Changing Your Business Model Series — The XaaS Business Model

In our last newsletter, we focused on the Fee-For-Service, Product + Paid Support, Product + Paid Add-Ons, the Razor Blade, and the Reverse Razor Blade Business Models. 

Today, we’re focusing on the XaaS Business Model.

Here is the list of business model categories we provided at the start of this series for your reference as you evaluate models that you might consider changing your business to —

• B2B (Business-to-Business) — where companies sell their solution to other businesses or organizations.

• B2C (Business to Consumer) — companies that sell to individual end consumers and may use retailers or wholesalers to sell to their customers.

• DTC (Direct to Consumer) — companies that sell directly to individual, end consumers.

• B2B2C (Business to Business to Consumer) — companies that sell their solution to other businesses to help those other businesses sell to consumers.

• C2C (Consumer to Consumer) — companies facilitate consumers selling to other consumers.

• B2C2B (Business to Consumer to Business) — companies who sell to the employees of other businesses who then advocate for their employer to buy the original company’s solution.

• B2G (Business to Government, also Business to Public Administration or Business to Public Sector) — companies sell their solution to government entities.

• C2G (Consumer to Government) — companies facilitate consumers directly interacting with a government entity.

Today’s Business Models — XaaS

The XaaS Model (which means Anything-as-a-Service) includes businesses that provide access to their products, services, tools, technologies, and support for a recurring fee. With the innovation of the XaaS model many industries are shifting how they provide their product/service to their customers in a more efficient way, while helping their customers avoid having to take on large upfront, operational, and maintenance costs. Their customers can also avoid going through complicated processes for building their own solutions or teams in-house. XaaS companies allow their customers to get the products/services they need and the results they desire faster, better, more consistently and conveniently, and by more affordable means over the long-term. This allows XaaS companies to customize their offering to the needsof their customers and for them and their customers to develop an ongoing mutually beneficial relationship. 

This model type includes models such as — 

• SaaS (Software as a Service) 

• PaaS (Product as a Service)

• Paas (Platform as a Service)

• IaaS (Infrastructure as a Service)

• STaaS (Storage as a Service) 

• DBaas (Database as a Service)

• AaaS (Analytics as a Service)

• Caas (Creative as a Service)

• AaaS (Authentication as a Service)

• DaaS (Desktop as a Service) 

• CaaS (Containers as a Service)

• FaaS (Functions as a Service) 

• DaaS (Data as a Service) 

• NaaS (Network as a Service) 

• Caas (Communications as a Service) 

• DRaaS (Disaster Recovery as a Service)

• HaaS (Hardware as a Service)

• Haas (Healthcare as a Service) 

• CSaaS (Cybersecurity as a Service)

• FaaS (Finance as a Service) 

As you can see, the list of this type of model is being used across a multitude of industries and is continuously growing. This model type can fall under the B2B, B2B2C, B2C, and B2C2B categories.

Mapping The Model: XaaS

If you mapped out the XaaS business model, it could look something like the following —

The XaaS Business Model

Let’s look into some examples.

XaaS Model Example #1

ClickUp is an all-in-one project management platform, SaaS (or Software as a Service). ClickUp created their Saas so teams could have one project management solution to replace them all. That way teams could be more productive, keeping them from having to juggle several tools in completely different ecosystems. Teams can use ClickUp for Project Management, Product Development, Knowledge Management, Resource Management, Collaboration and Workflows. Users can also create custom dashboards and views that fit their specific scenarios/workflows without being boxed into platform templates or capabilities. ClickUp’s SaaS is offered at 4 tier levels — Free, Unlimited ($7/user/month), Business ($12/user/month), & Enterprise levels. This allows different customer segments to access and engage with ClickUps SaaS based on their need levels and for ClickUp to continuously improve their SaaS based on regular users feedback and activity.

Up next is…

XaaS Model Example #2

Summit NanoTech is a CleanTech company using a HaaS (Hardware as a Service) model to provide its innovative, patented technology to its customers who want to extract lithium to help meet the growing demand for lithium batteries used in products such as EVs (electronic vehicles). Lithium comes from two primary sources: brine and hard rock. Traditionally, brine is processed to extract lithium via large evaporation ponds using solar energy and chemicals. However, this process requires a lot of land, creates a lot of waste, can damage the environment, and takes a lot of time to complete. It puts a tremendous strain on the environment removing vast amounts of water from the surrounding ecosystem and depleting communities around these facilities in South America of the scarce freshwater supply they rely on (South America is where a large supply of the necessary brine to help meet the growing needs of the world’s energy transition can be found).

XaaS Model Example #3

Microsoft Azure is a cloud platform for building, deploying, and managing innovative software solutions. As a PaaS (Platform as a Service), it is a development and deployment environment in the cloud that allows its customers to create everything from a simple cloud-based app to highly sophisticated, cloud-enabled enterprise applications. Microsoft Azure provides the infrastructure necessary (servers, storage, and networking) as well as middleware, development tools, business intelligence services, & database management systems. This allows it to support the entire web application lifecycle — developing, testing, deploying, managing, and updating applications as needed. Customer don’t have to purchase or manage multiple expensive software licenses, the infrastructure needed for the applications, the middleware, container orchestration, or development tools and resources. The platform provides all of that for them.

The last XaaS model version we are going over today is…

XaaS Model Example #4

Crowdstrike has a CSaaS model (Cybersecurity as a Service). The company is a global cybersecurity leader with an advanced cloud-native platform for protecting endpoints (physical devices that can connect to a network & act as entry points for a cyber attack), cloud workloads, identities and data. Their platform, called Falcon, brings together data, security, IT, generative AI, and workflow automation natively built into the platform. Crowdstrike collects data from everywhere relevant to its customers, builds and trains AI models for its generative AI capabilities, protects its customers with machine speed cybersecurity, and continuously evolves to stay ahead of cyber adversaries who would want to attack its customers. The provide the value prop of their CSaaS platform through 3 service levels — Falcon Go ($59.99/endpoint device/year), Falcon Pro ($99.99/endpoint device/year), and Falcon Enterprise ($184.99/endoint device/year). This allows their different customer segments to access Crowdstikes cybersecurity capabilites based on their need levels and for CrowdStrike to provide immediate continuous improvement to their CSaaS based on regular users feedback, activity, and the variety of cyberattacks customers might encounter.

Key Notes About The XaaS Model

As mentioned earlier, the list of companies and businesses choosing to change to the XaaS Model is continuously growing in many different industries.  

Business that were utilizing the Fee-For-Service Model, or a One-Time-Fee-For-Product Model (whether Retail, DTC, B2B or B2C Fee-For-Service), are turning to the XaaS Model to provide ongoing, continuously improving value to their customers in a way that’s better, faster, more convenient, consistent, and more affordable for customers. It can help create better financial stability and more streamlined workflows for these businesses who can then focus on creating a better product, service, business relationship, and overall experience for their target markets.

Would offering your Service or Product in a XaaS Model be something to consider for your business? Are there inflection points occurring in your industry or market trends affecting your customers segments behavior that are affecting your revenue consistency? And, because of that, the quality of service, product, brand experience you want to provide your customers?

Next Steps

We will continue to look at examples of business model categories and types we covered in our first newsletter over the next several newsletters to help you with your thought process around which business model may be a good fit for your business case.

If you’d like LUSID to help you work through your business model change and strategize around which business model is most appropriate for your company vision, you can set up a free call with us here. We’re excited to learn more about you and your company!

And feel free to reach out with any questions or additional thoughts you may have at [email protected]. We love connecting with visionary Founders, CEOs, and Company Leadership teams working on impactful visions and ventures.

Let’s Make Your Vision Your Reality.    

www.getlusid.com