Software As A Growth Enabler: Five Solution Providers Share Their Software Journey

Embracing New Business Models: The Cloud, Software And SaaS

Solution provider attendees of this month's XChange Solution Provider conference had an opportunity to mingle with some of the top channel executives from a variety of vendors and gain valuable information about new technologies and programs that will help their business grow in the next year.

One of the most important take-aways from the conference, however, is the chance to exchange experiences and learn from the successes--and failures--of peers.

Five solution providers took the stage with a series of short presentations that looked at how they were able to transform their business from legacy technologies, both hardware and software, to embrace the latest in cloud and Software-as-a-Service trends as a way to grow their business far into the future. These executives outlined many of the obstacles they faced, and how they overcame those obstacles, as a way to encourage their peers to make the transformation as well.

Here's a look at their evolution.

Software Push Requires New Customer Service Thinking: John Head, PSC

Early on in its software journey, the Chicago-area IT consulting firm rebranded from Precision Systems Concepts to PSC Group and adopted a new tagline, "It’s all in the way we listen." John Head, PSC's chief evangelist, said the change forced company leaders to think about customer service differently.

Instead of framing its business value around network break-fix capabilities, Head said the focus shifted toward providing difference-making customer guidance through passion, honesty and reliability. The approach paid off when PSC client Orbitz needed a more efficient, user-friendly fraud protection experience. PSC built a platform that solved both problems, allowing Orbitz to run its fraud protection service with just 15 people instead of 150, and later created a stand-alone company around the product – Accertify – that was acquired by American Express for $150 million in 2010.

"Know what you do well, know what you don't do, and know how to look into the future and take care of your people," Head said.

Rethinking The Software Business: Michael Knight, Encore Technology Group

Breaking into the software market was challenging for Encore Technology Group. The Greenville, S.C.-based solution provider saw some success following the 2003 launch of its Enboard software suite, but struggled supporting it as a large Capex purchase and educating customers about the platform.

"Sales and marketing wasn't a great focus. It was being sold by engineers off very large white papers, about a 40-page overview," Encore CTO Michael Knight said. "Very low monthly recurring revenue and you're always chasing the next deal. That drives bad behavior. You have an unwieldly number of customers that all need to be managed differently."

Knight said those early missteps nearly took Enboard off the market. But Encore eventually established a thriving software practice by building and funding the business as a separate unit, moving to a subscription model, and expanding marketing from a focus on IT to also target customers' industry-specific needs and budget constraints.

Pivot To Applications Gave Room To Expand: Clayton Hart, DTS

Diverse Technology Solutions moved into software after pivoting from a break-fix model to managed IT services. Clayton Hart, CEO of the Islip Terrace, N.Y.-based solution provider, said he believed the application market would be a long-term value source, and pushed DTS to build its own private cloud infrastructure in leased data center space.

"Owning the infrastructure was a challenge," Hart said. "It was a completely different business model. We went from selling bodies, hourly rates and services to selling inventory. I had to have inventory in advance of sales. I now had to do sales forecasting and projections like I never had to do.’

Once DS eventually got inventory management "down to a science," it was able to acquire a VoIP specialist. That allowed DTS to add new revenue streams, establish stickier customer relationships and continue to evolve the business, which now only provides cloud infrastructure to other channel partners, Hart said.

"It has really given us a platform to plug in different revenue streams," Hart said.

Three Takeaways From Moving To SaaS: Mary Stanhope, CloudScale365

Mary Stanhope, chief marketing officer of CloudScale365, a Nashville, Tenn.-based provider of managed and cloud services, said her company learned three key lessons last year as it moved into Software as a Service.

The first, she said, is that utilization is critical to SaaS, and developers must track who signed in, when they did, how often they did, and if they stopped. "All of these data elements are important to understand to keep that customer engaged each month," she said.

The second was to stop treating software as a line item and instead provide a clear monthly billing with its own clearly identified performance and support but no mention of the underlying infrastructure, Stanhope said.

The third is the need to completely change sales processes. "One of the No. 1mistakes SaaS companies make in the first 18 to 24 months is they use the exact same sales process," she said. "The cost of sale is too high."

Getting Pulled Into The ISV World: Ben Johnson, Liberty Technology

Liberty Technology built software tools for improving internal processes for years, but its expertise with Cisco and MSP platform developer ConnectWise opened the way to become a software vendor, said Ben Johnson, CEO of the Griffin, Ga.-based MSP.

The opportunity came in May when Johnson, who is on Cisco and ConnectWise's advisory councils, was asked by Cisco to drop everything and meet at ConnectWise's Tampa, Fla., headquarters. There, Johnson quickly realized that Cisco was trying to understand the MSP business. He told ConnectWise it should build an integration for Cisco Spark and take advantage of Cisco's $150 million innovation fund aimed at paying others to build integrations for its technology.

"ConnectWise was, like, 'Ben, why don't you build that?" he said. "So I said, 'Yes, we'll build that.' We had already had much of the functionality built out. We opened up a pilot for this in November at IT Nation, and we've got about a half-a-dozen people using the platform."