“Anything as a Service”, aka XaaS, is on the rise, with Gartner forecasting that by 2022, more than 90% of software providers will have migrated to an XaaS (or subscription-based) model. Traditionally, businesses have had to buy licensed software and install it on-site, with all of the expense implications of networks and infrastructure to support it. However, with the advent of XaaS, businesses simply buy whatever services they need, whether for HR or finance, and access them from anywhere. The only requirement is an Internet connection. This means a whole host of advantages for business, from low barriers to entry and little or no capital expenditure to instant scalability and device and location independence. However, it means significant changes, too.
Today, the most common services offered via subscription model are HR, finance, procurement, payroll and CRM. With XaaS, budgeting for IT services becomes so much more straightforward. Suddenly businesses have access to a multitude of functions all offered as a service with clear menu pricing and cost-per-seat options. These services are so accessible that XaaS really is the default answer for small to medium sized businesses, particularly as many of these new services are ‘try-before-you-buy’. For larger businesses, however, the transition to XaaS can be more difficult. For many, adopting new simplified and common business processes is seen as too big an obstacle to overcome, plus there’s the challenge of how it all fits into their existing (often very complex) IT estate. But in the future, the speed at which specialist service providers will be able to enhance their offering will far exceed the pace of change in a bespoke solution, which will help make XaaS the obvious choice for any organisation striving to keep pace with the rest of the market.
Implications for IT
Clearly, the ability for businesses to choose services from a menu removes responsibility from the traditional IT department and puts the emphasis and ownership of IT squarely with the relevant business function. This responsibility extends not only to selecting the service that provides the new capability that the business would like, but also to managing the business change required as a result of acquiring that new service – the so-called digital transformation.
Of course, the IT department still has an important role to play, but its focus in the new XaaS world is on devising an IT strategy that promotes and embraces XaaS, whilst ensuring that any new service chosen by the business fits within the organisation’s overall IT roadmap and data architecture. Crucially, this needs to include requirements for systems access rules, security and data integrity.
Failing to consider the organisation’s IT architecture can result in data being duplicated in disparate systems, which creates a future business risk.
New roles, new skills
In a world where IT departments are no longer the primary provider for their company’s IT, their role switches to one that defines strategy, polices technology choices and governs data integrity and security. Indeed, XaaS means new skills, new responsibilities and new expectations of the IT department. The IT team will not only be accountable for the IT strategy and business roadmap; it will also be required to manage change and the relationship with service suppliers, ensuring that changes originating from the service users do not contravene the strategic direction of the business or data integrity.
The most important and perhaps dramatic change, however, will be to define where in the organisation the business transformation project is managed and by whom. This involves managing the various changes associated with the new service – such as the roll out of the new processes, any resulting organisational change, training, redeployment and, most importantly, governance. The business transformation function should be an independent function within the organisation, reporting to the board. Headed by a CTO (Chief Transformation Officer), this team should not only be responsible for managing individual projects but also for managing the organisation’s ongoing transformation activity. To be effective, business transformation should be a process of continual improvement, defined by Gartner as “ContinuousNext”. In this way, change becomes not just something that happens when a new service is introduced, but a process of constant change and improvement – and this needs to be managed in the right way.
Larger UK businesses looking to adopt the ready-made approach provided by XaaS will need to take a much more disruptive approach to business transformation. For years, software vendors have sold packages on the premise that they can be configured to specific business requirements rather than adopting a standard model. This has probably been the single biggest cause of IT project overruns in the last 20-30 years and kept many a specialist contractor gainfully employed.
The truth is, and has always been, that the way a business performs key functions like raising an invoice or purchase order really doesn’t need to be that specialist. And a much stronger emphasis on preparing a business to adopt highly available and highly standard processes will lead to greater efficiencies, both in terms of development costs and in terms of future operations. Of course, SMEs are much nimbler and can more readily make the change required. Larger organisations that have entire teams ‘raising invoices and purchase orders’ will find the transformation that much more difficult, but the benefits of making the change will be that much more rewarding.
Prepare for the future today
Widespread adoption of XaaS may not be here just yet due to limitations in terms of choice, functional capability and performance at scale – particularly for larger businesses. However, significant progress has already been made in most of the standard core business functions of HR, finance, procurement and CRM and any remaining gap will inevitably close as competition in the marketplace hots up. That is why organisations need to be preparing and structuring their business for an XaaS future now, moving into the mind-set of XaaS as default. This revolution requires businesses to focus on best-practice outcomes, continuous efficiency improvements and creating organisations that expect and embrace change as a constant in their working lives.