19 May 2021

As-a-Service: What it is and how it's changing the face of IT and business (XaaS Business Model)


Anything-as-a-Service (XaaS) solutions, Is your business ready?

Everything as a service is increasingly becoming the preferred business model. Thanks to major platforms like Uber for ridesharing, Netflix for streaming video and Google for cloud services, businesses are now seeing the benefits of embracing on-demand, ‘as a service’ business models.

Everything as a service uses X as a placeholder for any kind of product, meaning that you don’t sell the product itself but charge for the usage or the output of the product, such as pay-per-use or a monthly flat fee, like Uber or Netflix, respectively. In financial terms, the customer exchanges capital expenses for operational expenses. Although XaaS sounds like it’s a standard leasing or renting model, that is not the case.

Digital Transformation With XaaS (Everything-as-a-Service)

The concept isn’t new, either. Sixty years ago, the Xerox Corporation (at the time named Haloid) introduced a new business model to encourage affordable widescale use of their copy machines to offices by leasing their machines. Xerox would supply the machine, services and support allowing companies a specific number of copies included in this service and charging for usage above and beyond that amount.

Today, anything as a service business models are based on the supplier taking on the responsibility for the data analysis and maintenance of the service and using information via the Internet of Things (IoT) to provide real-time upgrades and improvements.

Rolls Royce is an early adopter of the XaaS model with its turbine engines, which charges aerospace customers a fixed price for the number of hours they fly. Maintenance is covered, engine downtime is reduced, and companies have a fixed, predictable cost. These engines also come loaded with IoT sensors. For example, the Pratt & Whitney’s Geared Turbo Fan (GTF) engine is fitted with 5,000 sensors that generate up to 10 GB of data per second. As the cloud and IoT become more widely available to a much broader audience, XaaS becomes a central pillar in transforming their business.

The machine itself must be adaptable either through modularization or offering open standards, such as using a digital twin to engineer the product before integration begins.

A successful everything as a service business model must do the following:

Avoid downtimes. If the machine isn’t capable of working 24/7 or you can’t deliver it on time, you lose money. Predicting failures can help machine builders know when something may likely need maintenance or repairs, including access to spare parts.

Improve service efficiency. This is a point where you either gain or lose money. Parts and service experts must be available to manage any issues and ensure the machine has minimal downtime or updated functionality

Performance financing approach. Ideally, XaaS will have as flexible model as pay-per-use, which means you pay for what has been used from the machine. This will also determine current usage and the value of the service.

Positive user experience. When selling service, the retention rate must be considered high in order to achieve success. Interfaces need to be available on desktops and mobile devices so stakeholders can view and share information with ease and there must be a comprehensive transformation of how the business operates, including training for accounting, R&D and sales support since they won’t be selling products but rather services.

HPE CEO Pledges to Sell ‘Everything as a Service’ by 2022

In its boldest move yet to make on-prem IT more like public cloud, the company says GreenLake is its future.

Three years from now, every product Hewlett Packard Enterprise sells will be available as a service. That’s the pledge CEO Antonio Neri made from stage Tuesday afternoon during his keynote at the company’s Discover conference in Las Vegas. The pledge covers both hardware and software in the enterprise tech giant’s sprawling portfolio.

Disrupted by public cloud providers like Amazon Web Services and Microsoft Azure, market incumbents like HPE, Dell, and IBM have all been looking for ways to bring the experience of using their products closer to the experience of using cloud services. That experience includes not having to sink capital in infrastructure, not spending money to run and maintain it, and paying only for what you use. It also includes a constant stream of new features to select from and frequent upgrades to the latest hardware.

“In the next three years HPE will be a consumption-driven company and everything delivered to you will be delivered as a service,” Neri said. “You choose what you want, where you want it, and only pay for what you consume.”

The company started on this path in 2017, when it launched GreenLake, the overarching brand for HPE’s on-premises solutions offered as a service. Instead of buying a hardware system and the necessary infrastructure management software to support SAP Hana, for example, a customer can have HPE deploy the system in their data center, manage it, and provide it to them as a service, the same way AWS provides its myriad of services, with the key difference being that HPE’s services are running out of the customer’s own facilities, not AWS’s.

According to Neri, the GreenLake business, now serving about 600 customers, has been growing faster than any other HPE business. “We now deliver HPE GreenLake in 56 countries and lead the industry in consumption-based services on-premises,” he said. “This is HPE’s fastest-growing business.”

Dell Technologies, HPE’s biggest rival in the data center market, earlier this year rolled out an as-a-service offering for on-premises hardware, a service operated by its subsidiary VMware. The service is for Dell EMC’s VxRail hyperconverged infrastructure, combined with VMware Cloud Foundation, the software stack through which VMware extends between on-prem environments and its cloud-provider partners.

Delivering everything as-a-service, whether at the edge, in the cloud, or in the datacenter

Expanding HPE GreenLake

The GreenLake portfolio already includes Azure Stack, Microsoft’s software that simulates the experience of using its public cloud on-premises. It also includes solutions like backup, databases, Big Data, and edge computing, among others.

Monday, the day before Discover kicked off, HPE announced a new hybrid cloud partnership with Google Cloud, expanding the GreenLake portfolio. The hybrid cloud will combine HPE’s ProLiant servers and Nimble storage with Anthos, Google’s recently unveiled software platform for running applications in Kubernetes-managed containers on customers’ own hardware running in their own data centers, and in Google’s public cloud. According to Google, customers will also be able to use Anthos to manage their workloads in its competitors’ clouds, such as Microsoft Azure and Amazon Web Services.

Until recently, GreenLake was only available to large enterprises. On Tuesday, however, the company announced that it’s expanding the business to also target mid-size customers.

To take more friction out of the GreenLake customer experience, companies unable or unwilling to allocate their own data center space for their HPE-as-a-Service solution can turn to one of its two new colocation partners: CyrusOne and Equinix. Besides readily available space, power, and network connectivity at their facilities, large customers get the benefit of private network links to hyperscale cloud platforms if they want to use GreenLake as part of their hybrid-cloud setups.

Also being added to GreenLake is the vast portfolio of network technologies by Aruba, the enterprise mobility specialist HP acquired in 2015. At Discover this week, HPE launched a new Aruba “Network as a Service” offering sold through GreenLake.

New Storage Box With 100 Percent Uptime Guaranteed

Of course, no HPE Discover keynote is complete without a new data center hardware rollout. Neri announced two new pieces of hardware in his talk: a storage box and a compute box.

The storage box, announced together with HPE’s chief sales officer Philip Davis, is called Primera, and it combines hardware by Nimble Storage, a company HPE bought in 2017, with InfoSight, HPE’s machine learning and analytics-heavy infrastructure management software.

In what appears will be a part of all future product announcements by HPE, the company said it will offer Primera as a service, either as a subscription or on a pay-for-what-you-use basis. But customers will have the choice to buy and manage the new storage array on their own.

The company is so confident in the InfoSight machine learning-engine’s ability to stave off infrastructure issues that it’s guaranteeing 100 percent availability for Primera, Davis said. “And it’s standard for everyone,” he added, meaning there aren’t lower-tier Primera offerings that aren’t guaranteed to never go down.

Primera’s designers also aimed to make it the easiest box of its kind to set up. “It delivers a consumer-grade user experience that customers can install and upgrade on their own,” Davis said. “You plug in six cables, make a few clicks, and go from rack to rack in less than 20 minutes.”

Competing storage arrays require extensive planning and room in the budget for expert services, he said. Primera upgrades take less than five minutes, he added, this time taking a direct swipe at Dell EMC by saying he challenged anyone to upgrade a Dell EMC PowerMax storage array in less than five minutes.

HPE said it will start taking orders for Primera this August.

The Machine in a ProLiant Box

According to Neri, the company is already taking orders on the compute box he announced at the show. The box is an HPE ProLiant server with HPE’s moonshot “memory-driven computing” architecture inside.

The company first unveiled the memory-driven concept in 2014, and in 2017 showed a prototype system built around it called The Machine. The idea, basically, is to create a single big pool of memory, with a single address space, interconnected with the CPU using silicon photonics, a technology that relies on light rather than electrons for communication between components in a system.

The Machine HPE showed two years ago was a 40-node cluster with 160 terabytes of memory, all with a single address space. Without sharing much detail, Neri this week promised a ProLiant-based memory-driven development platform that combines CPU, accelerators, and memory, interconnected with a “photonic mesh,” and said the company was “now taking orders” for the box.

The SaaS business model & metrics: Understand the key drivers for success

As-a-Service: What it is and how it's changing the face of IT and business

As organizations push forward with their transformation efforts, as-a-Service computing is laying the foundation for greater agility, flexibility, speed, and more. In this Technology Untangled episode, experts discuss the evolution of cloud-based IT services and how the model is revolutionizing the way businesses compute―and compete.

Everyone's talking about as-a-Service computing models, and with good reason: As-a-Service offers businesses a long list of benefits, including greater agility, rapid elasticity, on-demand consumption, and more.

From platform and infrastructure to storage and networking, as-a-Service has upended traditional IT―and leveled the playing field in business.

"What the cloud has given us is the ability to move fast, and what the public cloud has done is it's made those services available to anyone," says Tony Clement, strategic hybrid cloud adviser at HPE Pointnext Services. "So, as a small business, I can compete from a compute perspective. I can compete with just about anybody."

In this episode of Technology Untangled, Clement joins colleagues Paul Kennedy, business development manager for HPE's advisory and professional services team, and Reuben Melville and Scott Thomson from HPE's GreenLake team to explain why as-a-Service is key to today's transformation efforts. They unravel all the terminology and buzz around public, private, and on-premises cloud models; explain why hybrid often provides the best of both worlds; and explore the as-a-Service capabilities that can help your business better compete.

Excerpts from the podcast follow:

Bird: Infrastructure-as-a-Service provides the same tech and capabilities as a traditional data center, including servers, network, OS, and storage, without the need to physically maintain or manage all of it.

An infrastructure middle ground between as-a-Service and on premises is hosted infrastructure, which was pretty popular in the mid-2000s. Now, it's usually referred to as colocation. It lets organizations rent physical space for servers and other hardware.

Clement: So the SaaS model has disrupted traditional IT. And more importantly, it's created pressure on IT to move faster.

Bird: These days, pretty much everyone uses SaaS on a daily basis, from Google apps, to Netflix, to Dropbox, and for some organizations, Salesforce.

The lines between Platform- and Infrastructure-as-a-Service are becoming more and more blurred with providers such as Microsoft and Google offering services that span both.

"Today, when I see IT leaders and business leaders holding on to the past―holding on to their VHS tapes, holding on to that VCR player, holding on to those old remote controls, holding on to that old stuff―that is a cultural problem within many organizations that's inhibiting digital transformation."


The five characteristics of cloud

Bird: All of these as-a-Service models were made possible by one innovation: cloud computing, which is defined by NIST as having five key characteristics: on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service.

These characteristics are the same, whether we're talking about the public cloud, like AWS, or the private cloud―computing services only available to select users, whether over the Internet or a private internal network.

But why are we talking about this? Well, the trajectory didn't stop at the end of our timeline. There's an upward trend in every imaginable as-a-Service offering from Security-as-a-Service, Analytics as-a-Service, and even Big Data-as-a-Service.

Clement: What the cloud has given us is the ability to move fast, and what the public cloud has done is it's made those services available to anyone. So, as a small business, I can compete from a compute perspective. I can compete with just about anybody.

Bird: As-a-Service offerings available on the public cloud were revolutionary for everyone, from start-ups to large organizations.

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'Tell me about security'

Kennedy: I remember this big, scary CIO walking into Google's HQ. And this must have been about 10 years ago. … And this guy sat down, looked some of the head honchos of Google in the eye and said, "Tell me about security."

And there was about two hours of one of the public cloud specialists talking to John, the CIO, about the security of the public cloud. After that two hours, the CIO sort of sat back in his chair, thought about it, looked us in the eye, and said, "Have you any idea how much money it costs me to run my infrastructure from a security perspective? Have you any idea how much my security budget is? And you're telling me that I don't need to worry about the security; you'll do it for me for a fee of 33 pounds per user, per year?"

That was a really radical change that he was thinking about.

Bird: So radical, cheap, and agile. Why wouldn't you want to use the public cloud for everything?

Kennedy: Is the public cloud a destination? Absolutely not. It's about choice, and choice is far more important than a single destination. The public cloud is not the answer to everything in the same way that running things in your own data center is not the answer for everything. There are some organizations where that's probably appropriate but really not many.

What we now need to think about is the public cloud is a choice

Enter private cloud

Bird: In fact, the very nature of some organizations meant that their workloads and applications needed to remain very much under wraps, but they still wanted some of the agility, a cloud like experience, if you will. Enter the private cloud.

Clement: So there'll be policies around the type of information or the type of processing that a particular service executes being proprietary: "This process that we have, it is our strategic advantage. There is no way I would ever let this out into the public ever. We've spent millions and millions over the last 20 years, and this is our proprietary stuff."

That is a good reason to run into private cloud because you want to be able to control security―physical security.

Bird: Safe and secure sound great in theory, but for most organizations, this just isn't practical.

Clement: In order to effectively run private cloud, you need to have a pretty strong motivator. The best practices that are being implemented today are very expensive. Google, Amazon, Microsoft―their infrastructures costs billions, right? And there aren't that many organizations on the planet that are willing to invest that much in technology when it could be available cheaper as a service.

Bird: The public cloud is perfect for certain apps and workloads, and the private cloud could be a fit for some organizations, but at what cost? If only there was some kind of blended environment that moves beyond these conversations about public versus private clouds.

Clement: The hybrid cloud is exactly what the definition says: It's the interoperation between private cloud and public cloud.

Bird: Yes, that's right, the hybrid cloud, otherwise known as the best of both worlds.

Scale, simplicity, speed

Kennedy: The main benefits of the hybrid model are around three things. And I talk about the three S's: scale, simplicity, and speed.

If you think about scale, you need to be able to have the capability to scale, whatever you're building, as quickly as you can, either on premises or in the clouds. Now, there could well be things that you'll want to build and be able to scale very, very quickly in the public cloud, and you can certainly do that. But having that switching capability to say, well, actually some of it needs to run on premises because of security or latency issues, but still knowing that you've got that scalability capability, that's actually independent of either public cloud or on premises.

So think about simplicity. Simplicity is all about having the things available to you whenever you want it. So what you don't want to do is be in a world where you could say, well, actually you can build that on premises but you can't do it in the public cloud. You want to have that simplicity to actually go, "Well, it doesn't really matter where it sits―I need to be able to get hold of that dataset, or I want to run a containerized infrastructure, or I need people to be able to access this application as quickly as possible."

And then you want things to run at speed. You want to be able to make those changes quickly and easily so you can stay ahead of the competition.

Bird: The hybrid environment lets organizations switch between these public and private clouds, and this simplification and streamlining of an organization's IT can be packaged together using the as-a-Service model.

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Everything-as-a-Service defined

Kennedy: What does Everything-as-a-Service fundamentally mean? Certainly, first of all, if things are as a service, we want them really to be location-independent. So we don't want to be deterministic about whether things are in our data centers or in the public cloud. We want things to be independent by very nature and, where possible, to be able to move around.

And when we want … everything to be as a service, we want the payment model, the cost model to also be the same. So what we want to be able to do is for customers and organizations to look at the cost model and think about it from a customer's perspective and think about it from their business perspective and not be determined by an architecture, be it on the public cloud or in the private cloud.

Bird: Depending on your business needs, having Infrastructure- or Storage-as-a-Service might seem a bit pie in the sky, but hardware manufacturers have been preparing for this for quite some time.

Clement: Infrastructure manufacturers―whether it's HPE or IBM or Dell, Cisco, EMC―they're building in cloud functionality within the hardware now. Right? So hardware itself has the hooks in it for virtualization: hardware, physical compute, storage infrastructure.

New applications, modern applications, are architected to run in the cloud. That's where you get this cloud-native term. Right? All of IT on-premises infrastructure, if we accept the assertion that that will become private cloud, being able to run my application workloads across both the private cloud and the public cloud could be of a big benefit. So there could be application functionality and application data that I want to keep on premises, but then there also could be application functionality and data that I want to run in the cloud. But I want this service to span both. I want it to be one service. I don't want to have two business services, so to speak.

Bird: So to ground this idea of hardware and infrastructure as a service, I called up Reuben Melville and Scott Thomson from HPE GreenLake.

Thomson: My name's Scott Thompson [cloud services specialist].

Melville: My name is Rubin Melville, worldwide category manager for GreenLake in the channel.

Bird: OK, really quick disclaimer: There are myriad examples of Everything-as-a-Service out there and GreenLake is HPE's offering.

Universal benefits of on-demand consumption

We don't want to make this all about us, but GreenLake is a really useful case study to explain universal benefits of the consumption model to organizations.

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Melville: Now, a couple of years ago, customers talked about this cloud journey, but what they tended to mean by that was public cloud. You know, "we're going on a cloud journey" really ended up being "we're taking it to the public cloud." However, we've now started to see a change in that. So customers are now looking for more of a hybrid-type solution.

And the reason for that is because they've started to realize that, yes, they're on this cloud journey, but they can't move all of the data that they have to the public cloud.

Bird: One of the biggest problems for traditional IT departments is provisioning. Organizations have always had to estimate how much of everything they need in advance, from storage to compute power.

Melville: So, where you're buying technology, for purchase of infrastructure, a customer is actually spending a lump sum upfront on capacity they don't actually know when they're going to use. So, if you think about it, most customers overprovision. In fact, industry talks about 60 percent overprovisioning for compute, for example, and around 50 percent for storage. So that means they're actually spending money upfront on capacity they don't actually require from day one.

So what we do with GreenLake is actually deploy on day one what the customer actually requires. So not overprovisioning, but actually what are they going to use? But we also give the customer a buffer because obviously capacity can go up and go down. So we'll give them a buffer on site of around 10 percent to 20 percent over what they require. That means they can scale into it when required.

Bird: Infrastructure as-a-Service avoids overprovisioning and service rule, which very much fulfills that simplification requirements of the hybrid environment. The ability to scale up and scale down is key both from an agility and a cost control perspective.

Thomson: Financial services is an area that this resonates with from the point of view that they think a lot about the return on investment.

[In the case of one company], they were really growing quite fast; their customers were putting demands on the organization to launch new products and ways that they wanted to see them be able to work. So they were trying to release all these new products and keep up with the demands as an IT division to release these products at the same time as helping the organization run the day to day and grow at the 8 percent year on year that they were looking to grow. Well, now that they have HPE GreenLake, they're able to effectively capacity plan and deploy projects much, much faster and have no lag time between the need for increased capacity and the supply of increased capacity.

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Bird: Isn't as-a-Service just the same as rental?

A rental or lease?

Melville: Good question. We get asked this quite a lot. Is GreenLake basically the same as rental, or is it a lease?

I would say no. And I can understand why you would ask that question, because there are a lot of competitive solutions that kind of describe as-a-Service when in reality, if you just look at it, it's like a lease.

What we're actually doing is metering the usage of the environment. And we do that for our software consumption analytics, and that's what makes it stand out from being a rental or being a lease.

Bird: Well, it's fair to say that in recent times, particularly in 2020, most organizations have experienced doing quite a bit more with quite a bit less.

Thomson: There's been a huge increase in remote working for obvious reasons. You know, we've seen particularly an increase in demand on virtual desktop infrastructure projects.

So risk and cost are critical and, of course, more than ever.

Melville: What we're doing with GreenLake is actually helping them with that because we're deploying capacity as and when required.

Thomson: Due to the fact that the consumption model is metered and billed on invoice on a monthly basis, there's no upfront investment required for an organization to start working with as-a-Service.

Bird: Well, as I mentioned earlier, GreenLake is just one example of the possibilities of as-a-Service, a model which in itself delivers those key public cloud concepts of agility and consumption pricing with a level of control more akin to the private cloud or even on-premises infrastructure.

Everything-as-a-Service is about flexibility. When organizations aren't held back by their hardware, they can really hone in on what's important to them.

Kennedy: For an organization to look at an Everything-as-a-Service model, there's a couple of key values that they get out of it. I think the first thing that they get from it is the capability to focus on the key elements of their business.

If you're a bank, you can focus on being a bank. If you're a retailer, you can focus on the customer experience. If you're a government organization, you can focus on the services that you provide.

Bird: Everything-as-a-service opens up new ways of working in every industry, but at its core, it's not necessarily a technological shift. The biggest changes and, perhaps, challenges are operational and organizational.

Thomson: It is challenging. There's a lot to be taken account of. We talked earlier about the multicloud environment and the hybrid environment―all of those different operating models need different skill sets to manage that complexity of various environments. It's tricky. And also making those decisions around where the workloads are going to be optimized is difficult as well.

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Innovate or die

Clement: You can't be thinking about how I can do something better than my competitors today with an Industrial Age mindset. That's impossible. And this challenge, this change of mindset, is the real transformation.

Would it make any sense for me to use, do the same tasks that I performed with my VHS player with Netflix? No. Why would you bother? And that's the way people are thinking in the digital age, thinking about traditional IT. Why are you bothering doing those things that we know are inefficient?

Today, when I see IT leaders and business leaders holding on to the past―holding on to their VHS tapes, holding on to that VCR player, holding on to those old remote controls, holding on to that old stuff―that is a cultural problem within many organizations that's inhibiting digital transformation.

Bird: Digital transformation is difficult but totally necessary. We often hear the phrase "innovate or die." And it really is a stark [reminder] that if organizations don't transform, they can't compete with those that do.

Clement: You may have heard the term agile allows you to fail fast. Yeah, it does allow you to fail fast because you can see what's working and what is not working very quickly. But the key isn't just failing fast; it's also failing fast, learning, and then pivoting. You have to think on the fly, you have to be nimble, you have to be agile, you have to come up with new answers, you have to be innovative, you have to be creative. And those attributes need to be part of your culture―they don't need to be an exception; you need to be doing that all the time.

Kennedy: Some organizations have struggled with the amount of investment that would be required. Certainly in some traditional organizations, IT has still been seen as somewhat of a cost and somewhat of a drag. You know, there was always that thought that IT, you know, the guys in the IT crowd, sit in the basement. You only really go there if you've got a problem with your computer.

Now, organizations need to look at that and fundamentally think about digital transformation in a new world. And the IT department needs to be at the point where they can lead that or at least be at the table to help facilitate, understand, and act on the way that the business needs to change. Because I'll tell you for one, there is some little startups somewhere that are going where they want to be and will be there quicker than them.

IT leaders are business leaders

Bird: Both Tony and Paul described CTOs and CIOs as playing important roles in driving organizations forward―not just in terms of technology by informing where apps, workloads, and data sits and how they're managed, but actually digitizing and modernizing the entire business approach.

Kennedy: I think number one, think about where the business needs to go in the future. Number two, really think about your customer―not now, but in the future. Number three, and I've spoken about this before, think about the culture, the culture not only of the organization, but think about the culture of your customers as well and how they want to interact with you both now and in the future.

Bird: The as-a-Service market is projected to keep on climbing, and as for the public, private, and hybrid clouds, word on the street is we'll be getting rid of that terminology altogether.

Clement: I don't think we'll be calling it hybrid for a very long time. It'll just be computing … just like we don't talk about the Worldwide Web anymore. You almost never hear anyone say WWW. We are on that trajectory. We will be in a hybrid world where private and public cloud need to interoperate effectively as one for the foreseeable future. Hybrid is the way of the future, and organizations need to move quickly to adopt it or they will compromise their organization's ability to win in the marketplace.

Bird: Harness the power of hybrid to get the best of both worlds; embrace Everything-as-a-Service to improve agility and flexibility; cut costs but stay in control; and digitally transform to keep your competitive edge. So how do you get started? Tony says there's no substitute for just jumping in.

Just do it

Clement: You could read as much as you want and go to as many workshops as you want, but until you actually start to live it and experience it, you don't know what it is, right?

It's just like anything else. It's only by diving in and experiencing it where you learn how your organization or any individual organization will execute this and then take advantage of it, because it will be slightly different in every company because of the culture, because of everything. And that requires that day-to-day leadership.

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