In Cisco’s most recent fourth quarter, the networking giant revealed that its transformation to a software company is well and truly underway. More interestingly, software subscriptions now make up 70% of its software revenue.
But it’s not just Cisco that’s keen to transition to a recurring software model, most of the technology industry is on the same journey.
The world is increasingly software driven. At Westcon-Comstor, we’ve always sold hardware and software, with every device having a software licence of some kind, but in line with industry we are transitioning our business to accommodate the dependency of a recurring software subscription model.
The biggest business in the coming years will come from recurring software subscriptions. Our revenue from Cisco recurring software alone, for example, has grown 100% year on year.
Increasingly, end users are demanding a consumption-based, cloud-based, Software-as-a-Service (Saas) model for ‘buying’ software. Enterprises particularly, no longer want complex, on-site software deployments. Rather they demand software that can be quickly and easily upgraded, managed centrally, changed when required, and connected to the cloud as workers become increasingly mobile.
Of course, this offers the entire industry a huge opportunity, but also a massive challenge to transition from a traditional ‘warehouse’ sales model to a recurring revenue model that’s streamlined to take advantage of recurring subscriptions – or renewals.
Customers now want to pay for their software on a consumption basis. Pay as you go. There’s no doubt about that. As a result, vendors are transitioning to this model, which is driving the need for Westcon and its partners to change too.
Of course, it’s not something that will happen overnight, which is why Westcon-Comstor has already taken steps to ensure that both itself and its partners are prepared for the transition.
It’s an overused phrase, but it’s a case of evolution not revolution. We need to keep in line with vendor developments, but at the same time we need to help the channel to make this transition too, as it’s not something any of us have been used to in the past.
We all need to get the management of software licensing and solutions right in terms of recurring revenue. We need to help the channel to get this right too, which is why we have invested heavily in the last two years in putting in place a dedicated renewals process, which can involve quite complicated contracts.
Westcon-Comstor is very familiar with the LAER model – Land, Adopt, Expand, Renew – which is a customer engagement approach with four distinct customer life cycle objectives. Land relates to new sales, adopt is making sure the customer successfully adopts and uses the solution. Expand helps customers increase spend as usage increases, including both cross-selling and upselling. Finally, Renew seeks to optimise the renewals process when it’s time for the customer to renew their contract.
To that end, RenewView is Westcon-Comstor’s internal automated platform to manage the entire renewals process. Previously, renewing a contract would be a complicated process requiring more than 90 manual steps between the channel, Westcon-Comstor, and vendors.
RenewView automates that process, automatically creating and capturing quotes from a variety of vendor tools, and then sending quotes back to Westcon-Comstor partners with very little human touch required. Renewal opportunities generated by RenewView are then made available in the customer-facing PartnerView portal – 90 days before renewal date so no opportunity is missed.
BlueSky, meanwhile, provides greater provision for partners to engage with vendors. It incorporates a cloud-based billing platform, which allows Westcon and partners to bill vendors on a usage basis.
But Westcon-Comstor’s push does not stop there. The ultimate aim is for partners to be able to configure solutions, request a single quote for all vendor solutions and manage recurring offers a simple and digital way through one ‘pane of glass’. The solution should then be delivered as one, billed correctly and, importantly, contain all the information required around managing recurring offers across the lifecycle of the engagement.
Ultimately, the opportunity is huge, but will require a considered transition and a new way of thinking about sales engagement. Westcon-Comstor is committed to helping its partners make the transition too, to ensure a win-win scenario.
Westcon-Comstor’s automated renewals process offers vendors lower-value opportunities and a longer tail of partners that otherwise might be missed. For partners, meanwhile, it provides significant insight into their renewals and recurring revenue opportunities, including official quotes from across all of our vendors.
“We have already built the foundation of a dedicated renewals platform and process, and we continue to invest in it. Our innovation is helping partners to better manage the renewals process so that we can all grasp the opportunity offered by recurring software revenues,” concludes Paris.