The Definitive Guide to Surviving the XaaS Revolution
June 24, 2020 | by Anjana Ramesh | Posted In Cloud
With ever-evolving technology, CIOs should continuously upgrade their IT model to stay on par with their competitors. Lately, many organizations are shifting to a flexible consumption model called “Everything-as-a-Service” (popularly known as XaaS) for their enterprise IT infrastructure, to improve business agility and gain a competitive edge. In this blog, we discuss the various benefits and challenges associated XaaS, and the key things you should focus on when adopting a XaaS model to get the most out of your efforts.
What is XaaS?
XaaS (Everything-as-a-Service or Anything-as-a-Service) is an open-ended consumption model that allows organizations to pay for products or services solely based on the usage, as opposed to a traditional IT model that involves an up-front purchase or licensing. Since the XaaS model fosters selling “anything or everything” as a service, there are countless examples of XaaS.
The typical examples include PaaS (Platform-as-a-Service), SaaS (Software-as-a-Service), IaaS (Infrastructure-as-a-Service), DBaaS (Database-as-a-Service), and STaaS (Storage-as-a-Service). In this model, companies adopt a cloud service as and when the need arises, thereby helping them sidestep the traditional IT infrastructure that requires continuous management. According to the Accelerating Agility with XaaS study by Deloitte, 71% of companies using XaaS say it now constitutes more than half of their enterprise IT portfolio.
Benefits of the XaaS model
There is a common conception that cost reduction is the primary reason for companies to adopt XaaS. Although it’s partially true, there is a myriad of other benefits that act as the driving factors of XaaS adoption. Here’s a quick look at some of the key catalysts that motivate companies to embrace the XaaS model:
In an ever-changing business landscape, it is essential for organizations to be nimbler in meeting their transforming business needs. CIOs cannot afford to have a clunky, rigid IT infrastructure that would not be conducive to their agility. XaaS works on a pay-as-you-go model and therefore gives organizations the flexibility to rapidly scale their IT capacity, operations, and the associated costs up or down on-demand, without any vendor-lock in implications. This ability tremendously improves the operational efficiency of the organization and also cuts down on the overhead costs.
Increased employee efficiency
While XaaS offers you a flexible consumption model, it also offloads the IT maintenance and upgrades to your service provider. Therefore, it significantly reduces the time that your IT team spends on infrastructure maintenance. Consequently, it enables your IT staff to spend more time on other business-critical priorities so your business can innovate faster. In the Deloitte survey mentioned above, 71% of the companies have stated that the adoption of XaaS has drastically reduced the time spent on their infrastructure management.
XaaS applications are designed to be easily adaptable and therefore can be modified and deployed quickly in a new environment. This, in turn, helps you shrink your time-to-market and enhance the customer experience. Furthermore, XaaS applications are also optimal at resource usage as the model allows you to access the system and network resources on an as-needed basis. Not many organizations may explicitly cite this as the primary driver of their XaaS adoption. However, for companies contemplating a switch to XaaS, it is a notable benefit to factor in.
Since the XaaS model allows you to pay only for what you use and when you use it, it is unsurprising that cost reduction is a key benefit of adopting XaaS. With every additional cloud service, organizations can minimize the usage of their in-house IT infrastructure, leading to fewer servers, hard drives, network switches, software deployments, and more. This helps reduce the operational overhead costs and eventually shifts the capital expenditure (Capex) to an operational expenditure (Opex) for your business.
While organizations typically opt for cloud services to reduce costs, improve performance, increase flexibility, etc., the ability to innovate at a much faster rate is a significant offshoot of choosing cloud. Specifically, with the XaaS model in which you could choose anything as a service, you have multitudes of choices to push the envelope of your product or service.
For example, the Formula 1 group, which stages the popular F1 series of auto races, shifted its on-premise data centers to Amazon Web Services (AWS) to significantly improve its race strategies, data tracking systems, and digital broadcasts through a variety of AWS services including Amazon SageMaker, a fully managed machine learning service that enables developers and data scientists to easily build and deploy machine learning models, AWS Lambda, an event-driven serverless computing service, and AWS analytics services to derive insights that continuously improve the way fans and teams enjoy, experience, and participate in racing.
Challenges associated with XaaS
While XaaS is highly beneficial as discussed above, it has its own downsides. Some of the top challenges are data security concerns, IT management/interoperability challenges, and unpredictable costs. Let’s take a quick look at these challenges below:
Data security and privacy concerns
The primary showstopper for organizations that decide to choose cloud services has always been the security concern. Even in the case of switching to the cloud, companies generally prefer their sensitive information to stay on-premise. However, to overcome this concern, it is essential to understand the security and compliance standards of your XaaS providers and choose the right one for your business.
Additionally, you should also get a good grasp of the shared responsibility model between your organization and the service provider. Some experts believe that poor corporate password hygiene and careless employees are the two biggest sources of cybersecurity breaches. It is therefore important for both cloud providers and customers to be conscious of their obligations and responsibilities in ensuring data security.
Another important challenge to address is the integration issues that come with XaaS solutions. It could either be integrating your new XaaS solution with your traditional IT systems or integrating the various XaaS solutions together. However, this pitfall is due to the lack of a comprehensive view and management of your XaaS solution that does not take into account the complete ecosystem of your IT infrastructure. In such cases, it is ideal to partner with a cloud managed service provider who can craft and execute the integration plans of your XaaS solutions without missing a beat.
It might sound ironic to cite cost as a concern as well as a benefit of XaaS adoption. However, in a survey conducted by Deloitte, one-third of the respondents cite cost as a top challenge. The reasons behind are unpredictability and duplicative costs. In other words, organizations find it difficult to predict and budget for the costs associated with XaaS due to price fluctuations. Additionally, some organizations also continue to pay for their traditional IT systems despite adopting a XaaS solution which is most likely because of the integration issues mentioned above. Cost issues diminish as you evolve to become a more mature XaaS user that understands the intricacies of the model inside out.
In addition to the challenges discussed above, there are quite a few challenges connected to vendor-related issues, customizability, and product features that need to be addressed.
Things to do before getting started with XaaS
There are no hard and fast rules that every organization can follow to thrive in its XaaS journey. Nevertheless, some should-dos that apply to any organization that decides to adopt XaaS are:
Choose the right cloud service provider for your business
The foremost step that helps you win half the battle is partnering up with the right cloud service provider. It is imperative to pick the cloud partner whose services are aligned with your needs. Some key things to look for when choosing a provider are –their security and compliance standards, availability of their services (uptime and downtime), associated costs, and the quality of their support. Furthermore, you should also delve deep into their services to understand how well their offerings and your business and IT requirements dovetail.
Chalk out a solid XaaS adoption and implementation strategy
As with any new technology initiative, moving to the XaaS model also requires a comprehensive and well-thought-out strategy to make it successful. The key steps to take into account while crafting a XaaS strategy include:
Defining the strategic objectives of your XaaS adoption
Before embarking on your XaaS journey, it is essential to define your key strategic objectives for adopting XaaS such as faster time-to-market, cost reduction, better innovation, etc., and map them with the predicted outcome of the services. This gives you a clear picture of how the services can help you achieve your objectives and what the associated trade-offs (if any) of your XaaS adoption are.
Conduct a gap analysis
To know where you stand in terms of IT maturity and where you want to be, it is vital to carry out a gap analysis. This will help you understand the tools and skills required to close the gaps and the subsequent steps to execute as a part of your XaaS adoption. For example, you may have to modify your invoicing process to accommodate XaaS invoices, which are recurring and based on usage data rather than fixed prices.
Check for organizational readiness
To make your XaaS transformation successful, an organizational mindset shift is necessary. It is, therefore, important for you to check if your employees understand the impact of the XaaS solution on your business and are ready to embrace the solution. Lack of employee buy-in and participation that arises due to a weak organizational culture can make your efforts go in vain.
Create an execution roadmap
Create a clear roadmap of what the organization needs to do in order to address the gaps uncovered in the gap analysis. Also, determine which data and processes should be moved to the cloud and which ones to retain in the on-premise infrastructure. Your execution roadmap should also focus on the tools, technologies, and additional skills required to achieve the desired results out of your XaaS adoption.
Watch for regulatory issues
If you’re adopting a XaaS solution that you would implement not only for your employees but also for your customers to use, you may be on the hook for regulatory standards, including General Data Protection Regulation (GDPR) and other data privacy standards. Hence you should have a keen eye for the regulatory issues (if any) associated with the switch.
Be vigilant about your cloud spending
As discussed earlier in this blog, one of the top challenges of XaaS is to predict the Total Cost of Ownership (TCO) and the budget for the same. Therefore, it is extremely important to be sharp-eyed about your spending and the ROI it yields. If the total spend exceeds your returns, then you should check for the issues and fix them. Not having a proper system to monitor your cloud spending can make you shell out a huge sum of money that you probably did not budget for.
Although we have covered a lot of ground in this article, you might come across more practical hiccups that spring up once you initiate a transition. Especially, when your IT team has little to no exposure to the XaaS model, it becomes challenging to lead through the change. In such cases, it’s ideal to team up with a qualified cloud managed service provider who can help you end-to-end – right from maturity assessment through to the planning, strategizing, and execution of your XaaS transition without any setbacks.
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