Picking a technology partner is a tricky business. When one of my colleagues asked me recently what he should be looking for when selecting a solution to partner with, a number of things sprung to mind. “But the most important factor”, we discussed, “is the potential return on your investment”.
You may ask, is that really the most important thing?
Yes. You’re running a business, you do it to generate revenue, and every partnership you enter into needs to be helping you drive up your capacity to earn a return. After all, you will be investing considerable effort (time spent training and selling) and resources (your staff, your leads) to ensure the success of the partnership – you need to make sure it’s worth it.
I’ve seen many businesses being stuck in reactive relationships with their clients because of how technology partners structure their revenue models. After the initial product purchase, most of their revenue is dependent on system maintenance, which means that these business are sitting around waiting for something to go wrong with their clients’ systems and earning nothing in the meantime. And if these dry spells last for too long, the entire business could be in trouble!
I’ve also seen others struggle with earning only the bare minimum from subscription-based models. While I agree that the reoccurring revenue coming from ongoing subscriptions is a good start, it’s only part of the answer. What such arrangements lack is the opportunity for partners to offer additional value to their clients, the opportunity to earn revenue beyond the subscription fees – there’s no room for growth.
So what does great ROI look like for a partnership with a technology provider?
I believe it should be comprised of two parts. One we’ve already talked about – the revenue model should be subscription-based and guarantee you an ongoing revenue stream. Whether your clients’ systems are chugging along nicely or whether they need some support, you should be secure in your income.
Second is the nature of solution you choose to partner with (this is actually another one of the key things to consider when selecting a company to work with, but that’s a conversation for another day). You want to be working with a product that is great on its own, but is best with you. You want your services to be an essential part of the value your clients receive: implementing, customising, integrating, best practice consulting, the list goes on… allowing you to supplement your steady revenue flow with intermittent high-value projects that boost your earnings.
So, when looking invest in a partnership with a technology provider consider your return:
- Are you receiving an ongoing revenue stream?
- Do you have the opportunity to boost your revenue by offering additional value to your clients?
I hope these thoughts will help you when evaluating your technology partnerships. If you’ve had similar concerns with companies you’ve partnered with, and would like to discuss that situation, call me on 02 9542 2000.
If you’ve got some thoughts on my blog, please leave your comments in the box below.
Drew Arthur is the Managing Director of Micronet Systems, and is focused on working with professional services providers to help their clients overcome inefficient sales, inventory and customer relationship management practices by leveraging cutting-edge technology. If you want to help your clients gain further efficiencies within their business while boosting your own revenue, click here to see how HARMONiQ Business Tuning Software can make a difference to their business and your own, or click here to get in touch.