The X factor
What secret sauce enables the Frontrunners to achieve better outcomes from their XaaS initiatives and, ultimately, more competitive advantage? Our survey analysis reveals several distinctions. Compared with the other segments, these companies are more likely to:
- Sharpen their expertise. Frontrunners have developed higher levels of expertise across a wide range of XaaS-related activities, such as selecting XaaS solutions and suppliers; managing costs; measuring returns; and managing, integrating, and securing solutions.
- Hone their strategy. Frontrunners are more likely to have established a comprehensive, enterprisewide strategyfor XaaS adoption. They’re also more likely to engage in strategy-related best practices, such as setting clear executive responsibility for adoption and establishing an enterprisewide data strategy to enable interoperability.
- Master execution. Frontrunners are more likely to engage in best practices relating to XaaS execution, such as establishing data security policies, continually monitoring security of their XaaS solutions, and tracking utilization.
- Build better relationships for customer success. Frontrunners set high expectations for their XaaS providers—for example, around security and regulatory compliance—and regularly reassess their relationships. They’re generally satisfied with current vendors’ ability to deliver desired attributes but also quite willing to explore new solutions and vendors.
Given the large XaaS leaps that Chasers and Followers expect to make over the next five years (figure 4), they would do well to emulate Frontrunner behaviors. If they don’t, they risk falling further behind in converting as-a-service adoption into competitive advantage.
Whether they’ve been XaaS-first from the start or have shifted to XaaS from traditional IT solutions over time, Frontrunners now run substantial amounts of their enterprise IT as-a-service. Along the way, they’ve honed their capabilities across a wide range of XaaS-related activities (figure 6).
As organizations adopt XaaS, it’s important for them to pinpoint areas of their business where XaaS could provide the most value. And it’s also essential to identify the right solutions and providers, and to ensure they have staff with the right skills. Frontrunners have generally built up more expertise than the other groups in each of these pursuits. After they’ve chosen solutions, adopters turn their attention to integrating them with existing systems—for example, determining how customer and product data can flow from one system to another. Another critical element is ensuring data security. Frontrunners typically indicate greater mastery in both areas.
Once solutions are running and integrated, adopters shift their focus to managing and maintaining them, effectively keeping XaaS costs in check, and measuring business returns. Again, the Frontrunners lead the pack in their command of these activities. However, it’s worth noting that, for each activity, fewer than six in 10 Frontrunners report “high expertise.” And when it comes to hiring and managing the right employees, fewer than half of Frontrunners profess to be experts. Even among the leaders, there’s still room to improve.