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Why Is Recurring Revenue So Crucial To Growth?

Solution providers depend more than ever on recurring revenue to grow their business. Companies detail how much of their business is based on recurring revenue, and why it's so important.

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As managed services portfolios continue to diversify, solution provider say the importance of increasing recurring revenue is greater than ever.

’It pays all of our bills,’ said PCG President David Hodgon. ’We’re about 40 percent recurring revenue. We’re about at $200,000 a month, so we’re about $80,000 recurring a month.’

ClearPointe’s Charles Van Heusen said his company depends on recurring revenue for ’over 75 percent’ of business ’and has for over a decade.’ That has led to the creation of a hard rule for ClearPoint.

’We see professional services as an ends to the means, so we don’t take on projects if it’s not for a customer that is under a managed services contract or is going to lead to a managed services contract.’

Some solution providers would like to be where Cisco partner Cirrity is -- the company depends 100 percent on recurring revenue. ’It’s incredibly important,’ said Cirrity’s Gerry Baron.

Networking and software solution provider Gulf South’s Haggai Davis said the Baton Rouge, La.-based company depends on the business model for ’60 or 70 percent’ of business, and he said growing that business segment is essential to overall success.

’It’s the only way to build a business, recurring revenue,’ Davis said.

PUBLISHED MARCH 24, 2015

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