The Search for New Revenue Streams with Better Growth Rates Starts Here

For technology companies, traditional services businesses have played an important role in revenue generation. These days, however, the shift to subscription and as-a-Service business models has put pressure on these revenues. In search of new revenue streams with better growth rates, many technology companies are increasing their focus on Managed Services (MS).

Three main factors driving technology providers’ interest in Managed Services: financial opportunity, customer demand, and Managed Services’ role as a stepping stone to Software-as-a-Service (SaaS) and other as-a-Service (X-as-a-Service, or XaaS) offerings and business models.

Technology companies often focus their attention on developing and launching new MS offerings. In our experience though, ensuring that there is an effective Managed Services operating model is critical to successful growth. Waterstone’s Managed Services Operating Model Framework consists of four dimensions—two relating to go-to-market and two to delivery:

Go-to-Market:

1.      Services Selling Model: alignment of the company’s sales and marketing approaches to effectively sell services

2.      Services Offering: an effective services offering development process, in addition to a compelling current offering portfolio

Delivery:

3.      Services Delivery: necessary capabilities to efficiently deliver the service offerings, with particular focus on automation

4.      Governance and Support: the tracking and management of key performance measures, along with support from company functions, that reflect the specific needs of a services business (which are different than a products business)

To grow a successful and profitable Managed Services business, tech providers must focus on each of these dimensions. Waterstone has developed a “crawl-walk-run” MS Operating Model Maturity Continuum to help companies chart a growth path for their MS business. By benchmarking their current operating model against this continuum, tech providers can identify and prioritize the elements critical to achieving successful growth.

To learn more about the factors driving the opportunities around Managed Services as well as our MS Operating Model Framework and Maturity Continuum, please read our whitepaper How to Succeed with Managed Services.

Today’s guest post was contributed by Eric Pelander, Managing Director at Waterstone Management Group, a boutique management consulting firm that helps technology companies and investors create measurable value by identifying and capitalizing on disruptive growth opportunities and by driving excellence in Services, Cloud and Customer Success. Follow Waterstone on twitter @WaterstoneMG, or sign-up for their quarterly newsletter to receive visionary insight.

Jennifer Carl is the Director of Software & Services Division Programs. Follow the Software team on Twitter at @SIIASoftware @SIIAJennifer