How small businesses can leverage cloud and XaaS for growth and profitability

Amidst the COVID-19 pandemic, the cloud computing ecosystem has been both a driver and beneficiary of digital transformation.

Arguably, the most significant business benefits from the adoption of a cloud environment have been saving operating expenses and improving cash flow.

According to a Microsoft India and the Thought Arbitrage Research Institute (TARI) survey, Indian SMBs can have improved cash flows of up to 308 percent due to the agility and flexibility enabled by cloud usage.

Moreover, about 96 percent SMBs have found a positive impact on their operating expenses within two years of cloud use, and 86 percent of SMBs believe the cloud is a secure platform.

Until a few years ago, most companies ran their in-house developed or licensed software and applications by installing them on desktops or a server in their office premises. Today, SMBs resort to a cloud environment to access new applications on any device from anywhere in the world.

As per a Nasscom report, cloud spending in India will exceed $7 billion by 2022. As mobility becomes important, cloud computing enables organisations to stay focused on their core business and customers, while parallelly learning, innovating, and leveraging the latest technologies to scale.

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What is cloud computing and XaaS?

In the simplest terms, cloud computing means storing and accessing data, software programs, and applications over the internet instead of the hard disk of the desktop or server.

In other words, cloud computing involves the delivery of hosted services on-demand over the internet, generally classified into three main categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), culminating in Anything-as-a-Service (XaaS). 

Besides, cloud computing is used by technology vendors to host their applications, tools, and services for others to access and use on usage-based or subscription payment modes (XaaS).

Small businesses can leverage XaaS offerings to achieve digital transformation because of the flexible payment terms under this model. 

How can XaaS benefit small businesses? 

For small businesses, one of the top advantages of using XaaS is they can avail of digital applications and services only afforded by large enterprises before cloud computing emerged.

This made it easier for them to survive and grow along with large enterprises in highly competitive environments.

Grow customer base

XaaS provides access to resources and data from anywhere through any device, allowing small businesses to scale faster. It can improve performance, customer service, and long-term client relationships.

The XaaS model — supported by cloud technology and integrated software applications — can help businesses enter new markets and enhance their customer bases at a lower cost. 

Improve business processes

Emerging technologies are transforming business processes and models, especially amidst the COVID-19 pandemic.

For example, the COVID-19 pandemic made it imperative for retailers to go online or hybrid to survive and grow. The change in the retail model was facilitated by digital technology.

A customised XaaS strategy helps streamline remote-based operations to recruit and empower employees from anywhere, work from home, conduct meetings remotely, or serve the customer.

A company can quickly access new technologies, depending on the changing demands, without worrying about upfront investment.

Shift Capex to Opex

Cloud computing has enabled companies reap the benefits of cloud-based solutions by way of a model where they pay for what and when they use on a subscription basis.

Expenses, including capital expenses (Capex), has now become operating expenses (Opex), facilitating accelerated digital transformation for small companies, which were hitherto a privilege of large enterprises with deep pockets.

Shift resources to higher-value projects 

Companies shifting to a XaaS model to streamline processes and operations can free up their IT and other resources for more value-generating innovations.

According to Deloitte, about 75 percent of companies report XaaS now constitutes more than half of their company’s enterprise IT. XaaS provides more users without discrimination of small or big with access to cutting-edge technology, democratising innovation.

Small companies with tight cash flow and scarce resources can leverage XaaS to concentrate on projects that can transform their business, leaving routine functions to cloud-enabled services.

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Considerations before launching XaaS strategy

Transitioning to a XaaS model is a strategic decision for any business. The shift can be time-consuming and painful from start to finish. The planning process is critical, so businesses should do due diligence before selecting tools and services.

Critical steps to keep in mind while implementing XaaS strategy:

• Map your vision and goal: You should have a clear vision of the company’s goals post-XaaS adoption. You must identify concrete quantitative and qualitative measures, which can include customer growth metrics, customer satisfaction scores, response rates, customer churn rates, profitability ratios, and more to measure the benefits of the XaaS strategy.

• Decide on a starting point: It is difficult and risky for companies, especially small businesses, to embark on digital transformation in one go. You should, therefore, identify and start with the most critical pain point. Consider a low-risk starting point that offers a high return, if possible. For example, if your customers want you to have a particular digital solution, and if you feel it could be beneficial, start there.

• Change management: Since all functions of an organisation are affected by the change, all the relevant stakeholders should be involved in the decision-making and planning stages so the XaaS transition can be driven towards a common goal of the company. Involving representatives from each group in the decision-making and planning phases make digital adoption throughout the business smoother.

• Measure the benefits: Post-deployment, keep a close eye on the KPIs established in the planning process. Mesure, make changes and adjustments, and share the results across your business to drive enthusiasm in the second stage of the XaaS strategy.

• Possible downtime: The internet connection sometimes breaks, and when it does, it can affect the services. You should have backup plans to take care of such eventual situations.

• Performance issues: In the case of downtimes, you should keep in mind the possibilities of bad performance because of issues with bandwidth, latency, data storage, and retrieval times. 

New normal

There won’t be any going back to the old ways of installing, implementing, and using technology tools and services from a physical server in your premise.

Organisations, particularly SMBs, must evaluate their current and future needs in sync with their plans and map them to the XaaS strategy to stay afloat and scale their business.