to XaaS.

The Age of the Customer has brought a change in how businesses offer their products and services. As customers now seek the convenience of access without the responsibility of ownership, the focus must shift from offering products to offering the capabilities of products delivered as a service. Hence, XaaS is on the rise.

“XaaS” (“your product X” as-a-Service)—also known as Anything-as-a-Service—is a subscription-based model where the relationship with the customer begins with the purchase. This business model has helped B2B companies generate continuous, predictable revenue from their products—and it is now eyed by B2C companies wanting to achieve the same.

Shifting from a product-centric to a customer-centric business model via XaaS enables companies to innovate faster and deepen their relationships with customers through data insights derived from IoT-powered devices. This puts the customer at the center of each interaction where businesses can analyze their unique behavioral data, thus creating significant contextual interactions that match every customer’s needs and wants.

Why transform to an XaaS business model?

The XaaS business model is a data-driven business model. Rolls-Royce’s XaaS success story is an example of how beneficial this model can be. Through its TotalCare program, Rolls-Royce rents jet engines to airlines on a “power by the hour” basis. It uses data from networks of IoT sensors to: (1) provide proactive maintenance, (2) help customers cut costs, and (3) boost operational efficiency, which can translate to millions of dollars per year for large enterprises. Rolls-Royce has explored how AI can help them further innovate product design and development.

Manufacturers are looking closely at the benefits of IoT-powered data services and embracing the XaaS model, as this model has helped companies quantify the value of their services. Stephan Sieber, CEO of Unit4, an enterprise software firm based in the Netherlands, says, “One of our clients, a large consulting firm, is now using machine learning and predictive algorithms to measure and report on the value they create for clients.” According to the findings in Unit4’s independent global study, three-fourths of senior managers and C-level executives said they believe XaaS has positively influenced their business model.

So, what are the benefits of transforming your business to an XaaS model?

As today’s customers expect on-demand access and service without the responsibility of ownership and maintenance, companies need to transform their business model from offering products to offering the product’s value as a service — or risk getting disrupted by competitors who do so. Here are some of the benefits of transforming to an X-as-a-Service business model:

  • Recurring Revenue Stream: Offer new services and subscription-based models
  • Dedicated and Engaged Customer Base: Develop intimate sticky relationships
  • Predictive Instead of Reactive: Leverage data analytics to provide customer insights and operational visibility

It’s evident that services, not products, are the future of business. Transforming to an XaaS business model lets you offer subscriptions that will address your customers’ problems and satisfy their need for convenience. Taascom can enable your company to embark on your business model transformation by helping you make the shift from a transaction-based to a subscription-based revenue model. If you want to kickstart your business model transformation, contact us today.

Enabling your transformation into an as-a-Service business.

We enable companies to embark on their Business Model Transformation journey and get to market faster while reducing their technology risk and investment.
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