{"id":29596,"date":"2023-08-30T11:32:02","date_gmt":"2023-08-30T10:32:02","guid":{"rendered":"https:\/\/www.intelligentcio.com\/apac\/?p=29596"},"modified":"2023-09-12T12:59:10","modified_gmt":"2023-09-12T11:59:10","slug":"how-subscription-models-can-unlock-better-valuations-for-business","status":"publish","type":"post","link":"https:\/\/www.intelligentcio.com\/apac\/2023\/08\/30\/how-subscription-models-can-unlock-better-valuations-for-business\/","title":{"rendered":"How subscription models can unlock better valuations for business"},"content":{"rendered":"\n

Mark Tan, Vice President and Country General Manager, Tech Data Singapore, says a clear understanding of subscription models is crucial to realize impactful gains.<\/em><\/strong><\/p>\n\n\n\n

Aspirations to improve consumer centricity have enterprises pivoting to unconventional methods of doing business.<\/p>\n\n\n\n

With Digital Transformation making \u201cAs-a-Service\u201d solutions mission-critical for both corporations and consumers, subscription-based models are no longer exclusive to B2C businesses and are fast emerging as a key delivery system for core B2B offerings.<\/p>\n\n\n\n

Per IDC, the trend for software companies adopting a subscription business model is set to hit 17.9% CAGR between 2021 and 2026 CAGR.<\/p>\n\n\n\n

What\u2019s more, subscriptions are forecast to drive 87.4% of total software revenue by 2026.<\/p>\n\n\n\n

This is evidence that even for B2B firms a key aspect of operations is undergoing a noteworthy change. But gaining a clear understanding of subscription models and what they entail for the entire business is crucial to realize the impactful gains the model promises.<\/p>\n\n\n\n

Understanding subscription models<\/strong><\/p>\n\n\n\n

Traditional ways of business involve an asset purchase model where customers pay a lump sum amount up front for the product or service as a perpetual license fee and continue to pay for maintenance, support and upgrades.<\/p>\n\n\n\n

A subscription model flips the script by having customers pay a subscription amount either monthly or yearly. This amount is usually less than what is charged in a traditional model and provides customers access to the latest version of the product or service in real time.<\/p>\n\n\n\n

Subscription models represent a paradigm shift for businesses as the endgame is creating customer experiences that lead to more renewals. Strengthening customer relationships by meeting evolving needs and wants consistently takes precedence over generating higher sales. It is necessary for enterprises and channel partners new to subscription models to take the long view and craft business models fit to meet a new mindset.<\/p>\n\n\n\n

Impact for businesses and the channel<\/strong><\/strong><\/p>\n\n\n\n

As more businesses migrate from on-prem to the cloud, a cloud-based subscription model is the way to go for both businesses and the channel today. Efficiently managed subscription models on the cloud can help end-customers offer new products and services that serve as gateways to new markets and, thus, increase revenue.<\/p>\n\n\n\n

Additionally, a recurring stream of income can help businesses beat economic uncertainty and market disruptions.<\/p>\n\n\n\n

Such a model can also help deliver seamless and simplified customer experiences that translate to stronger customer loyalty.<\/p>\n\n\n\n

Shifting to a cloud-based subscription model may be a challenge for channel partners from a cash management standpoint, but the overall enhancement in operations is substantial. Through the cloud, channels can expand their catalogue and create a dynamic vendor marketplace for their customers to leverage.<\/p>\n\n\n\n

This can help them integrate various solutions on to one platform, which can be used to launch offerings in multiple countries and currencies. Furthermore, the entire model operating off-premises means reduced internal IT expenses and energy costs, along with improved cybersecurity, which is a significant step towards more sustainable structures.<\/p>\n\n\n\n

It is also notable that subscription models deliver a benefit that applies to both businesses and channel partners equally.<\/p>\n\n\n\n

Organizations gain valuable data points into consumer perception and behavior across various touchpoints. This helps each enhance their overall offering and maximize customer satisfaction for repeat buying.<\/p>\n\n\n\n

Examining the challenges<\/strong><\/p>\n\n\n\n

Subscription models fundamentally change the way organizations and channel partners develop and sell products and services.<\/p>\n\n\n\n

Considering the prevalence of hybrid work and the global dependence on cloud, businesses are required to virtualize their tech stacks, which can be a challenge when legacy infrastructures are in place.<\/p>\n\n\n\n

A move to a subscription model also requires extensive streamlining of backend processes – as subscription amounts can vary, the accounting and CRM systems require recalibration to adapt to constantly varying levels.<\/p>\n\n\n\n

Many organizations, particularly enterprise technology companies that have a fixed offering, perceive the lack of well-developed product usage and adoption metrics as a barrier when moving to a subscription model.<\/p>\n\n\n\n

When such metrics are missing, there is a significant blind spot for gauging the success of current products. This, in turn, limits visibility into upselling opportunities and leaves enterprise technology companies with a lot to catch up on. Inability to adjust quickly to market shifts hampers their decision-making around long-term investment priorities.<\/p>\n\n\n\n

Resolving challenges the right way<\/strong><\/p>\n\n\n\n

When it comes to simplifying the complexities in the transition to a subscription model, it is better to work smart than to work hard. Leveraging tools that accelerate the necessary Digital Transformation and bundle hardware, software, and services into a single subscription offering can go a long way in making processes seamless. Such tools maximize value along the entire consumption chain for both customers and service providers.<\/p>\n\n\n\n

For customers, it can simplify the way they adopt technology and help match IT spends to drive reliable business results. For channel partners and solutions providers, it can help unlock new revenue streams, leverage flexible IT to scale solutions swiftly, scale up customer environments when needed to reduce overprovisioning, and more. Such a platform can also speed up refresh cycles that enhance customer loyalty through automatic re-engagement and expand capabilities by delivering specialized services that prioritize productivity and decreased costs.<\/p>\n\n\n\n

It is essential that companies be forward-looking and adaptive when it comes to making such sweeping operational changes. Having an experienced partner that can guide through this process can be a gamechanger and increase the chances of a successful shift. For instance, our Center of Excellence (CoE) is an adaptive virtual lab environment built to provide a guided approach that enables productive and profitable growth for channel partners. This CoE is built to provide ready multi-vendor next generation solutions that support the channel partner community and end-users solve complex IT issues via proof of concepts (POCs), demos, and enablement through sales, technical, and solutions training.<\/p>\n\n\n\n

In conclusion, moving to a subscription model requires large-scale structural changes to an organization, be it a business or a channel partner. But there are plenty of lasting benefits to be gained that can set your firm up for success. As end-consumers across markets begin to favor consumption-focused models, the time is right for organizations to make the switch and chart new avenues of growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mark Tan, Vice President and Country General Manager, Tech Data Singapore, says a clear understanding of subscription models is crucial to realize impactful gains. Aspirations to improve consumer centricity have enterprises pivoting to unconventional methods of doing business. With Digital Transformation making \u201cAs-a-Service\u201d solutions mission-critical for both corporations and consumers, subscription-based models are no longer […]<\/p>\n","protected":false},"author":58,"featured_media":29597,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[15,52,40,44,54],"tags":[970,192,4846,4848,4847],"class_list":["post-29596","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-innovation-digital-transformation","category-main-story-newsletter","category-software","category-top-stories","category-used","tag-b2b","tag-digital-transformation","tag-mark-tan","tag-subscription-models","tag-tech-data-singapore"],"acf":[],"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/posts\/29596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/users\/58"}],"replies":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/comments?post=29596"}],"version-history":[{"count":4,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/posts\/29596\/revisions"}],"predecessor-version":[{"id":29879,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/posts\/29596\/revisions\/29879"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/media\/29597"}],"wp:attachment":[{"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/media?parent=29596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/categories?post=29596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.intelligentcio.com\/apac\/wp-json\/wp\/v2\/tags?post=29596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}