How to Make the Shift to Selling Technology-as-a-Service

No matter what kind of technology or services business you work for, your world is changing. The way in which you will grow your revenues in the next 3-5 years will not be the same as you have done for the last 30 years. It follows that the sales behaviors, metrics, measures and processes that your organization has adopted in the past will not get you to where you need to go.

3 Main Factors Impacting the Current Technology Market

In the last 12-24 months, one of the TSIA’s hottest inquiry topics has been around how member organizations can cost-effectively grow revenues in a new market where customers want to buy in a new way.

Earlier this year, we carried out a series of interviews with senior sales leaders to get first-hand insight into what’s going on in their world and how they plan to respond to the changing market conditions.

There was almost unanimous agreement that there are three factors that are impacting most technology and services companies:

1. Current revenue growth rates are unacceptable and are not living up to shareholder expectations. This is true across both net new revenue performance as well as growth in existing accounts.
2. The shift to the subscription economy (or XaaS) is putting huge pressure on companies as they deal with the impact on their income statements. The other major challenge here is that traditional Product Sales teams are struggling to make the shift to sell subscriptions.
3. Increasingly, the balance of power in purchasing decisions is moving to the business owner. The IT department and Procurement are still very much involved, but technology companies now have to be able to show the tangible link between their solutions and the business value they deliver.

These factors are impacting different sectors, and individual companies, at different rates. But the reality is that, if you’re a traditional technology company, your customers don’t want to buy the same things from you in the same way that they’ve bought them from you in the past.

The Primary Challenges for Sales Teams Who Want to Sell Subscriptions

In the last twelve months we’ve seen a significant increase in the number of sales leaders engaging with TSIA, wanting to understand how to leverage our research and advisory services.

In these discussions with sales leadership we’ve identified specific business challenges that they are looking to solve. We’ve grouped these into two categories:

Horizon 1 – Performance Zone

1. How do we improve new business win rate?
2. How can we reduce time from contract to revenue?
3. What is the best way to optimize customer acquisition cost?
4. How do we optimize the revenue opportunity through customer life cycle?
5. What can we do to increase repeatability of solutions?
6. How can we improve gross margin at point of sale?

Horizon 2 – Transformation Zone

1. What is the catalyst that will change the customer engagement model?
2. Who has responsibility for designing the revised model?
3. How do we effectively align sales, marketing and product functions?
4. How do we increase/upskill Sales touchpoints without increasing Sales costs?
5. What are the impacts on the organizational structure?
6. Who are the experts we need and how do we integrate them?

The fact is that most of the tech industry is having to carry out a thorough review of how revenue growth will be optimized in new logo and existing accounts in the future.

There are those, in an increasing minority, who are still operating on the premise that more of the same is the answer. What is interesting about these individuals is that when you talk to them about the metrics, they are focused on are generally short-term, monthly, and quarterly commits.

And this is where the biggest challenge exists. Most traditional technology and services companies are having to operate in this dual paradigm where they are goaled and incentivized around this year’s income statement metrics.

Everyone appears to be largely in agreement that there is an issue. And, most enlightened sales leaders have accepted that the traditional fixes (increase sales capacity, increase calibre of sales person, etc) are not going to work this time.

Introducing TSIA’s Newest Research Practice: Subscription Sales

I don’t believe that there are many technology leaders and executives around the world that don’t have a reasonable grasp on what is happening in our industry, and within their companies.

What many companies are acknowledging is that they don’t know where to focus their efforts, what to prioritize, and who should do what. There are lots of people that can frame the problem, but that’s only 5% of the challenge. It’s what gets you to the point where change starts to be desired, designed, and deployed.

I’ve joined TSIA to establish a new research and advisory practice, Subscription Sales, to help member companies who are navigating this journey to selling subscription offers. A major focus of the practice will be on how technology and services companies become more outcome-orientated in the way they engage and sell to customers.

Until recently, I headed up the sales and go-to-market team for Dimension Data’s worldwide managed services function. My job was to enable the company’s Global Sales team make the transition from selling product and attached services to selling technology-as-a-service. In this role, I was fortunate enough to benefit from accessing the full range of TSIA services.

What I found as a member was that the more I accessed the TSIA’s services the faster I got things done, the faster I got projects approved, and the better the outcomes were at the other end.

The new TSIA Subscription Sales research practice is going to help technology and services companies to make this transition. We are building a community of enlightened sales leaders who will contribute to developing a set of benchmarks and insights that will be invaluable as their journey unfolds.

If you’re a technology or services company that is looking to make the change from selling products in a feature/function, reactive model, to proactively selling as-a-service solutions that tangibly impact your customers’ business outcomes then we’ll be an incredibly valuable asset and resource along the way.

If you want a Sherpa, and to not feel like you’re alone on the journey, then you should definitely consider joining us and being part of our community.