XaaS: Profiting From The New Technology Consumption Model
By Jason Bystrak, D&H Distributing
The market potential for XaaS, or “Everything as a Service,” is undeniable: The small business community alone comprises 30.7 million organizations, representing 59.9 billion private sector seats. According to one survey, the average SMB company spends between $10,000 and $49,000 per year on technology. And XaaS adoption is predicted to increase at a compound annual growth rate of 24% by 2024. This amounts to a per-seat opportunity that’s too great for channel partners to overlook.
XaaS is only positioned to grow further as more companies have been compelled to embrace digital transformation during the pandemic, moving greater amounts of their infrastructures and services to the cloud. Small to mid-size businesses have shown themselves to be especially agile considering the shift to remote and hybrid technology solutions, making this sector a notable opportunity for channel partners to profit from cloud services bundled with hardware and services. All-in-all, XaaS is becoming the new standard for technology consumption in the emerging digital economy.
The XaaS consumption model employs a combination of solutions including hardware, software, cloud-based solutions, and a roster of technology services. The challenge is to deliver this range of products and services through a streamlined conduit, reducing complexity while still capitalizing on the many benefits of XaaS. MSPs and VARs can more easily monetize per-seat services across multiple customers using a consolidated transactional platform, one that provides an array of cloud offerings and ideally allowing the partner to incorporate services of their own.
While the XaaS model can support any technology solution – including data center and network infrastructure – they are typically built around end-point devices. Software and SaaS solutions such as productivity, collaboration, unified communication, and business applications are added along with infrastructure options such as enhanced security, data protection, remote access, and virtual desktop. These are combined with services such as migration, integration, management, and support for the term of the agreement. While some XaaS solutions are capitalized in the project-style upfront payment, most are financed in a monthly subscription model, posing additional challenges for the traditional channel model.
The Benefits Of The XaaS Model
XaaS solutions can be provided in bundled packages to address vertical environments and evolving trends, empowering channel partners to target niche markets, capitalize on emerging tech, and develop specialized competencies. For instance, MSPs can create a remote work bundle including high-performance laptops, enhanced cybersecurity, licensing for collaboration solutions, and accessories such as laptop cases and power management products, fully supported with a managed service agreement.
Partners can leverage distribution companies for financing options, solution design tools, operational platforms, and supplementary services to help assemble, market, and deliver these bundles, creating an exceptional customer experience.
“Monetizing The Seat”: Advantages For End-Customers And Channel Partners
The XaaS consumption model offers considerable value for end-customers, delivering comprehensive, turn-key solutions through a single solution provider via a predictable monthly payment structure. XaaS translates to a lower cost of support since it utilizes standardized hardware and cloud-delivered software automatically providing the latest versions. This creates an always-updated, secure computing environment with predictable costs and technology refresh cycles. This model is also easily scalable, which accommodates workforce growth, and it eliminates large upfront costs in favor of an operating expense-based monthly payment, which also triggers tax benefits.
Per-seat monetization with XaaS presents a list of benefits for channel partners and MSPs as well, running the gamut from scalable sales methodology and increased upsell opportunities, to competitive differentiation and customer loyalty with built-in refresh cycles, to capturing future opportunities. XaaS represents higher profit due to attached high-margin services, lower service delivery cost through standardization, and the ongoing payments of a subscription-based model to increase company valuation. Savvy channel partners can leverage distributor financing programs with cash flow acceleration to receive upfront payments for the term of the agreement.
With XaaS, channel partners and MSPs will be better able to uphold their positions as trusted IT advisors, presiding over a client base that boasts a more modern, consistently-refreshed infrastructure, seamlessly monitored and managed via the cloud. As the business community continues to accommodate the demands of the hybrid workforce, smart channel partners should seek ways to make their transition to the XaaS consumption model, leveraging distributor programs and channel resources to help seize this opportunity—or be left behind.
About The Author
Jason Bystrak is Vice President of the Cloud and Services Business Unit at D&H Distributing. Channel partners can find out about D&H’s cloud solutions offering at www.dandh.com/cloud, or by emailing CloudSolutions@dandh.com.