According to Gartner, more than 60% of asset manufacturers will offer outcome-based service contracts by the year 2022, up from less than 15% in 2018. A separate report from IDC predicts that selling products-as-services will become a major component of OEMs’ businesses over the next decade.
The XaaS business model, also known as the subscription-based model, is becoming the go-to operating model for delivering IT services. Co-opting the rapid deployment model of the Cloud, XaaS will soon become the revenue engine for innovative enterprises—with 87% of CEOs believing that “digital” will be integral and transform their business along with the way they sell.
XaaS gives you loyal clients.
For offerings not sold as subscription, the consumer must make a repurchase decision each time. At that point, it is possible—and tempting—for the consumer to reconsider other options and not purchase again. But with the subscription model, it is simply easier for them to continue with the status quo for as long as your business delivers valuable outcomes.
XaaS provides recurring revenue.
In the XaaS business model, clients agree to pay a recurring fee for continuing access to your service offerings. You charge a monthly fee with a minimum term, during which you commit to maintaining the service. There must be a clear distinction, though, that not all companies that provide “services” are XaaS businesses. For example, an office cleaning service that offers $100 cleanings upon request is not a XaaS business — but an on-demand business that does not provide recurring revenue.
XaaS enables you to be predictive instead of reactive.
Thanks to the IoT, your installed base (through which you deliver your service) can provide you real-time operational insights into current operating status, keep you updated on upcoming maintenance needs, and flag unusual device behavior thus allowing you to be proactive instead of merely reactive.
Make the shift.
As today’s customers preferentially move to subscription-based services, companies must transform their business model from offering products to offering the product’s value as a service.
Services, not products, are the future of business. Taascom can enable your company to embark on your business model transformation by helping you make the shift from a transaction-based to a subscription-based revenue model. If you want to kickstart your business model transformation, contact us today.
