On The Record

Can We Get To Everything As A Service?

By Robert Faletra

FOR ALMOST TWO DECADES, we have been discussing the value of recurring revenue in the strategic service provider model.

The advantage for the strategic service provider is clearly knowing what much of the year looks like on Jan. 1 rather than coming into it with a need to begin sales from dollar one year in and year out. For the customer, there is the ease of budgeting and an ability to focus on new projects rather than not understanding what maintaining the current infrastructure will cost.

But now as the buzz around Everything as a Service grows, the question becomes can we get there and what are the benefits if we do? Is it worth chasing for the strategic service provider, and will customers be more and more receptive as the months and years unfold?

From the strategic service provider ownership perspective, there are real benefits and challenges to getting to the model. It’s not always easy getting buy-in from the sales team unless the commission structure is attractive. I still have yet to meet many sales-driven individuals who don’t prefer the big commission check up front and all at once rather than smaller chunks over a longer period.

There is good reason for the push-back. How many people who win sizable lotteries go for the stretched-out payment over decades rather than a smaller but substantial payout? Somewhat smaller but all up-front payouts are generally better for individuals than those that may be larger and spread out. They can be immediately invested or used in other ways that are preferred by the salesperson.

But for the strategic service provider business, the real value in delivering Everything as a Service is far more than knowing what is already booked as the business enters the new year. In this type of current economic environment where inflation is running high and an economic recession is a real possibility, Everything as a Service has the potential to keep many businesses in stronger positions to weather the challenges a downturn can bring.

This may even be true for the sales team if the compensation program is structured in a way that it not only reduces the risk for the business, but cushions and motivates the sales team as well. Losing top sales drivers is always a danger to a business, and downturns can see sales mercenaries jump ship quickly if they don’t see a route to a respectable year.

Customers, of course, see benefit in the service model as it allows them to budget easily and understand what they can expect to spend in a given year. However, will IT organizations ever completely buy into this model? It seems to me that the politics inside the technical teams will fight against complete adoption as the model in theory reduces the number of internal people dedicated to technical support.

In business you can never discount the power of politics inside the customer. The best salespeople understand this and figure out a way to maximize relationships and delivery excellence to get the most out of the account. But it can often be an insurmountable problem to completely change a customer’s approach to IT strategy.

If we go back 10 years and look at the predictions of how the cloud was going to change the world, there were plenty of pundits predicting a complete and total shift to purchasing everything through the public cloud. That hasn’t materialized and shows no sign of getting there anytime soon.

Are we moving more toward an Everything-as-a-Service model? The trend certainly would say yes, and there is little doubt more of our computing needs will be solved in that model in years to come.

But will we ever purchase it all as a service? n

BACKTALK: Make something happen. Robert Faletra is a Founding Partner of The Channel Company. You can contact him via email at rfaletra@thechannelcompany.com.