Shifting a business from traditional products and services to SaaS and XaaS requires a laser focus on the upstream disciplines of the Revenue Roadmap and a refocus of your business in five key areas.
Anything as a service, XaaS, is accelerating as companies navigate the shift to solution sales to meet and exceed customer requirements. XaaS describes a general category of technology-focused products and services delivered via cloud computing and remote access. The X signifies various products, tools, and technologies that can be delivered to users as a service over the internet.
As the pace of the shift accelerates, organizations want to know whether XaaS is right for them—and if so, how best to adapt to the technology. To address this challenge, we asked our consultants at SalesGlobe what they’ve been hearing from clients and learning about XaaS across various industries. Then we did problem-solving in SalesGlobe style. Whiteboarding and open discussion around The Revenue Roadmap to arrive at five areas that companies should explore and refocus to prepare for a new strategy launch.
The Revenue Roadmap is a snapshot of the four competency areas and associated sales disciplines where successful companies do well, and provides a comprehensive framework that can be leveraged to help companies in the midst of change. So let’s take each consideration one by one and explore what companies are doing that has been successful, pitfalls to watch out for, and questions you should answer for your business as you plan for what’s ahead.
There are two counterchallenges here that can cause internal and external strife and misalignment.
The key to countering these opposing forces is good planning on the right priorities for customers and the company.
Planning for your customers means incorporating change methodology that includes:
Acknowledgement and understanding that not every customer is on board or on the same timeline as your business is best addressed with voice of customer insight from your strategic alliances. You should walk away from those conversations with a clear understanding of how you will support existing customers based on where they are today, what a transition plan will look like, and if and when you will sunset your legacy business.
Planning for your business includes:
No matter who is driving the change, these elements converge at the point of customer requirements and a company’s innovation. In XaaS-based solution selling, the paradigm shifts from customer to company ownership as services are offered through various consumption vs. possession models such as:
The impact of this shift can mean a lower entry price point for customers and a shift to an OpEx vs. a Capex expenditure approval. Companies can drive product enhancements, fixes, and security through centralized rollouts for greater control and efficiencies. As the transition begins, companies need to thoroughly evaluate the readiness of portfolio offerings, implementation, training, and customer service to address challenges.
It’s critical to bear in mind that whether you’re a buyer or a seller, the driving force for the adoption of any new offering is the commitment of both parties.
Your GTM strategy should reflect a coverage model based on the overall XaaS solution. As companies make the shift, GTM elements of value propositions, core and industry-based messaging, account targeting, revenue motions, and pricing are core workstreams. But a key aspect of the GTM for the effective transition to XaaS involves changes to the field coverage and resource models. This requires an organizational design evaluation to determine the right roles and possibly new roles as well.
Some of the big questions the business should answer with clarity and have a plan to address:
Today there are many different roles to consider based on your company’s strategy around your offerings. A few examples to consider:
Once a new organizational design and roles are determined, companies must pivot to evaluate their readiness to support the new sales model and the need for new skills through training, tools, and potentially new talent acquisition.
Aligning Finance and Sales ensures the fiscal impact and the strategic impact of moving to a XaaS solution model support growth goals. The shift from legacy products to these types of new service offerings is transformative to a balance sheet. XaaS may be easier for customers with a lower cost of entry and the ability to adopt new technology solutions without upfront CapEx requirements, but the new XaaS model shifts much of the financial responsibility and risk to a company. There is a new nomenclature for how to do business with new or different service models, each with specific financial impacts to bookings, revenue, and margin which must be balanced with legacy products’ effect on financial performance. Revenue recognition skills of the finance team can help structure deals and pricing to optimize revenue and margin for profitable growth. The alignment of Finance and Sales during this transition is also critical to understanding targets for the sales team. As companies move to a XaaS portfolio, financial modeling is essential to TCV, ACV, booking quota targets to achieve an organization’s revenue, margin, and cash metrics both quarterly and annual. The partnership between Finance and Sales, ideally the CFO & the CRO, is central to the customer buying experience and the sales team’s ability to succeed.
An XaaS solution/legacy product hybrid environment should follow The Revenue Roadmap fundamentals. This will require a clear understanding of a company’s overall strategy and the sales strategy. This not only drives value to the customer, products, financials, and GTM, but it also underpins the sales incentive compensation framework. The XaaS consumption models (TCV, ACV, Reoccurring, Bookings) are a new aspect of plan design and quotas requiring alignment with the Finance and Product teams. As companies transition from legacy product to a hybrid XaaS solution sale, trying to sell both will require consideration of several methodologies:
With any sales incentive compensation plan, it is important to acknowledge that with a new model comes some unknowns. There needs to be flexibility and a mechanism in place to address the dynamic nature of shifting from products to XaaS solution selling. Companies can manage this by being transparent with the sales organization, monitoring results, and establishing triggers for action with a compensation committee of key stakeholders to act as needed.
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SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.
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