How do you solve for the “X” in XaaS? Join ISG’s CMO, Paul Gottsegen, as he interviews ISG Advisor, Prashant Kelker, on which XaaS trends and predictions you should be paying attention to in 2022.
Transcript:
Paul
X as a service, right? “X” is… so there's infrastructure applications, and there's kind of the common ones, but I've noticed that it's getting more narrow and more innovative of what that “X” is or could be. XaaS. Think proposal as a service, for example.
Talk about some of the “X” as-a-service that you're seeing, the ones that are just starting to peek their heads out as we head into the New Year.
Prashant
I'm going to build on the “peek its head out” idea, because there's one curious thing we are looking at under sustainability and green efforts, and that is retained product ownership.
So, what happens if you are GE, and you stop selling your engines but start renting your engines out to airlines? That's product as a service. Now, you can apply the product-as-a-service analogy to literally everything, think dishwashers. Think phones, think anything.
Retained product ownership is a really, really large trend we should be watching, because the more complex the product is, the more downtime becomes precious, so you know should be avoided. So, think about product-as-a-service. Think about if that product-as-a-service is connected and suddenly imagine having a digital twin of that product on your dashboard so that you can do preventive maintenance. If you could use that to avoid downtime, think how much you could charge for that conditional monitoring agreement. You've just sold a connected service on top of a product, which you have also sold.
Now, what could happen here is that – well, the good side is that you know there's the revenue. That’s the upside to it. The downside is certainly the asset still remains on your balance sheet, so there are a few things you still need to look at: the income sheet, the balance sheet, if there is a significant impact of this new connected service, but I think that's where the XaaS is going.
Now you can do this only if you delayer things so you can take your product as a service. You could take your product platform as a service. You could take certain business cases and say it's your connected future use cases as a service. There's no limit to what you can do if you delayer.
Paul
OK, so that's back to the paradigm word.
It's a different paradigm of thinking of everything as a service, even if it's like a dishwasher or washing machine or an aircraft engine, which obviously is something you can touch there.
About the authors
Paul Gottsegen
Prashant Kelker
Prashant Kelker is Chief Strategy Officer of ISG, Partner of ISG Americas Consulting and a member of the ISG Executive Board (IEB). He was named to the IEB in January 2023. Prashant was appointed Chief Strategy Officer in 2018, responsible for developing the firm’s three-year strategic blueprint, and he was instrumental in the development of our highly successful ISG NEXT operating model in 2020.
In January 2023, he was named to the expanded role of Partner, Americas Consulting, bringing together all our advisory capabilities in the region to support our commercial and public sector clients in response to the growing convergence of digital technology and enterprise operating models, business processes and revenue-generating connected products and services.
Prashant joined ISG in 2012 from Accenture, initially working for our DACH business and based in Germany. He moved with his family to the United States in 2018. Prashant earned his MBA from the Indian Institute of Management in Bangalore and a BE in electronics from Bangalore University in India.
