XaaS market trends

XaaS: Anything-as-a-Service? Yes, Please!

Polcode Team
4 minutes read

It’s fair to say that SaaS (software as a service) products have pretty much revolutionized the way we perceive software. Before the inception of SaaS products, companies had to go through a painstaking process of implementation of on-premise software solutions and provide an appropriate environment for the product to operate. SaaS brought down those costly and time-consuming deployment issues.

With the introduction of SaaS solutions, companies gained easier and hassle-free access to high-quality software without worrying about expenditures on resources.

SaaS has proved such a convenience both for companies interested in software and those selling it that soon enough a lot of other services began popping up on the landscape.

Welcome in the era of XaaS—anything as a service!

What Is XaaS?

Generally speaking, anything as a service encapsulates all technologies, products, tools delivered and sold as a service over the internet through cloud computing, by way of licensing-and-delivery. XaaS is the driving force behind innovation in the solutions delivered over the cloud. With more services available, there’s a growing shift among businesses to a multi-cloud heterogeneous architecture. Click To Tweet.

Officially, we recognize a variety of related terms. PaaS (platform as a service), IaaS (infrastructure as a service), SaaS (software as a service) are those most commonly encountered.

PaaS—platform as a service provides the environment and tools for software development, for example, to build applications. Example service: Google App Engine, AWS Elastic Beanstalk. 

IaaS—provides the infrastructure to host the platforms used for software development, for example, networking hardware, servers, and storage. Example service: Google Compute EngineAmazon Web Services.

SaaS—in the plainest of explanations, SaaS products are full-fledged apps used by the client, with the necessary infrastructure, platform, and resources included. These are services like Salesforce, Google Apps, Dropbox, Hubspot, MailChimp, Slack, and also plenty of other services devoted to, for example, accounting, human resources, booking systems, e-learning, office space management, and many, many more. Numerous startups are also embracing the SaaS model of delivery. Here, the sky’s the limit.

The three are just the tip of the iceberg of the “as-a-service” ecosystem. Below is a sample list of other XaaS products:

  • Security as a Service
  • Storage as a Service
  • Malware as a Service
  • Backend as a Service
  • Network as a Service
  • Database as a Service

XaaS on the Rise

Ever since XaaS products entered the market, they began their steady ascent to the software solutions podium.

Cloud services market 2017-2021

XaaS growth projection. Source: Gartner

Such favorable popularity results from the fact that both end users and big enterprises look for subscription-based pricing model that is easily and foreseeably managed and deployed to address their growing IT needs. This increasingly bigger demand for cloud-delivered products creates a fruitful environment where service providers compete to deliver even better services to meet that booming market need.

SaaS model alone is experiencing an astonishing growth and promising future:

SaaS market growth forecast. Source: Finances Online

Other popular cloud-delivered solutions are following not that far behind. Together—as a XaaS—they grew at 24% CAGR (compound annual growth rate) between the years 2013 and 2018:

Most highly deployed global cloud service by 2018. Source: Cisco

What is more, the same CAGR of 24% for XaaS is projected for the years 2019 to 2024!

Benefits of XaaS Solutions

Delivering services over the cloud has numerous benefits for users.

Clients turn to XaaS for a reduction in costs. Depending on the choice of a cloud solution, clients can do away with hardware (hard drives, serves), power expenses, office space allotment, maintenance of infrastructure, which amounts to considerable savings. A study done by Deloitee, further reports that the more IT operations are delivered over the XaaS model, the bigger reduction in costs.

XaaS prportion in enterprise software chart

Proportion of XaaS IT share and reduction in costs. Source: Deloitte

But this doesn’t always hold true and depends on what type of XaaS is used at a company. For example, if a business is using PaaS with virtual machines, it will pay much more for that than for its own hardware. With SaaS, that also depends on the product. For example, Atlassian licenses are cheaper than SaaS solutions. The majority of reductions that can be observed in the “as a service” delivery are often made in the time required to manage and maintain this software by administrators.

There’s also the case of a very easy and early access to innovative solutions with automation capabilities that often help companies get ahead of the competition.

Shorter deployment period for XaaS solutions significantly cuts the time required to make the service operational, allowing businesses to start making money sooner. On the service provider’s side, the deployment part is only a matter of setting up user accounts. Gone are the days where every instance of software had to be installed and configured for employees on-site.

Challenges and Risks of XaaS

While XaaS solutions can decrease operational costs and increase productivity and efficiency through innovation and automation, this model of service delivery isn’t devoid of cons and challenges.

One of the biggest challenges seems to be dependency and reliance on the service provider. If the service provider discontinues a particular service or changes delivered features, it puts companies that use it at risk of not having the means to perform key business operations.

Also, since a fast and stable internet connection is a must in the cloud world, any disruptions in that area, whether on the provider’s side or the client’s, mean unavailability of crucial services.

XaaS solutions can be difficult to integrate with existing IT environments. This, in turn, can require the companies to create dedicated integration systems. Also, future data migration to another provider can be a costly and cumbersome endeavor. Limited customization options, whether functionality- or performance-related, too, have to be taken into consideration before implementing a XaaS application.

Another risk present in the XaaS delivery model is data security. Since large amounts of data will be migrating through the XaaS solution, companies have to be aware of resulting compliance and security issues. Here, aside from a thorough viability analysis, there are four good practices we recommend:

  • Data kept in home countries or countries not bound by international agreements that allow governments to access the data
  • Access to XaaS solutions only via a VPN or VPC connection
  • Multi-step authorization
  • All services operating on encrypted disks

However, the growing competition among XaaS providers compels the companies to keep the number of disruptions to a minimum.

XaaS through the Eyes of the Service Provider

From the service provider’s perspective, building and maintaining a XaaS product has many advantages.

First, managing and maintaining a XaaS solution is cheaper and easier than its downloadable desktop version.

Second, any upgrades and patches are put into force instantly upon release for every user signed up for the service, which decreases the risk of any possible litigation.

Even though the initial investment in creating a XaaS solution might be considerable and the first flow of revenue rather slow, the subscription-based model will, over time, generate a much greater revenue compared to an upfront payment as seen in other software delivery models, such as CD-delivered or downloaded software.

In our next article, we’ll explore how XaaS, and particularly SaaS solutions are created and what are the best practices to get the most out of ideas sold via the cloud.

Anything, But Is It for Everyone?

The abundance of services offered online suggests that, yes, they are able to address the needs of businesses across multiple niches and industries.

And even though there are a few disadvantages to think about before deciding to either build or use a XaaS service, this model of service delivery is taking the world of IT by storm and soon enough might be the only one worth considering.

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