IT and Business Insights for SMB Solution Providers

How Pushing for More Everything as-a-Service Models (Xaas) Increases Your Recurring Revenue and Gives Customers What They Want

Managed service providers can use cloud-based subscription models to provide customers with flexible payment options and scalable solutions, turning everything as a service (XaaS) into MRR. By Jamil King

Should everything be a “service”?

We now consume almost everything as a subscription. Netflix, Zoom, and meal kits make it easy to try out different products and services at a low cost. However, the “as a service” model can offer more than streaming the latest show or delivering a ready-made meal to your doorstep. In the channel, as-a-service models represent the next phase of providing customizable and scalable technology solutions to customers in mission-critical industries such as the public sector, military, and utilities. For managed service providers and value-added resellers, there’s an opportunity to extend this model to small and medium businesses in other industries as well. 

As the workforce becomes more remote and workflows more digital, everything as a service (XaaS) opens the doors for more connected and flexible hardware and software offerings. In many cases, as-a-service models can provide additional resource and infrastructure for surge cycles as well. XaaS relies on the cloud to improve customer engagement, enhance business operations, increase workforce efficiency, reduce costs, and offer better support and maintenance. Additionally, XaaS often leverages subscription payment models, which provide an alternative revenue stream for the channel. In 2021, 55% of the IT sector invested in one or more types of XaaS, and 75% of business leaders reported that their organization consumes more than half of its IT through as-a-service subscription models. 

Most important, 88% of business leaders and decision makers believe that XaaS is crucial to their organizations in this digital transformation era. Like consumers, organizations prefer to pay for solutions and services as needed rather than owning depreciating assets for the sake of owning. The flexibility of XaaS allows SMBs to invest in a wide array of hardware and software solutions while reducing capital outlay. With many business leaders reporting that XaaS gives them a competitive advantage, MSPs and VARs have an opportunity to shift their focus and provide tailored solution lifecycle management to their customers. This is also a key area of revenue growth for the channel, which has historically been slower to embrace revenue models outside of traditional hardware sales.

A Channel Partner's Role in XaaS

Channel partners are an essential element of the XaaS equation. Solution lifecycle management requires scalable resources that support, service, secure, and maintain deployments. A customer can buy a product from anyone, but the best channel partners provide more than just a product—they provide a complete technology ecosystem.

XaaS also helps channel partners become trusted advisers. With so many options available, customers need partners to help them navigate the noise to find the most relevant and beneficial solutions. By implementing an XaaS model, MSPs can bring together the best hardware and software for the ideal combination of solutions to meet their customers' unique business needs.