Latest news with #XaaS
Forbes
31-07-2025
- Business
- Forbes
XaaS To SaS: The Evolution Of The Service Model
Kalyan Kumar is Chief Product Officer at HCLSoftware. The technology landscape has been redefined by the rise of XaaS ('anything as a service'). Initially built on the promise of the cloud, XaaS has revolutionized business by making IT services flexible, scalable and consumption-based. Today, this paradigm is evolving: The industry is witnessing the emergence of Service as Software (SaS), which harnesses the power of agentic AI to drive further transformation. Understanding this shift is essential for businesses aiming to stay ahead in a world of economic uncertainty, technological disruption and rapid innovation. The XaaS Foundation XaaS allows organizations to access infrastructure, platforms and applications via the cloud with flexible pay-as-you-go models. This has eliminated hefty upfront costs and made it easy to scale operations and speed up innovation cycles. In addition, XaaS has transformed large capital expenditures into predictable operational costs, freeing businesses to focus more on growth than on maintaining IT assets. However, as the number of services expanded, many organizations have faced challenges as far as managing and integrating an increasingly complex patchwork of solutions. As we like to say, 'God made the world in seven days because there was no installed base.' The Need For Evolution As digital transformation deepened, traditional XaaS began to show its limits. The explosion of cloud services resulted in a fragmented environment where integration and governance proved difficult. Businesses started focusing less on acquiring more services and more on creating orchestrated, seamless experiences across customer, data and operational touchpoints. With the growing value and complexity of data, especially regarding privacy and actionable intelligence, organizations demanded greater data control and clearer alignment between technology and business outcomes. This shift has fueled the evolution toward service models that embed automation, intelligence and measurable value. Emergence Of Service As Software The emergence of SaS signifies an evolution wherein services move from being enabled by software to becoming the software itself. Routine, people-driven services are automated and embedded as highly functional, intelligent software modules—powered primarily by AI agents. This transformational shift has made the role of agents of action crucial, as they drive automation, orchestrate workflows and deliver tangible results within enterprises, moving far beyond mere software-enabled service models. As with any model, SaS brings its own advantages and disadvantages: 1. Integration Of Agentic AI: SaS leverages advanced AI agents—referred to as agents of action—capable of handling everything from basic workflow automation to autonomous multistep reasoning and execution. 2. Outcome-Driven Delivery: While XaaS was about access and process involved, SaS shifts the focus to results. Customers pay based on actual business outcomes, not just usage or features. 3. Human + AI Collaboration: The model supports "human in the loop," maximizing efficiency while retaining essential oversight and governance. How XaaS Is Shifting Toward SaS Increasingly, we're seeing a blurred line between solutions we'd think of as XaaS and those we'd label SaS. Some examples: 1. From Orchestration To Hyper-Automation XaaS laid the groundwork by connecting diverse applications and infrastructure; SaS now adds an intelligent, agent-driven orchestration layer. This means businesses can automate tasks, integrate data flows and deliver tailored customer experiences at scale, powered by agents of action working within a unified orchestration framework. 2. The Role Of Agents Of Action We utilize a paradigm that sorts AI agents into three categories: For every role, there are now agents that simplify, streamline and expedite processes. Take, for example, a person in marketing. Could there be an AI agent for them? Of course. By utilizing various agents, marketers can quickly build reports that previously did not exist or approach problems at an unprecedentedly granular level. The true power of the agents of action comes in collating, organizing and making sense of first, second and even third-party data (D), orchestrating the flow of information between these sources (O) and finally delivering hyper-personalized experiences (X) to the users. 3. Outcome-Driven Consumption With SaS, pricing is reimagined: Customers subscribe based on realized results, reducing risk and incentivizing genuine value creation, unlike traditional license or seat-based models. This focus on outcome-driven consumption aligns with the shift facilitated by agentic platforms. Real-World Implications So what does the shift from XaaS to SaS ultimately deliver to customers? We see three main benefits from this evolution of service as software solutions: 1. Faster Innovation: Automation of routine functions by agents of action allows enterprises to focus on strategic growth. 2. Silo-Free Operations: Unified platforms break down barriers between functions, partners and providers. 3. Data As A Strategic Asset: Businesses gain deeper insights, improved compliance and better decision-making. The journey from XaaS to SaS represents a pivotal moment for the technology sector. By evolving the service model to embed intelligence, embracing automation through agents of action and focusing on outcomes via different strategies and paradigms, organizations can realize new efficiencies and deliver greater value to customers. The SaS model is not just the future—it's a necessary response to the demands of modern digital enterprises, standing as a natural evolution of the XaaS revolution. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
Yahoo
14-07-2025
- Business
- Yahoo
Europe's IT, Business Services Market Boosted by AI-Driven Cloud Demand in Q2: ISG Index™
Combined market up 14% in Q2, driven by 34% growth in XaaS Managed services off 4%, as companies limit discretionary spending LONDON, July 14, 2025--(BUSINESS WIRE)--Strong interest in AI continued to drive cloud services growth in Europe during the second quarter, even as demand for managed services slowed under the weight of macro uncertainty, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm. The EMEA ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows second-quarter ACV for the combined market (both managed services and cloud-based as-a-service) advanced 14 percent, to US $9.0 billion. Although up double digits year on year, the combined market declined 1.2 percent sequentially from the first quarter, as economic and geopolitical concerns limited discretionary spending on managed services. "Europe continues to embrace the cloud for AI adoption and cost efficiency," said Steve Hall, president, ISG EMEA and the firm's chief AI officer. "Given the region's macroeconomic and geopolitical instability, there has been a lot of discussion around digital sovereignty in Europe. We view sovereign clouds as a potential growth segment for the industry going forward." Second-Quarter Results by Segment ACV for the as-a-service (XaaS) segment soared 34 percent year on year, to a record US $5.1 billion, and was up 7 percent sequentially from the first quarter. It was the fifth straight quarter XaaS has grown by double digits, averaging 31 percent in that span, although the Q2 growth rate moderated slightly (down 170 basis points) from Q1. Within this segment, infrastructure-as-a-service (IaaS) climbed 43 percent year on year, to a record US $3.9 billion, while growing 13 percent from the first quarter. Software-as-a-service (SaaS) grew 12 percent versus the prior year, to US $1.2 billion, although it was down 7 percent sequentially. Managed services ACV in the second quarter dipped 4 percent, to US $3.9 billion, and was down 11 percent sequentially from the first quarter. A total of 240 managed services contracts were awarded in the quarter, down 20 percent from the prior year and down 14 percent from Q1. Among them were three mega deals (ACV of US $100 million or more), compared with four signed in the second quarter last year. Still, the total ACV of the mega deals was up 9 percent year on year, as companies continued to emphasize larger deals aimed cost optimization. The volume of smaller deals under US $10 million declined 31 percent year on year, as enterprises limited discretionary projects. Within managed services, IT outsourcing (ITO) slumped 21 percent, to US $2.6 billion, with data center services the only growth area. Business process outsourcing (BPO), meanwhile, rose 23 percent, to US $667 million, led by growth in customer engagement, facilities management and finance and accounting services. By industry, managed services ACV was higher in travel, transportation and leisure (up 90 percent), business services (up 74 percent) and retail (up 10 percent), while the region's three largest sectors showed mixed results. Energy and manufacturing were up 4 percent and 3 percent, respectively, but banking, financial services and insurance (BFSI), Europe's largest industry for sourcing, fell 8 percent. ACV in the engineering, research and development (ER&D) segment, meanwhile, reached US $953 million, up 193 percent year on year and up 64 percent from the first quarter, as companies invested in digital integration and innovation. Geographic Performance EMEA's largest managed services market, the DACH region, grew 11 percent year on year, to US $1.0 billion, while France rose to the number two spot for ACV, at US $817 million, up 142 percent from the prior year. The UK, traditionally Europe's largest sourcing market, dropped to third place, at US $770 million, down 41 percent from the prior year. The Nordics, coming in fourth, climbed 72 percent, to US $471 million of ACV. First-Half Results For the first half, combined market ACV rose 19 percent, to US $18.2 billion. Managed services, at US $8.3 billion, was up 3.4 percent, while XaaS, at US $9.9 billion, rose 35 percent versus the same period last year. A total of 518 managed services contracts were awarded in the half, down 11 percent from last year, including six mega-deals, even with the prior year. The total ACV of the mega-deals, however, advanced 10 percent year on year. Within managed services, ITO was essentially flat (up 0.2 percent), at US $6.1 billion, while BPO declined 16 percent, to US $1.2 billion. On the cloud side, the IaaS market grew 41 percent, to US $7.4 billion, while the SaaS market rose 20 percent, to US $2.5 billion. ER&D services more than doubled from the prior year, to $953 million of ACV. 2025 Global Forecast For the full year, ISG is maintaining its forecast of 1.3 percent revenue growth for managed services, reflecting a stabilizing tariff environment but also continued weakness in discretionary spending. At the same time, ISG is raising its previous growth forecast for cloud-based XaaS by 300 basis points, to 21 percent, based on continuing strong demand for AI-driven transformation. Hall commented: "In terms of our macro outlook, it has improved over the last 90 days, yet business uncertainty remains high. That said, AI has emerged as the dominant theme, overcoming many of these concerns to drive the overall market forward." About the ISG Index™The ISG Index™ is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 91 consecutive quarters, it has detailed the latest industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, universities and the media. The 2Q25 Global ISG Index results were presented during a webcast on July 10. To view a replay of the webcast and download presentation slides, visit this webpage. About ISGISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world's top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments. View source version on Contacts Press Contacts: Philipp Jaensch, ISG+49 151 730 365 Will Thoretz, ISG+1 203 517
