Show Me The Money: Succeeding With The Recurring Revenue Model
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Many partners are afraid to move into cloud services that might cannibalize traditional revenues and change resale margins. Yet, many end user customers are asking for cloud services as they offer advantages including lower costs by spreading subscription payments out over monthly or quarterly terms. The rapidly growing market demands for cloud services offer a great opportunity to innovate with existing channels or be disruptive in new markets. The challenge is how to make it as rewarding as the cash flow from subscription? Cloud services are very different from the upfront fees earned with providing and integrating on-premises solutions. This session will cover the lessons learned from an integration partner that has made the successful transition.
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Show Me The Money: Succeeding With The Recurring Revenue Model
- 1. The community for Partners who want to build a more successful cloud practice The Webinar series
- 2. Show me the money Succeeding with the recurring revenue model Mark Emanuelson Atlantic Technologies
- 3. Who is Atlantic Technologies? We deliver cloud apps CRM Mobile Contact Centre ERP BI For leading clients With our partners
- 4. Show me the money
- 5. Transition to recurring revenue Recurring Revenue Model Small margin on resale Value in consulting services Margin on subscription Traditional Model Big margin on resale Big consulting services Paid on upgrades
- 6. Customer value proposition SOFTWARE TIME VALUE Capital Expense Upgrade Expense
- 7. Customer value proposition Cloud Computing Value Greater ROI SOFTWARE TIME VALUE Capital Expense Upgrade Expense Low Capital Cost Automatic Upgrades
- 8. Customer concerns CIO Concerned about: • Security • Support • Experience • Installed base Business Concerned about: • Growing revenues • Reducing costs • Productivity • Mobile, social, digital
- 9. Scale to More Apps Fewer Developer Hours Prebuilt Application Components Minimize Churn Build Loyalty Faster Updates Subscriptions and perpetual contracts Collaborate with Partners Lower TCO Shared revenue and reward models Benefits of recurring revenue
- 10. Pursue a different go to market Don’t run it same as traditional business • Financial processes • Watch fixed costs • Order-to-cash • Follow indicators Build programs to encourage usage • Track usage metrics • Measure adoption • Test new features • Spot potential issues Invest in lead generation • Innovate marketing • Test drives for leads • Track lead metrics • Reward activities
- 11. Don’t neglect to develop the market “Build it and they will come?” • Tune your offer • Correct pricing • Sales discipline • Targeted promos Customer success and community • Share success stories • Reward for references • Build user community • Great intelligence Establish customer success team • Drive satisfaction • Renewals are key • Ongoing education • Build references
- 12. Don’t rely on traditional methods Focus on agile development • Waterfall not suited • Rapid iterations best • Release frequently • Collect feedback Promote an API strategy • Open API strategy • Easier to integrate • Partner with others • Drives innovation Leverage cloud development tools • Not from scratch • Pick a platform • Do what you do best • Outsource the rest
- 13. Compensating sales Pay later On subscription Compensate based on percentage of bookings over time + Optimized cash flow - Least incentive Pay now Pay later Some commission up front, and rest based on revenue + Good for farmers - Lower sales comp Pay now On contract Sales team comp on full contract value or first year’s revenues + Good for hunters - Risk in cash flow
- 14. Compensating partners Resale Margin $$$$ Partner buys licenses and resells to end user + Partners pushing sales - More risky for partner No compensation 0 Partner makes money on services only + Easy to admin - Less incentive Pay Commission $$ Partner provided incentive to sell licenses + On-boarding fast - Who gets credit
- 15. Keys to success Pursue a different go-to-market Easy to provision, easy to upgrade Develop community and success stories Choose the right incentive compensation Pay close attention to cash flow
- 16. ATLANTIC TECHNOLOGIES Mark Emanuelson Atlantic Technologies Tower 42, 25 Old Broad St. EC2N 1HN, London, United Kingdom Phone: +44 (0)759 059 2082 Email: memanuelson@atlantic-technologies.com
- 17. To watch the webcast replay or to join the community, visit: www.cloudservicescommunity.net