“X” as a Service: Product Retained Ownership in 2022

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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

Paul serves as Partner and President of ISG Research and Client Experience and is responsible for the ISG Research business globally, including such products as ISG Provider Lens™ provider evaluation research, ISG Momentum® market research and ISG Events. In addition, Paul leads the firm’s entire Client Experience, including digital and product marketing, partnerships and alliances, sales enablement and corporate communications. He was previously CMO and Americas Head for Mindtree during the six-year span in which Mindtree, a fast-growing technology services company, expanded from $400 million to $1 billion in revenue. Prior to Mindtree, Paul held executive positions with Infosys, HP and Dell. Paul earned a bachelor’s degree in computer science from Brandeis University and a master’s degree in business administration from The Wharton School. He serves as the co-chairman of The Gastric Cancer Foundation. 

Prashant Kelker

Prashant works with enterprises to shape their operating models for a digital journey and brings 20 years of expertise in all aspects of applications and platforms, from designing transformations through the whole sourcing lifecycle. Prashant’s experience spans a range of industries, including Financial Services, Telecom and Media, Automotive and Utilities, and a range of geographies, including Europe, the Americas and India. Recently, he helped a Fortune 100 automotive giant consolidate its next-generation sourcing for applications, executing digital transformations right up to application management. He has also structured and run a digital transformation strategy and multi-project execution for a large logistics firm in the Nordics and set up a captive offshoring unit for agile product development in India for one of the world’s largest publicly-listed European entertainment companies.

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