The As-a-Service Era
This feature will explore the rise of as-a-service models, with insights into the technologies currently on offer and the trends driving as-a-service offerings across the Channel.
Why are more organisations embracing subscription services?
Subscription-based business models have become increasingly popular in recent years, everything is purchased “as a service” from Netflix and Spotify to Cloud Storage and O365, and Channel companies have had to evolve to support this market need. Subscription models can be challenging to implement and involve streamlining the billing process as well as maintaining those all-important strong customer relationships.
We continue to see SaaS as the fastest-growing sector in the Subscription Economy Index (SEI), outperforming other sectors in cumulative revenue growth, with 12.3% revenue growth on average in 2022.
As SaaS has been around for decades, businesses within the SEI are now focused on optimising the subscription model via leading-edge practices in customer success, using advanced techniques to acquire and retain customers, deliver measurable value, and create opportunities for expanding their relationships.
What does this mean for the business models Channel companies operate on?
To begin with, it requires moving away from traditional business models – including the on-premises sales model. Moving from a perpetual licence to a subscription model changes the sales cycle that companies have come to rely on, so it’s about evolving with the times and adapting to subscription models, which can be more profitable in the long run.
To ensure the subscription-based model works, a shift in mindset is necessary. This means making sure new customers find immediate value and support within their ecosystem and that current customers know what the changes mean for them. However, this can be difficult because it requires revisiting long-established business practices first, but once in place, the investment in new methods will empower Channel businesses to create a business model that will set them up for future success.
What innovations are you seeing across the as-a-service market? What new technologies are being explored?
SaaS has been such a dominant business model over the past decade eliminating the need for end-user investment in costly infrastructure and maintenance, passing all of that to the SaaS provider, reducing the management and administration burden on businesses and enabling them to focus on their core competencies.
The same demand for “as a service” exists for hardware services, but where SaaS has a relatively low setup cost for the provider, Hardware-as-a-service providers have much higher barriers to entry – requiring not only investment in the hardware, but also a service focused architecture, warehousing, logistics, repair centre etc.
At Agilitas, our tailored on-demand Inventory-as-a-Service (IaaS) IT maintenance solution, InventoryAssurance, has continued to expand across the MSP market, focusing on server, storage and networking hardware.
But as cloud computing grows and the requirement to support a remote workforce continues, we are experiencing a higher demand for Workplace-as-a-Service solutions. Customers are increasingly looking to outsource the processes and logistics for the hardware that enables them to operate a productive digital workspace – laptops, monitors, phones and tablets. These components are typically more “commodity” and so the innovation and value proposition becomes about how Channel organisations retain a personal touch both at an organisational and a user level, whilst providing a slick and efficient operation for their customers and a profitable service.
What key trends are driving as-a-service offerings?
In our 2023 Channel Trends report, it was revealed that when asked about the future of the Technology Channel over the next 12 months, 82% of respondents ranked customer experience as the most important to their business, closely followed by company culture at 80%.
This demonstrates the opportunity for Technology Channel businesses to establish a ‘Total Experience’ to enhance employee and customer satisfaction. By improving experiences for all stakeholders and implementing this transformational strategy, Channel leaders can build more resilient business models.
But organisations are currently facing great uncertainty with inflation, supply chain disruptions, geopolitical tensions and the threat of COVID-19 variants just a few of the concerns that are troubling business leaders.
By turning to as-a-service offerings, businesses have the agility to scale up and down, have greater visibility over forecasting and still remain a resilient business.
Equally, the increase in consumerisation of Enterprise IT has brought a fundamental change in the way that technology is used in the workplace with a focus on user experience and convenience. Technology improvements, cloud storage, SaaS applications and reduced cost of devices are all enabling new ways of supporting Hybrid workers wherever they may be located through a full “device swap”. Users are best served, up and running faster and have much better experience with a simple device replacement, that can be fully provided on an “as a service” basis,
All this in turn enables businesses to provide that essential customer experience, building their reputation and allowing them to stand out from the competition.
With shifts in customer preferences towards as-a-service purchasing, we can also expect to see ongoing synergies between software and hardware, with emerging technologies blurring the lines between the two in 2024. As a result, hardware vendors will have the opportunity to create new business and revenue models to address future customer pain points and needs.
What are the opportunities for partners delivering these kinds of solutions?
Strong long-term customer relationships can make the process of setting up a subscription pricing structure easier, as connecting with customers just when it’s time to sell doesn’t work with subscription models.
For ongoing success, the sales and marketing relationship must be nurtured. If the sales team is regularly checking in to make sure their solutions are meeting customer needs, the process becomes about excellent, long-term customer relationships and continually working to fulfil customer needs better. This could be through selling additional services or features that make transactions easier.
Streamlining is also key for transitioning to a subscription-based business model. The subscription amounts will be variable, so the accounting and CRM systems must be able to monitor all the variants.
Ultimately, with the increasing popularity of subscription-based business models over traditional channel arrangements, Channel businesses will need to be ready to move to new processes in the year ahead.
View the full as-a-service era article featuring Scott alongside other industry leaders at Comms Business
View the Comms Business article here
