NexGen 2022 Panel: XaaS ‘Fits The Bill’ For Customers Scaling Fast

‘We’re the tip of the spear to the customer and we understand the problems that you’re solving, so it’s my job to go find the right people, process and the technology to solve that in a consumption model,’ one MSP says at XChange NexGen 2022.

XaaS Boom

Demand for Everything as a Service, or XaaS, is on the rise as businesses seek out new ways to buy IT that match the realities of life in a post-pandemic world. For many businesses, this includes limited budgets and talent shortages. The good news is XaaS can bundle the hardware that customers need with valuable services, such as cloud and security, and take management off the hands of customers with limited IT resources. Which in fact, happens to be the bread and butter of many MSPs today.

A panel of such MSPs spoke at the CRN parent The Channel Company’s XChange NexGen 2022 conference in Orlando, Fla., about their own businesses and their blossoming XaaS businesses. These executives shared how wrapping hardware, software and services together in a neat bundle for their customers are allowing them to scale their own businesses as needed, while remaining secure. Perhaps most importantly, it’s also giving MSPs a way to build on their all-important, long-standing relationships with their customers as their trusted advisers helping them move into the future.

The panel, led by The Channel Company CEO Blaine Raddon, explored the natural transition that MSPs are making as their customers’ buying habits change, the vendors that are proving to be valuable partners to MSPs building out their XaaS solutions, and some of the challenges and hurdles associated with XaaS.

Here’s what the three cutting-edge MSPs had to share.

What does XaaS mean to you and your customers?

Tech veteran Mike Little, CEO and senior technology adviser for Austin, Texas-based Green Tea Technology, saw the XaaS trend rapidly taking off and wanted to start his own company focused on providing IT solutions on a “pay-by-the-drink’ model for customers.

He launched Green Tea Technology in 2020 at the height of the COVID-19 pandemic.

For Green Tea’s customers, XaaS represents a service that will take IT tasks off their plate so they can focus on more strategic tasks. They also won’t have to hire extra people and put new processes and technology in place to handle some of these more burdensome IT tasks, Little said.

“I think [customers] are looking for things that solve a very specific problem,” Little said. [Customers are saying], ‘We don’t want to manage the IT and we want to focus on our core business, so, can you provide a service that will take care of that for me? And oh, by the way, I want to pay monthly. I want to able to pay as we go.’”

TrueIT, a born-in-the-cloud MSP that got its start in 2012, primarily serves SMB customers who see XaaS as a way to avoid the responsibility of updating, said Zac Paulson, CEO of Fargo, N.D.-based TrueIT. About 50 percent to 60 percent of the company’s business is done in an XaaS model.

“They don’t want to update anything. They want it to be evergreen, they want it to be up to date, and then they also want to be able to be nimble,” Paulson said.

Aliso Viejo, Calif.-based MSP Corent Tech offers SurPaaS, its integrated Cloud Platform businesses can use to “SaaSify” or migrate any software application. The company also offers cloud-to-cloud migration and PaaS services.

The company’s primary customers are ISVs that want to deliver their software as a service without spending years turning it into as a service and MSPs who are “dying to deliver a specific software solution,” according to Feyzi Fatehi, Corent Tech’s CEO.

“They want to deliver it as a service for their customers and build the practice to make money, but they don’t have the engineers to transform that open-source solution to a SaaS offering for themselves,” Fatehi said.

Are you going with any of the big vendor XaaS platforms that are on the market right now from the likes of HPE and Cisco?

Green Tea Technology has invested in HPE’s GreenLake XaaS platform. The transition to XaaS is not one to be taken lightly—there are many pieces for MSPs to consider, including how they’ll pay their service reps, Little said.

Then, the pandemic hit, and Little saw a future in which businesses were going to change up how they bought IT.

“I really got in with HPE on the GreenLake model early and everything in my company is as a service—my accountant is as a service, my lawyer is as a service, everybody that supports Green Tea Technology is as a service. We built the whole model as a monthly consumption model,” he said.

Some of Green Tea’s more sensitive customers are leveraging HPE GreenLake to secure their data in a way in which “the cloud comes to them,” Little said.

“They don’t need to be in the public cloud. They need a private cloud that only their company is using, but they get to use it as a service and can be charged by the model, which is a really big advantage for them,” he said.

Are you getting pressure from longtime vendors to move customers to XaaS?

MSPs are “absolutely” feeling the pressure from tech vendors that have invested heavily in their own XaaS platforms, Corent’s Fatehi said.

“To technical geeks like me, technology is about psychology. A lot of times people just need to get their head around it and understand it,” he said.

Fatehi recalled when he was at HP and many employees were resisting PowerPoint. “It’s just getting over something new and giving up comfort of what they already know,” he said.

The customization that partners can offer on top of XaaS is a selling point for partners like Green Tea, whose customers may not even know what the underlying solution is, Little added.

“With GreenLake, they provide the hardware and the people and the process monitoring. But then I bring in a third-party [colocation] provider and security services and wrap that all around and the customer doesn’t see any of that. I think for as a service, you need to be able to understand what pieces you can pull together to solve a customer’s problem,” he said.

How do you qualify an XaaS opportunity?

Qualifying an XaaS opportunity starts with educating customers on the financial model since it’s different than what most customers are used to, Green Tea’s Little said.

“Really looking at the pain points that you’re trying to solve around financial modeling,” he said. “A lot of our customers don’t have the skill set to manage their environment. So, if a customer doesn’t have the people or the process and they really want to grow fast, this is where they fit the bill.”

TrueIT, on the other hand, is still waiting for public cloud-based XaaS offerings to come down to meet the needs of small businesses and the lower midmarket, Paulson said.

How does security play a role in XaaS?

Security is a must—not an option for XaaS bundles, Corent’s Fatehi said. “It’s mandatory,” the company’s leader added.

Businesses rely on their cloud providers to provide the cloud in a secure manner. And cloud is “nothing but infrastructure as a service delivered in a secure manner,” Fathi said.

“And what if we add software as a service on top of cloud, which is infrastructure as a service in a secure manner? Absolutely, there’s no other option,” he said.

What challenges are you running into—or overcoming—with XaaS?

Early on, the marketplace from which to procure XaaS was difficult. Now, cloud distributors are starting to understand the XaaS model, TrueIT’s Paulson said.

“But I still think there’s a lot to be done in the hardware market. A lot of hardware stuff purchased one time is in the smaller part of the market,” he said.

Creating familiarity in the industry is one challenge that companies like Corent are facing, Fatehi said, adding that focus groups could help.

“Invest in perfecting the pitch, perfecting the deployment model and the messaging. Learn the pitfalls and use that as a launch to take to the market [including] testimonials and case studies that would help launch a new as a service model from other people in the industry that other customers will believe,” he said.

Green Tea is thinking in terms of three- to four-year contracts, so identifying and working with strategic partners is critical, Little said.

“Are these [vendors] going to be around? They’re playing a key role in delivering a piece of the puzzle,” he said. “For us, it’s really picking the right strategic partners that are going to help us grow the business. We’re all in it together; we help each other be successful. My focus right now is just building that team.”

“We’re the tip of the spear to the customer and we understand the problems that you’re solving, so it’s my job to go find the right people, process and the technology to solve that in a consumption model,” he said.