XaaS has reached the tipping point

Has anything-as-a-service (XaaS) reached the tipping point? HPE’s second-quarter results seem to be pointing in that direction. The company revealed it had achieved an annualised run-rate (ARR) of $678m, up 30% on the same quarter in 2020. That figure represented slightly more than 10% of HPE’s overall revenue of $6.7bn.

President and CEO Antonio Neri left observers in no doubt about the company’s commitment, stating that it was “accelerating our pivot to as-a-service, while also advancing our cloud-first innovation agenda to become the edge-to-cloud platform as-a-service choice for our customers and partners”.

HPE sees no let-up in the growth of its ARR, reiterating its 2020 guidance of “30-40% compounded annual growth rate from fiscal year 2020 to fiscal year 2023”.

While HPE can claim to be one of the earliest of the larger vendors to move to the XaaS model, others are busy moving in the same direction, including the likes of Dell Technologies and Cisco.

The XaaS phenomenon and the opportunities it opens up for the channel are discussed in a timely new report from the Global Technology Distribution Council (GTDC) entitled The XaaS revolution: distribution’s pivot to the future.

The report highlights the ability for businesses to better support remote workforces, quickly deploy new technologies and make instant updates as significant factors driving XaaS adoption.

It acknowledges that the market for XaaS is still relatively small in terms of the overall demand for ICT goods and services. “Until it becomes a major, if not preferred, business model, ICT distributors have time to modernise their businesses,” says the report, “but not much.”

The GTDC believes XaaS will be a significant boon for the channel and quotes Stacy Nethercoat, senior VP of advanced solutions at Tech Data, in support of its argument: “XaaS presents a tremendous opportunity for channel collaboration. With a multidisciplinary team of experts, distributors can help IT services providers quickly gain a competitive advantage and deliver more comprehensive support to their clients.”

The opening for distributors in the XaaS space is described as “considerable”. The GTDC adds: “No matter what you call it – everything, anything or something as a service – distributors, vendors and channel partners have ample opportunity to elevate their game in the XaaS economy.”

The channel can help to optimise the XaaS experience by handling multi-vendor contracting, subscription management and technical support, along with product logistics, marketing and financing. The GTDC says this will make distributors, and the role they play, more valuable than ever.

“Although XaaS has already spearheaded a once-in-a-generation technology revolution, distributor ecosystems will help perpetuate and shape this new legacy in the making,” it adds.

In other words, no matter how things shake up, channel partners will maintain the pivotal role they have always played for vendors and customers.

No wonder the GTDC predicts: “The potential is limitless. Vendors that engage with proactive distributors and channel partners will reap greater rewards in this economy, no matter what you call it.”