Three Mistakes Channel Firms Make During the “As-A-Service” Transition
In channel firms’ quest for new market expansion and growth, the anything-as-a-service model promises ample opportunity to transform traditional, hardware-oriented business limitations. But firms have found the transition from VAR to service provider is easier said than done: a survey from Accenture found that 68 percent of firms won't be ready to deliver their core offerings through an as-a-service model until 2020.
Channel partners have ample incentive to make the leap: as-a-service offerings promise greater revenues, lower upfront costs and stronger customer relationships reinforced by frequent contact. The as-a-service switch is not without difficulties and firms can easily stumble before finding their stride. Channel partners should be wary of these common mistakes while they navigate their own as-a-service transformation.
Mistake #1: Failing to adapt the development and delivery processes
Channel firms must rethink both their production model and development philosophy to successfully transition their offerings from singular transactions to a recurring service.
Attempting to bolt on an as-a-service offering to an existing product portfolio will yield subpar results, and fail to entice current and potential customers. When a customer reaction to a new service offering is, “Why does this exist?” you know you’ve gone astray. Many vendors underestimate the scope of change required for service, rather than product-based, delivery. Channel partners can’t simply amend their workflow; the entire development and production process must be reimagined for the needs of a service-based offering.
Firms must retool their production process to focus not on minimum viable products, but services that truly delight customers. Whereas standalone products are often accompanied by model and version numbers that delineate improvements over time, services and platforms have no such distinguishing marks. A customer disappointed by an unpolished service is unlikely to reconsider later, despite changes to the platform. On the other hand, channel firms must also shift focus from delivering a single iteration of a product to a continual delivery model. Customers expect as-a-service offerings to be maintained and improved over time, forcing firms to identify and eliminate bottlenecks that could prevent a rapid, sustainable delivery model.
Mistake #2: Only making changes to product teams
It may appear counterintuitive, but adapting your organization for an as-a-service delivery model must include more than product-focused teams. Marketing, finance and operations teams also need to make considerable adjustments to accommodate your firm’s service-oriented product offering. Especially where employees interact with customers, it’s important that they have the flexibility to update community management strategies to match the pace of development. When a service offering changes or expands, it’s crucial for a channel partner to quickly communicate these changes externally.
Similarly, firms should ensure that internal support teams, like accounting and operations, are able to take advantage of more efficient continual delivery processes. Without companywide evolution, internal services could easily serve as a bottleneck for product and service teams, bogging down the delivery cycle and undermining efficiency gains elsewhere. Adjusting your business for as-a-service product delivery is about more than a new type of offering, and requires your entire organization to become more efficient.
Mistake #3: Exempting the C-suite
A channel firm can only move as fast as its slowest members, and businesses sometimes fail to consider the role of the executive team in adapting to a rapid, continuous delivery model. No single stage of business operations should be a hindrance, and that includes executive oversight, approval and decision-making. Executive teams must look beyond day-to-day and quarter-to-quarter management to focus on optimizing their own workflows, rooting out inefficiencies, and breaking down silos. It’s also important for executives to begin developing new metrics that accurately track business success, since existing benchmarks are unlikely to reflect the reality of an organization’s as-a-service delivery model.
As part of this process, the executive team should look for tools that support more agile workflows across the firm. While there are a variety of project management solutions available, organizations should identify those that provide the flexibility to cater to different teams’ needs, and at the same time help management with organizational alignment. These tools should also integrate with existing systems (e.g., cloud-based office suites and enterprise messaging) where possible to enable executive teams to gather and analyze the metrics they need to manage the business.
There’s much more to embracing service-oriented business offerings than bolting “as-a-service” onto an existing product. Rather, channel firms must retool their workflow and development philosophy to balance speed and quality. This requires firms to modernize both external and internally facing teams to eliminate bottlenecks and ensure consistent quality. Although deceptively simple, as-a-service offerings require channel partners to rethink their development model and commit to a streamlined approach designed to delight customers on the first try.