XaaS and the Future of IT – Part 2

Highlights from a recent panel discussion on XaaS ("Everything as a Service") at GlueX 2019.

Here are a few highlights of questions asked during a GlueX panel discussion on the topic of XaaS (“Everything as a Service”) and the future of IT along with responses from Nicole Mead, business development manager at GreatAmerica Financial Services.

How can MSPs get prepared to take on an XaaS model?

Undertaking a new model will likely affect all members of your organization in some way, including but not limited to: marketing, sales, procurement, accounting, and support. Because this shift requires all hands on deck, you need to ensure each employee understands the change and value your XaaS products will drive to the company and them individually. To start, hold a company meeting to share the overall company vision of the XaaS shift and make it a point for leadership to work with each team, so they fully understand the impact.

For example, if your sales team can continue making the same amount of money, or more, by selling the same way they always have, it will be challenging to promote change with the new solution.  The shift to the XaaS model should also drive an update in the commission structure.  With change often brings discomfort, so staying ahead of the game by consistently communicating the added value of the XaaS model will encourage your sales team to be as excited and engaged as you are.

For more information on how to align your Sales Compensation Plan in today’s XaaS landscape, check out the following webinar:  http://www3.greatamerica.com/recurring-revenue-compensation-webcast

What are the advantages/disadvantages of using your business cash flow vs. using a 3rd party to finance and facilitate an XaaS offering?

It is no secret that by using your cash flow, you will have full control of your XaaS solution. From pricing to documentation, to billing, to controlling the end of term and refresh cycle, it is in your hands.  You will recognize your revenue monthly and will have pure gross profit after accounting for expenses.

In the merger and acquisition world we live in, we see cases where MSPs who self-finance their XaaS offerings are faced with deciding between doing the next big project or purchasing another MSP.  Before determining if using your cash flow is the best option, think about your strategic initiatives and the importance that cash flow and business valuation play into those initiatives.

By bringing in a 3rd party finance source, you might feel like you are giving up control of your client experience. This is why it is vital to work with a 3rd party finance company that can integrate with your processes (quoting and invoicing) and will take the time to understand your go-to-market strategy (through co-branding or a white label approach). In doing so, you can reduce your risk and increase cash flow by receiving the full project cost upfront.  With this strategy, you also avoid decreasing your business valuation and taking on an encumbrance to your balance sheet like you do when self-funding.

If you bundle your hardware and managed service payments into a single solution, you also have the potential to increase your margins and can lock your managed services agreement into a longer term.

Do you want to learn more about this topic?  Check out the recent Service Leadership Webinar Series here


What is one piece of advice you would give an MSP looking to implement a new XaaS offering?

Work with your Solution Provider as a partner.  They understand how their most successful partners are implementing a similar solution and can provide best practices as you get started.  They will also be subject matter experts that can often provide marketing content, sales strategies, and training for your organization.