The XaaS revolution: lessons and benefits for startups

If you’re in tech now, you’ve either heard of the everything-as-a-service (XaaS) revolution or you’re on the front lines.

According to Ernst & Young, 9% of all businesses have entirely shifted to XaaS business models while 85% are in the process of doing so. Moreover, nearly 90% of companies have some revenue generated from XaaS models.

Among the leaders in the XaaS market are giants like Google, Amazon Web Services, Microsoft Corporation, AT&T, Cisco Systems, and IBM. Legacy businesses from various industries such as Xerox, Lenovo, and even Rolls-Royce are also on their way to successfully transitioning to XaaS models.

Photo credit: Rosemaryetoufee

But for startups or medium-sized businesses, is it a good idea to run entirely on XaaS services?

It’s the old “buy or build” question. The fact that demand for XaaS solutions is growing in a post-pandemic world suggests that companies are choosing to “buy” between the two options.

As the chief strategy officer of a fintech startup, I look at the subject from another angle: offering a software-as-a-service solution while being an XaaS business. Let’s look at the benefits and challenges of the two-way XaaS model.

This trend can’t be ignored

Startups from various industries are also transitioning their business models to XaaS. The 2022 Global Tech Trends Survey by Equinix revealed that 69% of IT decision-makers across Singapore are moving in this direction.

XaaS centers around taking any IT or business function, turning it into a product, and adding multiple layers of services to it. These services can be paid for in a flexible consumption model rather than an upfront purchase or license.

The most common and familiar ”as-a-service” models are platforms (PaaS), infrastructure (IaaS), and software (SaaS). XaaS encompasses everything provided as a service, from email, computing power, and databases to data sources, storage, and cybersecurity, among others.

The increase in remote work brought about by the Covid-19 pandemic has boosted the XaaS sector across industries including healthcare, ecommerce, retail, banking, and fintech. As KPMG noted, after some initial hesitation, customers have embraced XaaS, recognizing its superior agility and cost-effectiveness.

When companies have to manage every tiny detail of “built” IT, their departments often lack the resources to provide high-quality service standards. Using the “buy” XaaS option, more critical strategic workflows can be kept within the company.

The advantages of XaaS

In my experience as a consumer and provider, I found that XaaS offers several benefits:

Speed to market: Time is of the utmost importance for digital organizations and startups, and XaaS solutions can be deployed immediately.

Challenges to keep in mind