Transitioning Your Business Model to Grow Your Business-as-a-Service
If you are the CEO of a company selling products or services to other businesses, you are probably constantly looking for new sources of growth. It’s frustrating when your company is not able to realize its growth potential.
Sometimes the issue involves understanding customers or markets better. In other cases it’s about changes to a marketing strategy or execution plan. But sometimes the solution involves changing the core business model of your product or service (or completing a change that you already began).
More and more companies are realizing that transitioning their business to an as-a-Service model is the answer to driving higher growth and more profitable and stable revenue streams. In this article series, you will learn:
This series will make no assumptions about prior experience with as-a-Service models (sometimes referred to as XaaS). It is equally applicable to companies that have software or technology at their cores and those that don’t. A huge amount of content has been written on related topics and the main goal here not to repeat or replace that, but to simplify and begin the journey.
Part 1 – Is It time?
No doubt you have heard many friends, advisors, peers, and the media at large talking about high growth companies that use an ‘as-a-Service’ business model. The trials, tribulations, (and valuations) of tech ‘unicorns’ like Uber, Twitter, and Salesforce dominate the business media these days. Interesting and exciting, but that’s not your business. It’s likely you don’t even consider yourself a tech company!
So how do you know it’s time to consider transitioning to an as-a-Service business model? Here are some signs:
Use the following tool to assess your overall level of concern or pain around these eight issues. Next to each one, note a score of 0 (means your business is experiencing no pain at all relating to this issue) up to 10 (means your business is experiencing dramatic pain relating to this issue):
Here’s how to read the results. If you scored:
Keep in mind that your potential buyers or clients are often experiencing the flip-side of many of these issues. It is usually when motivations and value are misaligned between buyers and sellers that markets (and businesses) are most inefficient, growing the slowest, and are least profitable. Such a situation needs to be addressed to benefit both parties!
So suppose your score on the preceding tool is high enough that you want to continue this exploration. It’s important to note that as-a-Service business model transitions (like most significant changes to how your company operates) also have requirements and risks. To name a few key ones:
These may sound like big caveats or hurdles to overcome. But – trust me – for most businesses that want to drive high-value, long-term relationships with clients, the ROI is significant. In future installments of this article, we will deal with how to effectively address each of these issues.
But what if these considerations sound too big or too scary relative to the rewards? In that case, you have two choices:
For those ready to continue on this journey, subscribe to my blog at the bottom of this page and read Part 2 of this series that will dive more deeply into what an as-a-Service business really is, who is doing it, and why.