CLARITY.SHOW Podcast: Going Customer-Centric with XaaS
In this podcast, Sergey Jermakov, Senior Partner at CLARITY is joined by Ankit Sharma, Senior Director, Industry & Customer Advisory at SAP. Ankit has a background in industrial manufacturing and has been with SAP for about 10 years. He is currently leading the Everything-as-a-Service (XaaS) program at SAP.
Together Sergey and Ankit dive deep into the transition to the Everything-as-a-Service (XaaS) model in different industries. Join Sergey Jermakov and Ankit Sharma as they discuss the opportunities, challenges, and key strategies for success in this new business model. Don't miss out on these valuable insights!
Our guest Ankit Sharma, Senior Director, Industry & Customer Advisory, at SAPand the host of the podcast Sergey Jermakov, Senior Partner at CLARITY.
1. The Current State of the Market
2. The Big Opportunity and Concern
3. Challenges in Adoption
4. Key Areas of Focus for Success
The business landscape is rapidly evolving, and one of the most significant shifts is the transition towards Everything-as-a-Service (XaaS). This model, which encompasses Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and many other service-based business models, is transforming how companies operate and interact with their customers.
The Current State of the Market
The XaaS model has gained significant traction in recent years, particularly in the industrial manufacturing and high-tech industries. Companies are increasingly moving towards service-based business models, driven by the need to unlock new revenue streams and gain a competitive advantage.
One of the key trends in this transition is the shift from a product-centric approach to a more customer-centric one
This shift is evident in the rise of digital services, where companies are leveraging data from smart products to provide value-added insights to their customers. These insights, offered as subscriptions, are creating new opportunities for monetization and customer engagement.
The Big Opportunity and Concern
The transition to XaaS presents a significant opportunity for companies. By offering services on a subscription basis, companies can generate recurring revenue and potentially achieve higher margins. For instance, high-tech companies like Apple boast about two times the margin in their service business compared to their product business.
By offering services on a subscription basis, companies can generate recurring revenue and potentially achieve higher margins
However, the transition to XaaS is not without its challenges. Companies need to determine the right servitization mix, the right service-based business model, and the right price point for their offerings. Additionally, they need to navigate the complexities of scaling these business models beyond pilot programs.
Challenges in Adoption
One of the biggest challenges companies face in adopting XaaS is the cultural shift it requires. Transitioning from selling products upfront to selling services on a subscription basis can impact a company's financial statements and require changes in its processes and profit formula.
Companies need to constantly innovate to stay ahead of competitors
Another challenge is the competition in the digital services space. Companies need to constantly innovate to stay ahead of competitors who are developing digital services agnostic of any hardware.
Key Areas of Focus for Success
To successfully transition to XaaS, companies need to focus on several key areas. First, they need to develop digitally smart products that can transmit data for offering digital services. Second, they need to create offerings that provide continuous engagement with their customers. Third, they need to establish strong business networks and alliances to deliver the outcomes they promise to their customers.
Lastly, companies need to consider sustainability regulations and the impact of their products on the environment. The XaaS model can help companies navigate the sustainability maze by extending the life of their products and designing products with sustainable features.
The Bottom Line
The transition to XaaS is a journey that requires strategic planning, continuous innovation, and a customer-centric approach.
Despite the challenges, the benefits of recurring revenue, higher margins, and deeper customer engagement make it a worthwhile endeavor for companies willing to navigate the complexities of this new business model. As the business landscape continues to evolve, the companies that can successfully transition to XaaS will be well-positioned to thrive in the new era of service-based business models.
Here is a full video of this podcast:
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