Why Strategic Partnerships Are Key To Global Everything-as-a-Service (XaaS)

By Mariano Dy-Liacco X, Tech Data Global Lifecycle Management (GLM)

Demand for service-based offerings is outpacing the need for traditional products. According to a survey by the Technology Service Industry Association (TSIA), 48 percent of the 50 largest technology providers have seen product revenue flatten or decline in recent years, while 66 percent of them have experienced growth in service revenue. And the COVID-19 pandemic has only further accelerated this key transformation strategy.

Your customers look to you as an original equipment manufacturer (OEM) to lead transformation efforts with innovative technology, and the same is true for an everything-as-a-service (XaaS) business model. Shifting gears from traditional product manufacturing to service-based offerings requires careful planning and strategic development, all while adjusting to the oscillating “new normal” brought on by the disruptions of 2020. As customers move toward agile and flexible consumption models, they expect their trusted OEMs to have the services they need. But there are parallel forces at play for many OEMs, as they need to continue servicing their traditional installed bases while at the same time deploying adequate resources to support their XaaS offerings. Global service delivery compounds the challenge of transformation by complicating costs, talent gaps, and processes: 

Below you will find the considerations necessary as OEMs endeavor to balance investments to support both business models:

• Balancing global services costs: While adding XaaS service delivery options to an existing OEM business can produce operating leverage, there are certain incremental costs needed to stand up what is almost like an entirely new business. Ensuring a stellar customer experience in both models requires a significant investment of time and resources for strategizing and planning to establish region-specific operations and implementation. In addition to the cost of launching your global XaaS offerings, you may see a lag in revenue streams as demand for traditional product offerings declines and your service delivery business ramps up, exacerbating the pressure on investments that are required for a dual support model. 
• Filling talent gaps: Services delivery requires more workers with delivery expertise positioned closer to all supported regions, but many OEMs lack the workforce — both in skillset and numbers — required to implement delivery of both business models on a global scale. You need a geographically dispersed team that can continue delivering and maintaining your legacy solutions while also engaging with customers on a sales and support level to help guide them toward your service offerings. This requires a team that understands the nuances of global delivery, including region-specific legal requirements, so that customers feel supported.
• Managing regional process differences: Having the right resources in place is critical when you need to quickly ramp up production, marketing, packaging, and support of your solutions in regions where your organization offers support but lacks a physical presence. An on-the-ground strategy can help you develop efficient processes that reduce the burden on your workforce so you can scale your global services without losing traction with your existing customer base. 

Build, Buy, Or Partner?

Scaling your business for global services delivery that supports two models requires making a common choice around each aspect of your business: Either build capabilities from within, acquire a company that can add expertise to the business or partner with organizations that can fill skills gaps. Applying this decision to your legacy offerings as well as your new services can help you find ways to streamline transformation so your teams don’t get overwhelmed and your customers feel supported. 

Consider your existing infrastructure and employee base. If you have the expertise in-house and the resources needed for some aspect of your new XaaS business model, make use of those resources, and then identify your gaps and determine the best strategy to fill them. If you have the capital, then perhaps you acquire a company that’s focused on a singular aspect of the business that covers your gaps. That way, you’ll own the capability and can quickly build your new services business. 

You may discover, however, that it makes better financial sense to build strategic partnerships with a services vendor who understands the significance of and challenges presented by the urgent drive for transformational changes. By outsourcing aspects of your business, you can focus your core team on upskilling and strategic development efforts without losing traction with existing customers. 

Strategic partnerships that offer global delivery expertise can help expand your customer engagement, operations, and delivery processes worldwide. Outsourcing delivery and product life cycle management functions also can free up resources so you can focus on delivering more innovative and sustainable service offerings across the board.

A single, global life cycle management partnership offers several key benefits, including:

• Relief from the financial strain of having to hire experts in each global location to manage supply chains, procurement, integration, deployment, and repair of products
• Dedicated customer engagement, including training, maintenance, and support as well as customer success management 
• Rapid response on a geographic level, including having the right skillset on the ground at the right time 
• Unified, integrated services across the globe that optimize processes and preserve the brand experience within diverse global requirements

Future-Proof Your XaaS Strategy

It’s clear that the XaaS business model will only grow as a dominant driver of transformation in the technology market. Developing strategic partnerships and a global plan for your XaaS endeavor helps future-proof your business against this rapid and dynamic market shift.

Partnering with an expert in global services delivery can help your company — and your customers — transition smoothly as one model declines and the other grows. A global services delivery company has the capabilities and global reach to help you manage hardware, software, and services in nearly any region. You’ll simplify processes with trusted, streamlined services while freeing up your staff to focus on the road ahead.

About The Author

Mariano Dy-Liacco X is General Manager of Global Field Services for Tech Data Global Lifecycle Management (GLM).