It's no secret why manufacturers and high-tech companies are driving business model innovation with service-based strategies, essentially selling results rather than products. The global Everything-as-a-Service (XaaS) market is projected to grow from USD 545.35 billion in 2022 to USD 2.378 trillion by 2029. In one study, IT companies said that XaaS is helping them “create new business processes, products, and services.” Rethink your business model and rethink how you sell to your customers. ”
During a panel discussion held at this year's SAP Sapphire & ASUG Annual Conference Orlando, three industry leaders shared their experiences with XaaS, including business drivers and results, lessons learned, and future strategies.
HPE: Combining a broad service base provides flexibility for customers
Changing customer expectations are behind most organizations' decisions to innovate with service-based products, and global infrastructure leader HPE is no exception. HPE offers customers a variety of Software-as-a-Service (SaaS) and Infrastructure-as-a-Service (IaaS) products.
“Our industry is experiencing an incredible transformation in how our customers, from large enterprises to individual developers, use services and infrastructure,” said HPE. said Dave Carlisle, Chief Technology Officer, Global IT at . “A wide range of combinations of service-based options means customers can choose what works best for their business. To manage complexity, balance flexible customer options with guardrails of standardization. is needed.”
For a 75-year-old organization like HPE, the transition to a subscription-based business model involves every part of the organization.
“From developing new offers and features to customer experience and partner engagement, we need to be fully aligned,” Carlisle said. “By using SAP Billing and Revenue Innovation Management as the foundation for our service-based business, we have significantly simplified the end-to-end transition to a subscription-based model. What used to take us now takes minutes. Overall, this is a great opportunity for us to evolve and innovate our business model.”
Autodesk: XaaS data drives business growth
Sudhir Missal, senior director of engineering at Autodesk, agreed that XaaS business decisions are primarily customer-driven.
The transformation to a services-based model has enabled the global design and software company to better meet the needs of customers in the architecture, engineering, construction, product design and manufacturing, and media and entertainment industries.
“We have multiple subscription-based services that reflect how customers want to purchase,” Misal said. “This is a change in mindset, not just for our partners and customers, but for the entire company. We need to make sure everyone is included in this journey, from planning to execution. It provides a connected system of record, and SAP Billing and Revenue Innovation Management provides subscription-based order management capabilities.”
Not only does XaaS increase speed to market, it also reveals valuable data for business growth and scale.
“This digital transformation will help us invest in future growth,” Misal said. “We have collected a lot of data over the years, which we can use to reinvest in new market opportunities. With a solid foundation in place, we can quickly roll out new business models around the world. Masu.”
SAP: Start small and get big with subscription-based services
At SAP, the market leader in enterprise application software across an unparalleled range of industries, moving to a cloud-based business model makes perfect sense.
“We are thrilled to be partnering with SAP for the first time in 2020,” said Stefan Kraus, senior vice president and general manager of Discrete Industries and Energy & Natural Resources at SAP. “For us, this means creating new Software-as-a-Service offerings like RISE with SAP and GROW with SAP to help companies of all sizes move to the cloud in their transformation journey. We support you.”
Krauss said SAP's customers, power tool manufacturers, can embed sensors in their products to charge according to actual usage and sell predictive maintenance as a service, including design for a circular economy and recycling. We explained how we were able to track items throughout their lifecycle. He advised companies to carefully identify where service-based services can yield the greatest results and involve the entire organization in the transition from selling products to servicing.
“One manufacturer in Germany had to retrain its sales force to sell solutions rather than products,” he said. “Most companies start small. Every once in a while, a crisis occurs that forces a company to rethink the way it does business. We can help customers who are struggling.”
IDC researchers predict that digital products, services, and experiences will generate 40% of total revenue for G2000 organizations by 2026. Deploying XaaS is a strategic business decision that, if done correctly, can be a win-win for businesses and their partners.
Susan Galer is Director of Communications at SAP.