BoB Conference: Reaching The Holy Grail Of Recurring Revenue11:44 AM EST Tue. Oct. 16, 2012
For Jere Brown, CEO of Dimension Data, Americas, it all began in 2008 when Lehman Brothers evaporated as did its $80 million in revenue and another $220 million from other financial services clients.
"I vowed we'd never do that again," said Brown, who put Dimension Data on a journey to move from a product company to a services company.
"Meet The New You: The CEO Of Change" was the opening keynote and panel last night at UBM Channel's Best of Breed Conference in Tampa, Fla. Moderated by Robert Faletra, CEO of UBM Channel, the panel addressed how VARs need to change their business model in a time of shifting customer demands and rapid technological change.
"The clients are clearly under pressure to do more with less and as a result are asking more from solution providers. It isn't a conversation about implementing a system but, rather, 'How can you help me run my business?' We aren't used to thinking this way," said Harry Zarek, president of Compugen. "We need holistic solutions, not just design and install."
"The industry has a number of sectors that are rapidly changing -- social media, mobility and cloud. There are some opportunities there and some threats for solution providers," said Ed Anderson, chief strategy officer of CompuCom.
"Engage in a business conversation; talk to them as a CEO. There is a lot of empathy when you talk business to business," added Zarek.
As VARs adapt to this change, they need to sell and incent their teams differently, invest more in marketing and work with vendor partners in ways that make sense for their respective business models.
Compensation model changes, said Brown, are not just for sales but for all employees. "We created a climate for change where every employee can state three strategic objectives," said Brown.
Recurring revenue is the holy grail and VARs need to sell deeper into their existing clients. "You need to be selling the entire portfolio and [figure out] how you can move into a recurring revenue model," said Zarek.
One of the challenges with this business transformation is that the point of contact within customer organizations has changed. The role of the CIO is shifting and line-of-business managers are becoming more important.
"In the public sector, IT is in control. In private sector, the line-of-business has the dollars. The good news is there is a chance for diversity, there is an opportunity," said Zarek. "IT has lost the desktop and has moved from a service to an operational role. But there is potentially more dollars for the channel [as a result of this change]," he added.
Furthermore, solution providers need to invest much more in marketing to acquire new clients. For instance, Dimension Data will be spending $1 million more in marketing, and CompuCom is investing in marketing analytics technology. Compugen is working with vendors and tapping into the midmarket.
"It is underserved and they will take everything. We just need to find them," said Zarek.
Beyond leads, vendor partners also need to help solution providers with the change and truly understand how their models are shifting.
"They need to understand the opportunities for solution providers," said Brown. "Products bring in 1X, services 2X and managed services 5X. They don't understand our business and value proposition and what we stand for uniquely. At the senior level they understand that we offer choice. At the street they hate that we offer choice."
PUBLISHED OCT. 16, 2012