There is no doubt about it: “Software is eating the world, but services are eating software.”[i] Every day, we see customer value shifting away from products and solutions to experiences and outcomes. The powerful combination of the cloud and software as a service (SaaS) has been fueling this fast-moving trend. Beyond technology innovation, another evolution has also been at play. The clue is in the name… Software-as-a-Service. As customers moved from software to SaaS, they went from simply buying a code-based product to getting a service with several new benefits:
- The agility and flexibility needed to ensure IT is not beholden to past decisions
- The ability for business leaders to deploy and scale innovative experiences delivering the desired business outcomes, often centered around transforming the customer and employee experience
- A CFO-proof business model that saves costs and reduces investment risk
Customers came to demand that every IT outcome needed to be translated into a service, and so the as-a-service model had to extend beyond the world of code. Enter XaaS. Pronounced Zaas or said X as-a-service, this term means “anything delivered as a service” and describes what buyers want: offerings that are services-led, consumption-driven and cloud-enabled to accelerate the business outcomes that companies need to be successful.
By definition, XaaS offerings must come to market as outcomes, or services, that correlate to business goals – all with a modern user experience centered around insights and telemetry to fuel more agile decision making, planning and service utilization. It is important to note that this transition is also shifting how customers define value, moving away from the speeds and feeds of the components to the experience of the outcomes. This means XaaS offerings must go to market packaged around the value of the services they deliver, not the underlying components.
In the world of IT infrastructure, the delivery of managed services has been the traditional way to sell an IT or business outcome to buyers. Cisco customers look to our Provider partners to design, build, implement, and operate the desired IT solution tied to a Service Level Agreement (SLA). But as vendors digitize core IT to be API-centric and cloud-enabled and wrap it all with a flexible consumption model with Service Level Objectives (SLOs), the model is changing. And our partners are already leading the way by launching as-a-service value propositions.
The question then for you in the Cisco partner community is: how do managed services and XaaS offers compare?
Partners and Managed Services Will Make XaaS an Unstoppable Force
Services, the key to success in XaaS delivery and operations, are not always standardized nor objective. Instead, they must constantly evolve to meet the needs of unique regional, segment and vertical customer requirements. In other words, services must be nimble and responsive to needs that are constantly changing, and successful XaaS technologies must come to market through businesses that can refine, consult, and deliver ongoing services.
These are the reasons that managed services are being deemed essential within XaaS offers, with the Technology & Services Industry Association (TSIA) finding that nearly one-third of managed services revenue is now coming from managed XaaS solutions. And our own market model, developed with a leading research company this year, found that while growth for Cisco’s portfolio in as-a-service categories will outpace our traditional product portfolio, the current share of managed services demand will persist. Said another way, customers will shift to new as-a-service experiences with an expectation that they will continue to buy these solutions with a services-led value proposition.
This is where partners have a massive role to play. For this reason, I am so incredibly excited to supercharge what Cisco can do with as-a-service by fueling it with managed services. And as we do this right, we start a virtuous cycle of the Three Ps:
- Platform – We focus our portfolio to build from a platform first approach to ensure greater ease for you to build customer outcomes as-a-service.
- Preference – We want to ensure we are your vendor of choice by doubling down on the people, tools, support, and investments you need to grow.
- Performance – As we focus together on delivering customer outcomes, we continually align investments, incentives, and rewards to ensure we are driving relevance and profitability to your bottom line. Key to this transition is that we support you in the business model transformation to capture the meaningful growth opportunity ahead of us while continuing to support your existing Cisco-based business.
The transition to XaaS is a big topic, so tell us what you want to hear about next and stay tuned for more! And if you are a partner and want to learn more about managed services, as-a-service selling with Cisco+, and other opportunities you can take advantage of to fuel your business next year, please register for Partner Summit!
We can’t wait for you to experience this year’s Cisco Partner Summit. Together, we make Everything Possible!
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