PwC's XaaS - Anything-as-a-service - Embracing digital to drive revenues and accelerate growth.

Subscription-based business models offer the possibility of new, ongoing revenue streams, making them highly attractive for companies in just about any industry. But they also present challenges for finance professionals accustomed to a more traditional approach to selling products and services.

The subscription (or “as-a-service”) business model came to the forefront with cloud-based software licensing. During the COVID-19 pandemic, customers fully embraced the as-a-service model, with subscriptions for digital media and entertainment, education, software, and consumer goods seeing growth.

Customers evaluate a traditional product based on qualities like durability, features, and functions—essentially, what the product can do, and how long it can do it. When it comes to subscription-based purchases, customers focus more on what the services can help them achieve. This changes the metrics you should track to measure your offerings’ performance. These might include:

Time to value: Bringing a product to market takes time and upfront capital investment. The same is true for a subscription-based offering, but the difference is obvious: expenses must be amortized over the subscription period, instead of built into a one-time sales price. The advantage of subscriptions is that new offerings can be brought to the market quickly and then continually, incrementally improved—meaning the time to value is much faster.

Customer satisfaction: Because subscriptions depend on renewal, keeping customers happy is paramount. As soon as your service stops being useful, customers will cancel their subscriptions. This is where finance needs to collaborate closely with line-of-business leaders to keep them informed about what’s working well—and what isn’t—so that the business can quickly change course for a better outcome. KPIs for a new business modelOpens in a new window might include annual recurring revenue (ARR), customer churn, renewals, and customer lifetime value.

Customer behavior: Closely related to customer satisfaction is customer behavior—that is, how are customers using the product or service? Are there features that they don’t care about? Is it missing needed capabilities? Is it updated frequently enough to stay ahead of the competition? The iterative nature of as-a-service deployments means you can quickly pivot to make your offering more attractive to your customers.

Scott Bailey, Managing Director, PwC US, Oracle Global Alliance, PwC said: "Our aim is to help our clients to successfully bring new products and experiences to their customers through subscription services, which often requires changing or evolving  business models. Our Anything-as-a-Service (XaaS) offering accelerates our client's transition from strategy and business vision to marketing launch and transaction readiness in two to three quarters. We design and deliver a compelling digital customer experience aligned to key business outcomes (such as recurring revenue streams, growth and EBITDA) which enables executive alignment on goals. Our deep experience gives our team the ability to design and build the required operating model and execute the best-fit path for each client to scale successfully through digital technology enablement.” 

In a recent IDC Technology Spotlight, sponsored by Oracle and PwC, titled ‘Transformation 2.0: Rapidly Deploying Digitally Mature Capabilities at Scale Creates Competitive Advantage’ (December 2021, #US48382121), IDC analysts commented that ‘In the post-pandemic economy, companies and consumers are embracing digital to drive revenues and accelerate growth. As a result, the "subscription economy" is growing even faster with a huge shift to recurring revenue business models. This shift includes subscription, consumption, cloud, and connected devices or smart devices, with software playing a key role in products and services and in their operating model. Digital customer experience is at the heart of the subscription economy and of PwC's Anything-as-a-Service (XaaS) solution powered by Oracle Public Cloud.’