Everything-as-a-Service model allows organizations to pick and choose the IT resources they want and how they pay for them.
“Information technology is undergoing an inexorable shift from being an asset that companies own — in the form of computers, software and myriad related components — to being a service that they purchase from utility providers.”
It’s been almost two decades since the author Nicholas Carr made that observation. The rise of Everything-as-a-Service (XaaS) seems to be finally validating his premise.
XaaS is a service-based delivery model in which organizations access all technology infrastructure, applications and support services without purchasing hardware and software. It is rapidly becoming the favored approach for organizations of all sizes. IDC analysts predict that 65 percent of organizations will rely on this pay-as-you-go consumption model by 2026.
According to a recent Allied Market Research report, the XaaS market was valued at $474.93 billion in 2021 and is estimated to reach $2.6 trillion by 2031, a compound annual growth rate of 18.9 percent. This growth is being driven by increased demand for simple, cost-efficient access to the latest technologies that allow organizations to remain competitive.
How XaaS Enhances Business Agility
It makes a lot of sense, given the rapidly changing nature of business technology. With processing capacity doubling every 18 months, computers purchased today are dated before they’re even out of warranty. The general consensus is that servers, routers, switches and storage devices should be replaced every three or four years. Maintenance costs increase exponentially after that, as does the risk of downtime.
The XaaS model provides an escape from the unending refresh cycle while also giving companies more control over how they pay for technology, with predictable pricing models and flexible terms that fit their business needs. The benefits of this approach were crystalized during the pandemic as organizations accelerated their use of cloud-based delivery models while also shifting more technology management and maintenance functions to managed services providers (MSPs).
“This experience demonstrated the real value of XaaS and the cloud, and a shift away from a reliance on traditional legacy IT,” said Paul Silverglate, vice chairman of Deloitte’s U.S. technology sector practice. “Expect this trend to have staying power as the advantage of service-based technologies — and some of the associated behaviors — continue to provide measurable benefits and enable enterprises to compete more effectively.”
Relief from Shortages
Global disruptions of the technology supply chain arising from the pandemic have also driven XaaS adoption. Widespread lockdowns that slowed or halted the flow of raw materials led to historic shortages of critical technology components such as processors, routers, switches, servers, wireless access points and more. IDC analysts project that component shortages will continue well into 2024. That is expected to lead mass numbers of companies to extend their reliance on cloud-sourced infrastructure, applications and services.
The XaaS model also offers relief from the ongoing IT skills shortage. Approximately two-thirds of organizations say staff shortages inhibit their ability to adopt important technologies. XaaS providers address this dilemma by bundling hardware and software with a broad range of managed services for designing, building, implementing, managing and maintaining the entire environment.
Making it Work with Managed Services
In many ways, it is the managed services component that makes XaaS a viable model. It ensures organizations not only have access to emerging technologies but also to the manpower and expertise necessary to use them efficiently. MSPs provide specialized services such as network design, cybersecurity, backup, help desk support and more. These services allow organizations to offload tasks that would otherwise require a dedicated team of professionals.
In addition to enhancing existing operations, XaaS backed by managed services allows organizations to experiment with advanced technologies cost-efficiently. Artificial intelligence, machine learning, augmented reality and robotic process automation are among the innovative technologies that would otherwise be too time- and resource-consuming for internal IT teams.
XaaS represents a significant change from the way technology resources have traditionally been acquired. While the transition will undoubtedly present some challenges, there are clear benefits to a service-based delivery model that allows businesses to rapidly adopt new technologies without the need for large upfront investments in hardware, software and personnel. That can be an important competitive advantage in a rapidly changing business environment.
