Across industries, organizations are aiming for more control over the enterprise IT they use and how they pay for it—and that demand has been met by a shift to service-based delivery models for providing products, capabilities and tools, according to a new study.

Eighty-one percent of adopters said the pandemic has accelerated their organization’s shift to XaaS from traditional IT, and 55% reported that the crisis is causing their organization to invest more in XaaS than initially planned, the Everything-as-a-Service (XaaS) Study by Deloitte found.

The study was done to obtain a cross-industry view of how organizations are adopting and benefitting from as-a-service enterprise IT, Deloitte said. The firm surveyed 600 IT and line-of-business professionals from U.S.-based companies in Q4 2020.

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The survey found that the transition from traditional IT to XaaS—already well underway in 2018—continues to transform the enterprise IT landscape. Eighty-six percent of respondents said they believe XaaS is critical to strengthening their organization’s response to business/workforce challenges caused by the pandemic (46% strongly agreed).

The study shows that the trend to use XaaS to boost business agility, in addition to reducing costs and improving workforce efficiency, will continue to strengthen, Deloitte said. The vast majority of adopters surveyed also reported that XaaS has helped them create new business processes, products and services, and business models, the study said. It has also changed how they sell to their customers.

Further 88% of respondents said they believe XaaS will be crucial as their organization recovers from the pandemic (43% strongly agree).

The momentum for XaaS is causing organizations to invest more in XaaS than previously planned. Leaders reported that on average, their organizations are spending $20 million on XaaS in the current fiscal year with the overwhelming majority (69%) planning to increase investment in the next fiscal year, by an average of 23%.

Other findings:

• 82% viewed XaaS as very/critically important for their business success—an increase from 70% in 2018.

• Six in 10 reported gaining competitive advantage through use of XaaS—but as XaaS becomes ubiquitous, that edge may be harder to keep.

• 75% of respondents reported their organization consumes more than half its enterprise IT as-a-service (with the remainder being traditional, non-service-based IT), up from 71% in 2018, and 87% expect to reach that level of adoption within five years.

• Nearly half report their organization allocates at least half their IT spending to XaaS.

Vendors must rise to the challenge

While XaaS adoption seems to be on the upswing, and most organizations have been pleased with the overall IT experience they’ve had with their XaaS providers, the study also revealed some challenges. Despite enthusiastically embracing the XaaS model, 93% of adopters reported issues scaling up their XaaS efforts.

For example, optimizing utilization remains a challenge. More than four in 10 companies use less than half of the capabilities of their XaaS solutions.

Only three in 10 adopters said they’re content to stay with their current XaaS providers.

Adopters said they want vendors to work with them on their challenges—guaranteeing reliability/performance, offering integration, helping optimize utilization and providing strong data security—however, only four in 10 are “extremely satisfied” with their current vendors’ ability to provide these attributes.

Eighty-two percent believe their organization could achieve better outcomes if providers behaved more as consultative partners.

While the pandemic illustrated the importance of IT in maintaining business continuity, it also revealed the urgent need for companies to be nimbler and more adaptive to the ever-changing IT needs of users, said Paul Silverglate, vice chairman of Deloitte and U.S. technology sector leader.

“This experience demonstrated the real value of XaaS and the cloud, and a shift away from a reliance on traditional legacy IT,” Silverglate said in a statement. “Expect this trend to have staying power as the advantage of service-based technologies—and some of the associated behaviors—continue to provide measurable benefits and enable enterprises to compete more effectively.”

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