Adapting to Tomorrow: The Shifting Landscape of as-a-Service
Subscription Services Gain Momentum: A Preferred Choice for Organizations
Subscription services means lower risk for end customers. It enables organisations to try new services more affordably, without any long-term contracts or setup costs. It also enables greater flexibility, so organisations can change subscriptions as their business evolves and only pay for what they need.
For providers, the low-risk element means these services are far easier to sell. Cloud-based services are also faster to deploy with reduced disruption and less operational IT complexity.
Business Model Evolution: The Shift’s Effect on Channel Companies
Annual recurring revenues (ARR) are important in any business and for those in the telecoms sector, customer subscriptions play a key role in increasing the value of a business.
However, the affordability of the monthly subscription model can make incentivising sales teams a challenge since subscriptions often come without any long-term commitment from customers. The solution is to give sales teams the flexibility to offer extended contracts at discounted rates to ensure customer commitment.
For those in the channel prioritising the value of consultative selling with extended contracts serve as the foundation for delivering the promised value. A long-term commitment provides the opportunity to secure long-term relationships and to upsell and cross sell throughout the customer lifecycle.
Managing cash flow from subscriptions requires planning. Capital Expenditure (Capex) payments bring in large one-off payments compared to the gradual accumulation of monthly subscription revenues. One option is to offer annual subscriptions paid in advance combined with value-added services to attract customers. This again emphasises the importance of providers adopting the role of consultants and trusted advisors who understand their customers’ business needs rather than merely functioning as salespeople.
Breaking Ground: New Technologies Reshaping the as-a-Service Market
AI-powered services have become central to various as-a-service offerings, particularly in the realm of customer experience. Many organisations are actively exploring ways to harness AI capabilities to address tangible business challenges, as well as to optimise productivity and streamline processes.
AI naturally aligns with as-a-service subscriptions, as much of the value of them is that they learn and continuously improve. For the vast majority of end customers, it is simply not viable as an on-premise option.
APIs are another transformative technology. Given the swift pace of technological advancements, it is important that customers maintain access to the latest updates and developments, which is only feasible in a subscription-based commercial model.
Key Trends Shaping the as-a-Service Landscape
The as-a-service trend will continue to grow since it delivers the tools and capabilities organisations need to navigate the complexities of the modern business landscape. With the availability of more affordable computing power, enhanced security and solutions architected to scale, businesses can transition to and embrace the flexibility of the Cloud with increased confidence.
With subscriptions infiltrating our private lives as much as in business, this model is now a familiar approach across all types of purchases. We are now in a subscription economy where the acceptance of this model is widespread and oftentimes expected.
Partners’ Pathway to Success: Seizing Opportunities in Solution Delivery
This biggest opportunity for increased margins is to enhance the value of an as-a-service solution with service wraps, such as strengthening the customer service capabilities of an underlying UC solution. Partners are well placed to understand the needs of their customers and can create productised solutions and service wraps to meet the exact needs of their customers. Service wraps also present the opportunity for longer term contracts that deliver better value over time.
From a marketing perspective, subscription services are inherently customer-centric with the focus on delivering ongoing value and maintaining a positive customer experience. It offers a reason for the partner to stay in touch with the customer and provide value throughout the relationship. Ultimately, partners can demonstrate a customer service mindset to support them throughout their evolution with greater opportunities to upsell and cross-sell.
These as-a-service solutions contribute to the value proposition of a channel business by ensuring consistent revenues, enhancing predictability, refining forecasting, and providing staff with job security. Training staff to effectively sell and support these services is also a relatively straightforward process.