3 min read

Bruce Stuart: There is no free lunch with the cloud

Cloud

What has to happen to build your recurring revenue driven business depends on where you are right now and where you wish to take your business in the future.

There is obviously no free lunch when it comes to your participation in the recurring revenue business.  Investments lead returns, expenses lead revenues and time and money are interchangeable.  Some partners will look at the cloud and SaaS opportunity and pass, while others will analyze it as a truly business building investment opportunity and jump at the chance to invest in a high growth market with big vendor backing and limited competition.  Some partners will have enough capital to invest, and some will not.

Whatever you decision outcome you owe it to yourself, your management team and your business to ask and answer the following questions:

  • How fit are you to transition?
  • What might you have to build and why?
  • How to engage with your vendors and distributors?
  • How fit are you to transition?

Before you and your team start to think seriously about making an investment in building out a recurring revenue business you want to be taking a good look at some of the key aspects of your existing business.

You will want to start off with some thinking about a Business Plan.  As you look out into the future, 1-3 years, what do you want the organization to look like?  What do you want it to be doing and what resources will it require to do what you want it to do.  Will cloud, SaaS and MPS be part of the destination?  But before you generate a destination, you want to do a thorough assessment of your current fitness to transition.

How is your organization’s financial health? How much will the recurring revenue investment potentially cost? How will you finance your investment in the business?

How are your organization’s marketing capabilities?  Do you have the funds to invest in marketing infrastructure and programs?  Do you have the right type of marketers engaged in the right type of activities to generate the right number of prospects of the right type?

How are your organizations sales capabilities? Can you train them to sell cloud, Saas and MPS? Does your current sales compensation model support the sale of SaaS offerings?  Will you need to hire new sales resources with a new sales profile with more success selling annuities?  Will you need to overlay these new people on your legacy sales force?

How are your organizations administration and system capabilities?

Do you currently have the capability in place to run the billing and compensation systems required by the recurring revenue business?

How are your organizations technical capabilities?  Will the people commit to becoming trained and certified on the various cloud and SaaS solutions?  Do your technical people have the ability to adjust to the nature of the services business that is driven by the recurring revenue business?  Are they currently in a structure of large extended projects staffed by deep specialists…can they change when required?  Will you need to hire different technical resources?

Once you have honestly assessed your existing fitness level and ability to transition you and your team can start business planning and seriously thinking about what you might have to build and how.

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About Channelcorp

Margaret and Bruce Stuart founded Channelcorp in 1989.  The firm is a global leader in the assistance of reseller, distributor and vendor clients. Channelcorp specializes in the business model transformation that is required in the face of the structural changes to recurring revenue driven business models in the worldwide IT business (www.channelcorp.com/services.php).  Channelcorp publishes and sells four industry- leading books and 12 white papers (www.channelcorp.com/publications.php).