Is XaaS the future of cloud computing?

Anything as a Service is a natural evolution of the cloud, but where do we go from here? 

Enterprises and consumers are inexorably moving to cloud computing, and many are already cloud-native. The corporate emphasis towards leaner, more agile operations began this trend years ago. Fewer companies are building their own data centers. Hyperscalers and other cloud computing giants are filling the gap. The cloud itself may be public, private,or hybrid, but fundamentally, cloud computing is central to innovation in corporate IT and software development. And it’s here to stay.

Anything as a Service, or XaaS, is part of that trend and a natural outgrowth of the evolution of cloud computing. Service platforms built on cloud computing infrastructure help businesses scale and adapt faster than ever before. “Anything as a Service” presents a new landscape of opportunities as more customers migrate to 5G. 

The subscription consumption model central to XaaS holds enormous promise for entrepreneurs looking to bootstrap innovative businesses without huge capital investments. Many businesses are already seeing significant savings. 

The COVID-19 pandemic and its tectonic shift in skilled labor to a hybrid workplace has helped to accelerate the XaaS trend. The emergence of service platforms provides one route for businesses navigating hybrid work issues to support their workers. Perhaps just as importantly, it offers businesses the ability not only to scale services up as they need additional capacity, but to scale services down to respond to changing capacity needs as well.

End-user spending on public cloud services topped $332 billion in 2021, according to Gartner. $122.6 billion was spent on Software as a Service offerings: platforms like Salesforce and SAP, or Adobe Creative Cloud and Microsoft Office 365. $82 billion as spent on Infrastructure as a Service (IaaS), which provides cloud-facing businesses with the core services they need to scale in the cloud. Another $59.4 billion was spent on Platforms as a Service (PaaS), which provide a richer set of tools for businesses to deploy custom cloud applications. Gartner also predicts these three segments will experience the most growth in the coming years as more and more businesses turn to the web by necessity.

One size may not fit all, but fits most

XaaS also holds the promise of new revenue streams and growth opportunities for Communication Service Providers (CSPs) as they pivot to 5G. 5G provides a limitless runway for innovation and iteration for businesses that adapt to cloud-centric methodologies that focus on DevOps and other operational and management processes and systems that emphasize constant app deployment and iteration.

Anything as a Service comes with some downsides, as well. Some of these are issues enterprises have grappled with for years, such as dependency on a single vendor or dead-end technology. Depending on the cloud means additional security requirements, backup and service outage mitigation strategies. Data sovereignty and data privacy are of paramount concern. And while XaaS holds the promise of lower capital costs for businesses, it’s still a consumption model. Hidden fees and license charges can create staggering charges for businesses, potentially limiting profitability and growth.

XaaS isn’t a panacea for all corporate capital concerns, and it isn’t a one-size-fits-all solution. But it may be a “fits most” solution which guides the evolution of cloud computing through the next several years as businesses continue to reinvent themselves around the cloud.

The cloud isn’t right or necessary for every business, or every business process. But the majority of businesses looking at XaaS now think that the model gives them a leg up over the competition on getting new products to market, and many of them consider it a strategic advantage. One thing for sure: It’s growing, and will continue to grow and evolve, along with the rest of the cloud computing business.

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