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The Service-Based Business Model: Just a Bunch of Hype?

What’s the big deal about the service-based business model, and what could it do for your business?

CI Staff

It seems we are in the midst of one of the greatest shifts in our industry in perhaps a lifetime.

Companies that once sold products, delivered boxes to doors and then went on their way, are completely revamping the technology provider business model as we know it.

It has been called managed services, solutions, and now acronyms are beginning to appear: Saas (Software as a Service) and Haas (Hardware as a Service).

If you sell, service, or support technology and haven’t yet given the service-based business model any thought, it might be time to take a gander at what this could mean for your business.

THE ULTIMATE GUIDE TO AS-A-SERVICE

Tips, advice, and long-term solutions on how to transition your business to an as-a-service model, and why it’s beneficial to do so.

Part 1: Why Change Your Business Model?

Part 2: How to Plan for the Big Transition

Part 3: Managing Cash Flow

Part 4: Adapting Your Sales Strategy

Part 5: Transitioning Your Existing Clients

Part 6: Business Process Automation

Part 7: How to Retain Clients

Check back for updates and new sections of the Ultimate Guide to As-a-Service to be released on CommercialIntegrator.com.

There have been successes: integration giant AVI-SPL saw a 10 percent growth in service revenue from 2012 to 2013, now bringing in more than $40 million in service-based revenue.

Global integration firm Verrex Corporation told CI in an interview as far back as 2011 that it had been making strides to hire salespeople who are comfortable selling service agreements.

But is it just a bunch of hype?

If it is, it’s the most profitable bunch of hype we’ve ever seen.

Adopting the service-based business model, although challenging, will help you A) develop a stream of predictable revenue and B) make your business more competitive.

The recurring revenue business model is hard to beat. Think of the as-a-service model in terms of bundling together the hardware, software, services and support that your clients need and then charging them a flat monthly fee for the entire bundle.

Over time, when you add up all of the payments in a managed services contract, you can expect to make more money on this model than one-time projects or installations.

You’ll also raise the lifetime value of your clients, become a critical point-of-contact for your clients, increase your stickiness with existing clients and reduce the possibility that competitors can gain a foothold.

Still unsure? Read Chapter One of the Ultimate Guide to As-a-Service to learn what else you can gain from making this transition, and receive guidance and advice for every step along the way.