How To: Transition To A Reoccuring Revenue Model

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When it comes to transitioning to reoccurring revenue models, VMware's Frank Rauch said it best: "People are hopping on this bandwagon."

That's because the bandwagon is a highly profitable one, with desirable growth and consistent streams of revenue.

"One of the areas that we've seen the fastest growth is managed services -- not necessarily cloud services -- managed services," said Cisco Senior Vice President Edison Peres. "We encourage that because we want to see more of the partners' revenues, to level out their revenue streams, to have a higher percent of their business coming from reoccurring revenue."

IBM's Tami Duncan said the primary challenge is in compensation models for sales teams. "The firms get it," said Duncan. "Where they're struggling is their reps."

Dell's Frank Vitagliano said he never expects older revenue models to "completely go away," but transitioning to reoccurring revenue looks good. "The reoccurring revenue piece is to me, an indication of the health of that partner."

Vitagliano agreed that sales reps tend to struggle with the transition, and said partners should take a page out of the born-in-the-cloud business book, which do not struggle with "how to pay sales teams" because they simply started out in that model, he said.

PUBLISHED MAY 7, 2014