Magazine Article | June 17, 2014

VARs' Guide To As-a-Service Model

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By Business Solutions magazine

Hype Or Real Opportunity?

It’s Really A No-Brainer — “Lots of people are aware of the concept, but I think the real question is how many VARs are buying into the hype and having success. One of the greatest advantages of as-a-Service is that it’s a predictable business model. VARs sitting idle waiting for an order are simply not profitable, but idle time when your clients are not calling, and yet they are still paying you, is infinitely more profitable. The recurring revenue model works because you have better visibility into next month and next year, and you can adjust your costs below your recurring revenue line.” — Mark Sokol, director of marketing, ConnectWise

Sales Advice

Don’t Force It — “If the traditional model is what the end users want and it satisfies their needs, that is what the reseller should give them. Resellers need to listen carefully to what end users need and want, while also paying attention to their ability to pay and offering an as-a-Service model only when appropriate. They should see their enduser’s needs as a long-range plan – one model might be best at the outset, but the as-a-Service model may work in the future.” — Velda Goodin, manager, technical services and solutions, ScanSource

Common Mistakes

Improper Pricing — “The three most common mistakes I hear from solutions providers that went through the transition are trying to move too fast, expecting the transition to happen overnight, and incorrect pricing. Before getting into this, you really need to do your research and understand what’s ahead of you. It’s going to take time, and the companies that don’t understand that aren’t going to be nearly as successful as the ones that do. From a pricing perspective, this is a totally new and completely different business model. I’ve seen companies convince their clients to buy into the model, but then lose them all to the competition not because their pricing was too high, but because they were not showing the value they can deliver. I’ve also seen it from the other side, where the services are priced too low and they’re priced like a commodity. That’s a good recipe for missing out on a huge amount of profit.” — Mark Sokol, director of marketing, ConnectWise

Cash Flow Crunch — “Resellers have to wade carefully into an as-a-Service model. If their cash flow issues won’t sustain them, they may find themselves challenged. Resellers need to build their as-a-Service model carefully to the point where they can sustain it over the long term.” — Velda Goodin, manager, technical services and solutions, ScanSourceSubscribe to Business Solutions magazine

Barriers

Get Out Of Your Old Mindset — “By far, the number-one barrier to making the transition to the as-a-Service model is trying to continue to do things the way you’ve always done them. It’s not going to work. You’re no longer just a piece of a larger puzzle; you’re now the one trying to put that puzzle together. Your processes are going to change, your sales concepts are going to change, and if you resist that change, you’re far less likely to be successful.” — Mark Sokol, director of marketing, ConnectWise

Prepare For Change — “The as-a-Service model can create cash-flow difficulties. Going from a project-centric to cloud/service-centric model takes knowledge and homework to ensure resellers stay ahead of the curve and know what to expect in the business.” — Velda Goodin, manager, technical services and solutions, ScanSource

Significant Trends

Fine-Tune Your Help Desk — “One of the most significant trends I see out there is convergence. People realize they can probably do more for their clients than what they’re doing today, and as companies start to buy into the as-a-Service model and expand their service offerings, the ones just providing niche services are starting to face stiffer competition than anything they’ve seen in the past. One other important thing to note is that as you make that move, you need to understand how important your help desk becomes. You’re now providing multiple services that you’ll have to support, so fine-tuning your help desk and service delivery is key.” — Mark Sokol, director of marketing, ConnectWise

Become A Single Source To Your Customers — “The entire IT industry is trending toward the as-a-Service model, so resellers of retail solutions must align with this and become the single point of accountability — one single source for products and services — for their customers. Through this model, resellers can provide new, more efficient services for their customers through a more efficient service delivery model. With this model, the size of the reseller doesn’t limit the size of the opportunity.” — Velda Goodin, manager, technical services and solutions, ScanSource

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