The successful recurring revenue business will require capabilities in seven key areas:
- Technology; and
- Administration and support.
- Some organizations that consider investment in the recurring revenue business may already have many of the resources that are required in place. Others will need to make the capability acquisition part of their destination plan in order to be successful.
Leadership from senior management is crucial to cloud, SaaS or MPS success. Because the scale and scope of the re skilling that is required is so broad and deep it is extremely unlikely to happen in organizations that does not have a senior management group and named executive sponsor that really wants to see the recurring revenue business grow.
Strategy and strategic direction provide a vital roadmap for the Business Plan and all the transitional investment that will be made. Is the recurring revenue business investment defensive or offensive in nature? What is the plan to integrate the recurring revenue business into the existing transactional businesses that you may have? If you are a startup what do want to be?
Marketing’s role in the recurring revenue business is to create prospects for sales and to keep the installed base aware of the reseller’s offerings. It will need one person who is responsible for the required planning and execution. It will need investments in programs and activities that generate the required output at the expense levels available.
Sales’ role in the recurring revenue business is to turn prospect into contracts, and then maintain them and then up sell them. In order to perform this role the sales force will need to be properly trained and then compensated for what you want them to do. This will likely require a change in approach to, and structure of, compensation. It may also require new sales talent.
Finance and the availability of capital obviously play a key role in the cloud, SaaS and MPS business. In order to be successful a reseller has to have adequate capital that they can put at risk for the required amount of time, and then have the ability to manage the organization through the unprofitable and cash flow negative startup stage to profitable growth and then maturity.
Technology and technical knowledge plays a very specific role in the recurring revenue business. Technical resources will need to be generalists capable of talking to business people about business problems and solutions. If these people do not currently exist in your organization you will need to make them, buy them or rent them.
Administrative and support tools and resources will be required to operate a business that has fundamentally different requirements then the legacy business partner. Annuities and recurring revenue stream present a challenge to legacy accounting systems and structures that will overwhelm them if they are not segregated and dealt with using dedicated system and processes.
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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).