Blog | January 6, 2014

Converting To As-a-Service? Take Your Time.

By Mike Monocello, editor-in-chief, Business Solutions magazine
Follow Me On Twitter @monocello

BSM-Falling Money3

By far, the biggest objection I hear to converting from break-fix to the As-a-Service model is the change in cash flow. Experts and MSPs who've already made the transition have very clear advice: make the transition in stages and as your company can accomodate.

Brett Bennett, CEO of POSitive Technology, appear in our January issue ("Cloud Retail Software Brings Retail Win"). POSitive Technology, a Germantown, MD-based ISV made the shift to the cloud several years ago when it developed its OpSuite product, a cloud-based retail management solution for multistore operators.  According to Bennett,  POSitive previously offered traditional on-premise solutions but gradually transitioned to the cloud, because Bennett wanted to offer a low up-front cost of entry to customers and produce predictable monthly income for his business. His advice for making the transition aligns with other's who've gone before him.

"You can't do it quickly," he advises. "Just trying to cut off and make a big change will kill anybody. Your team is used to getting $80,000 up front and then you're swapping that out to a few thousand up front and living off that monthly income for a few years to make up the difference."

Bennett recalls his transition was a work in progress. "We had to continue selling traditional deals along with new SaaS deals. Luckily we had some good revenues built up from previous years that we could utilize as a cushion." He goes on to say that, from a sales and technician standpoint, this was a big deal because everyone is commissioned. "They were used to getting big checks, and this dropped them down to a much lower amount. Again, because we tapered it with traditional and SaaS, that helped out. Now we are 98 percent SaaS. The sales team makes money on a residual basis, and we commission them on the period of the contract."

If the financial burden is too much for you to bear, keep in mind there's no hurry and slow and steady might be the key to a successful and smooth transition.

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