The as-a-service model to sell technology services is quickly becoming mainstream. And for good reason. Value-added resellers (VARs) are increasingly finding it more challenging to sell technology solutions as an upfront capital expenditure. Simultaneously, IT departments are expected to do more with less staff and lower budgets while delivering more business value to gain a competitive edge and earn more profit.
New sales models, such as Robotics as a Service (RaaS) and Hardware as a Service (HaaS) are attractive because they take work off the desks of busy IT professionals and allow them to focus more time on activities that more directly impact the bottom line. Software and hardware upgrades are automatic, so the customer always has the latest and most secure technology in their toolbox. In addition, customers appreciate the ability to purchase a comprehensive solution with a single, fixed, monthly fee that gives them a convenient alternative to buying equipment or automated solutions as a capital investment. As-a-service models can also help VARs cut costs, assemble bigger deals, improve customer retention, and provide a lucrative, recurring monthly income.
To roll with the changes in the marketplace, VARs are partnering with financial companies to offer RaaS, HaaS, and other as-a-service offerings to reduce the CAPEX hit of IT purchases for customers and close more business. VARs are going beyond offering traditional business and consulting services to add even more value by providing creative and innovative ways to help businesses purchase the technology solutions they need. In many cases, savvy VARs are productizing financial services and adding them to their line card.
Supporting VARs’ Needs and Reducing Staffing Costs
The as-a-service model not only helps customers solve problems and run their businesses at a lower cost, but has added benefits for VARs as well. Because most HaaS and RaaS agreements include the option to receive equipment and software upgrades continuously, the model reduces the customer support load for VARs. In many cases, equipment can be pre-configured and shipped to the customer by the manufacturer, which helps VARs reduce the number of on-site technical support visits. The model may also lessen the need for VARs to employ high-salary technical experts.
Selling Deeper Into Customers
The RaaS and HaaS models aren’t just about the equipment itself. It’s about bundling equipment with a complete solution that includes software and support services. By packaging a complete solution, VARs can sell deeper into accounts, getting more business per customer than in the past.
VARs are keenly aware that some customers don’t have budgets large enough to cover significant capital expenditures on hardware or automation. Because RaaS and HaaS is handled as an operating expense rather than a capital expense, VARs can close more deals in situations where CAPEX sales are limited. This is an important value proposition for customers because many are working with outdated hardware that’s expensive to maintain. A complete hardware refresh is now much more possible and affordable, giving these customers the ability to upgrade while lowering the total cost of ownership.
Improving Customer Retention
Keeping an existing customer is a lot less expensive and time-consuming than finding a new one. Even better is to expand relationships with existing customers to become the indispensable provider for your market niche.
The VAR that provides a complete as-a-service solution with equipment, software, services, and financing is more valuable to customers than a run-of-the-mill equipment vendor. By selling deeper into the customer with additional as-a-service offerings, VARs can forge a deeper relationship, making it less likely that the customer will go shopping for another provider.
In addition, at least some of your existing customers probably have urgent needs to replace technology that’s nearing end of life or want to invest more in technology for more efficiency. Selling RaaS or HaaS makes it easier to connect with existing customers around their needs and provides a simple, manageable way to upsell or cross-sell new technology, services, and financing to meet their needs. And, by selling deeper and retaining more customers, you can grow your business with the customers you already have.
Building a More Predictable and Profitable Revenue Model
Like it or not, hardware is becoming a commodity. As margins on hardware get squeezed, the hardware-only sale is becoming less profitable. Many VARs also experience ups and downs in cash flow. By offering as-a-service solutions, VARs can balance their cash flow with recurring monthly revenue and increase margins by bundling hardware with software and services. Eventually, you can replace unpredictable income spikes with predictable monthly income from ongoing as-a-service revenue.
Of course, it would be disruptive to transition to an as-a-service model too quickly. VARs can make the transition at their own pace by selecting specific deals to pursue as an as-a-service offering while preserving their traditional CAPEX sales strategies.
In essence, the as-a-service model is a new way to package and sell your current products and services. As-a-service makes it easier to sell and support technology solutions and provides VARs with the opportunity to improve profitability and enhance competitiveness. By providing customers with something they want and will increasingly expect from their trusted technology partner, you can remain indispensable to them.
Located in Cleveland, Ohio, River Capital Finance is an independent equipment financing company specializing in the warehouse distribution and robotics industries. River Capital is proud to specialize in as a service solutions, the most comprehensive mobility lifecycle management solution designed for business.