More than half (54%) of businesses are prepared to adopt anything-as-a-service (XaaS) models today. They believe that embracing XaaS will help them generate US$100s of millions over the next three years, and increase their valuation by 50%.
These are some of the findings from EY’s latest report, which surveyed 1,200 organisations globally to gauge adoption trends of XaaS across industries.
Apart from technology vendors, organisations in other industries are also eager to make the shift to XaaS. Case in point: Life sciences/health care and automotive manufacturers are among the top five sectors where companies have completed their XaaS transformation.
“As corporates in Southeast Asia seek to innovate their business models, many of them are focusing on their core capabilities, divesting non-core businesses and functions while exploring managed services. This contributes to the growth of the XaaS market in Southeast Asia. While many are looking to tap on the XaaS model, the reality remains that we are still seeing companies in a mix of in-progress or piloting stages in their XaaS transformation,” says Joongshik Wang, EY-Parthenon Asean leader, also EY Asean Technology, Media & Entertainment and Telecommunications leader.
The report also reveals that businesses are increasingly migrating from basic subscriptions to consumption-based models and outcomes pricing. While 60% of the respondents are currently using subscription models to charge for XaaS offerings, 52% intend to shift to consumption models in the next three to five years – driven largely by the appeal of a more predictable revenue stream.
However, the move will also call for transformational changes across the organisation. “For companies in Southeast Asia, the key challenge that many face is understanding their customer strategy, including justifying commercial models and having a view of how the future operating model will look like for sales, marketing and IT functions, and incorporating these into their XaaS transformation strategy,” Wang shares.
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According to the report, organisations that are successfully operating XaaS models have significantly transformed their go-to-market enablement (46%), billing and payments (44%), and finance and accounting (42%) processes.
Additionally, 86% have also set up customer success functions to drive the adoption and expansion of XaaS models, while 35% have set up new legal entities or tax structures in order to support their transformation programmes.
