Anything goes: why more businesses are turning to XaaS
“The stress? It’s extreme,” says James Rubython, founder of The Muddy Paw dog-grooming chain. “You despair of paying wages on time. Or at all. Stress can stop you from doing anything.”
And the cause of this torture? “It’s cash flow. Always. You can be profitable and turning away customers at the door but if your cash flow isn’t sorted, you can’t pay bills. Then your internet gets cut off, and that’s it.”
His plan is to open 200 grooming salons across the UK. But every new location ties up cash for months while the salon is fitted out and staff are hired. “We’ve had days where I’m not sure if I can pay salaries. Mortgages depend on us being on time. It’s horrendous,” says Rubython.
Fortunately, he has a solution. The Muddy Paw is full XaaS. The X in the name, as in maths, stands for either ‘anything’ or ‘everything’, as a service.
“We love XaaS,” says Rubython. “We rent everything as a service. Our email system is business Gmail. It means there’s nothing for us to run. No responsibility. For payments, we use Zettle and pay a percentage of each sale as a fee. If we don’t trade at a location, we pay nothing. We’re running two booking systems called Savvy and Shake Your Tail, to compare which one is better, and both are a monthly cloud service. Our accounts package is a cloud-based subscription package. Even our cars are rented.”
The result is an ultra-lean enterprise. “We don’t even have an IT guy,” Rubython says. Capital is sunk into new venues rather than operational acquisitions. It’s an agile philosophy in an economy where nimble cash management is king.
The case for XaaS
These days, there’s nothing that can’t be acquired as a service. Office space, data storage, cybersecurity, performance dashboards, and even quantum computing are all accessible via pay-as-you-go access.
“In essence, the XaaS issue is the old ‘buy or build’ question,” says Michele Tucci, chief strategy officer of Credolab, a fintech software provider for banks. He rattles through the benefits. “Speed to market is first and foremost. XaaS solutions can be deployed within days or even hours.”
Product maturity is another key consideration. “By opting for a ‘buy’ solution rather than a ‘build’ one, you get a tried-and-scalable solution without needing to spend time testing and refining it. The flexibility of XaaS helps companies quickly scale up or down as needed, and brings the latest updates on new technologies as soon as they come online. Most of these upgrades will also be automated, which means no pause and no disruption.”
The cost flexibility of XaaS is critical, says Tucci. “The scalability of XaaS means that vendors can offer a cost-effective term licence subscription based on consumption, so you only pay for what you use monthly or yearly. It compares favourably with bespoke solutions and ongoing maintenance and support costs.”
There’s also the option to switch providers as and when required. If a service isn’t performing, it’s pulled and switched out like a Lego block. Add it up, and XaaS is a formidable proposition.
Weighing up the cons
Of course, XaaS may be potent but it’s not all-conquering. There are good reasons to resist a full XaaS approach.
There are hidden issues, such as data compliance and security. If company data is held by a third-party provider, what happens in a catastrophe? “In cloud and hybrid environments, you are responsible for making sure your data is secure and accessible for compliance, legal and other purposes,” warns James Blake, chief information security officer at Cohesity, a data resilience company.
“This is known as the cloud’s shared responsibility mode,” he continues. “Cloud providers can be chosen to be custodians of an organisation’s data, but the responsibility always lies with the organisation to ensure they’ve aligned their risk tolerance to their cloud deployment.”
Tucci believes most companies simply don’t realise it’s an obligation. “I am often amazed at the lack of understanding that people have of their shared responsibility model – in everything from backing up, maintaining a redundant architecture, through to patching. A classic example is Office 365, which explicitly states that consumers of the service should provision their own back-up and restoration capability atop the service provided by Microsoft.”
Then there’s the question of scale. At what point do organisations benefit from developing their own tools in-house? For large companies, it can make sense to develop even peripheral services to get exactly what is needed.
“Amazon developed its own videoconferencing tool,” says Jun Seki, chief technical officer at Rosecut, a wealth manager. “TikTok developed an internal messaging tool called Lark, as an alternative to Slack. Even Gmail was an internal tool at Google before they opened it up to everyone.”
Seki observes that the tipping point at which XaaS may become uneconomical is earlier than is often assumed. “The cost of licences starts to rise pretty quickly,” says Seki. “You can pay crazy amounts. Once you reach 100 people, subscriptions become expensive. Companies start thinking that if they take development in-house, they can build the software how they want it, with customisations.”
Prepare for the new normal
The debate, then, is nuanced, but the trend line points only one way. XaaS is the new normal. It may just take a bit of getting used to.
As Tucci puts it, “As with any innovation, there might be people in a company who resist using XaaS solutions – just as people once did not trust smartphones, preferring to work with push-button phones. But over time, the latter have simply left the market. For most people, it’s a matter of getting used to something new and giving up the comfort of what they already know.”