Unit4, a world leader in enterprise software for service organizations, announces today the findings of an independent global study into the business model changes services organizations are making driven by the Everything as a Service (XaaS) economy.
Of the organizations that have made changes to their business model, pricing or product and service offering, 72% have actively extended their services beyond their traditional core markets, 79% have expanded services to new international markets and 85% have increased their income as a result of the changes they have made.
New digital and cloud technologies are driving business model changes around the world. As customer demand for simple online subscription services and rapid value grows, organizations are modernizing operational and business models to create greater efficiencies and to engage customers, employees, and business partners in new ways. The research shows the extent of those business model changes and the rate of change among medium and large services organizations around the world.
Most respondents (78%) believe XaaS will influence their industry, and 74% of those state that influence will be positive. 85% and 82% respectively believe the XaaS economy has influenced changes to their products and services and their pricing models. Around a third (30%) of those have not started to make any business model changes but plan to in the next 12 months, with 9% not planning any changes at all. Only 20% and 22% of the organizations surveyed have made significant changes to their business model and their products and services respectively. Changes have predominantly been implemented over the last two years, although the largest companies (5000+ employees) are twice as likely to have started within the last year.
Those who have already made changes to their business model, product or service offering, or pricing have seen significant benefits. 77% have increased customer retention, 75% have introduced more standardization into their products and services, and 80% claim they have introduced more personalization in marketing their services.
Overall, 21% of service organizations interviewed have moved fully to a subscription pricing model, and 52% have partly adopted subscription pricing. More than two-thirds (69%) of senior managers and CEOs expect to adapt their income model in the next three years. At the same time, 47% of all respondents believe they are late to implement changes, and 41% believe they are behind their competitors. 41% blame their technology infrastructure, claiming it is inadequate while 60% of those making changes agree that technology investment has opened the doors to new opportunities.
Perhaps not surprisingly, the oldest organizations (more than 15 years old) are the most conservative in their approach to implementing change. Younger companies are more likely to be making significant changes to their business model and pricing when compared to older companies (who are more likely to make minor changes).
“We know technology is driving rapid change in the world of business, but gauging the level of impact is more difficult,” said Stephan Sieber, CEO of Unit4. “Our research shows that services organizations are redefining the way they deliver to capitalize on the opportunity and see bottom line benefits as a result. Today’s technology can do more than ever before, and has a huge role to play in supporting these modernization efforts.”
The survey was conducted by DJS Research in April 2018 among 245 C-Suite and senior managers in services organizations with more than 250 employees, based in the US, United Kingdom, Australia, Singapore, France, Netherlands, Belgium, Germany, Norway and Sweden. The findings of the survey have been summarized in an infographic. A report of the survey findings is available on request.