Leverage Strategic Partnerships to Scale Your Services Business and Meet Global Customer Demands
While many original equipment manufacturers (OEMs) in the technology sector provide their hardware and software offerings to customers around the world, transitioning to everything-as-a-service (XaaS) on a global scale is not without its challenges.
Demand for service-based offerings is outpacing the need for traditional products. A survey by the Technology Service Industry Association (TSIA) found that 48 percent of the 50 largest technology providers have seen product revenues flatten or decline in recent years, while 66 percent of them have experienced growth in service revenues.1 The COVID-19 pandemic appears to have added fuel to this trend. All respondents to another TSIA survey conducted in April and May 2020 said the COVID-19 crisis would accelerate business model transformations, and they expected a greater percentage of revenues to come from XaaS offerings.
As consumers and business professionals alike are continually adjusting to the oscillating “new normal,” many OEMs are now undergoing a rapid transformation and racing to expand their global services delivery into new regions while also prioritizing the safety and well-being of employees and customers and providing personalized, proactive services. Organizations that have achieved XaaS success typically adhere to a few common best practices, such as:
- Balancing traditional product delivery with new lines of service revenue streams
- Delivering uniform and equal customer engagement regardless of geographical location
- Understanding global business requirements, from regional compliance and supply chain logistics to inventory, parts and labor management
Top 3 Challenges of Global Transformation
Your customers look to you to lead transformation efforts with innovative technology, and the same is true for an XaaS business model. Shifting gears from traditional product manufacturing to service-based offerings requires careful planning and strategic development. As customers move toward agile and flexible consumption models, they expect their trusted OEMs to have the services they need. Global service delivery compounds the challenge of transformation by complicating costs, talent gaps and processes.
Balancing global services costs
Adding global service delivery options to an existing OEM business is almost like launching an entirely new business. Making the leap requires a significant investment of time and resources for strategy and planning, setting up region-specific operations and implementation. Budgets can quickly fall short as you strive to balance the new XaaS business with ongoing legacy product delivery and support.
In addition to the cost of launching your global XaaS offerings, you may see a lag in revenue streams as demand for traditional product offerings declines and your service delivery business ramps up. The challenge is to balance your established OpEx and CapEx business with an XaaS model that runs on a different set of margins and cash flow.
Filling talent gapsDelivery of traditional hardware and software on a global scale requires a certain level of expertise, and many companies have excelled at getting their physical products to market globally. However, services delivery requires more workers with delivery expertise positioned closer to all supported regions. Many OEMs lack the workforce — both in skillset and numbers — required to implement delivery of both business models on a global scale.
As you build your service delivery arm, your geographically dispersed team should continue delivering and maintaining your legacy solutions while also engaging with customers on a sales and support level to help guide them toward your service offerings. This requires a team that understands the nuances of global delivery, including region-specific requirements, so that customers feel supported.
Global delivery also challenges your team with diverse business processes and regional legal requirements, including regulatory compliance, taxes and tariffs. To ensure all legal requirements are met, your global team should understand tax implications, contracts, leasing models and compensation structures of a hybrid business model from region to region.
Managing regional process differencesAn XaaS delivery model challenges your assumptions and makes you rethink your current service delivery strategies. Teams that manage legacy product delivery can’t always support your emerging XaaS business, but maintaining parallel workforces on a global scale can be cost prohibitive.
Having the right resources in place is critical when you need to quickly ramp up production, marketing, packaging and support of your solutions in regions where your organization offers support but lacks a physical presence. An on-the-ground strategy can help you develop efficient processes that reduce the burden on your workforce so you can scale your global services without losing traction with your existing customer base.
Build, Buy or Partner?
Your organization can take any number of different strategic approaches to scale your business for global XaaS delivery. Many of these strategies require a common choice: Either build capabilities from within, acquire a company that can add expertise to the business or partner with organizations that can fill skills gaps. Applying this decision to your legacy offerings as well as your new services can help you find ways to streamline transformation so your teams don’t get overwhelmed and your customers feel supported.
Consider your existing infrastructure and employee base. If you have the expertise in-house and the resources needed for some aspect of your new XaaS business model, make use of those resources, and then identify your gaps and determine the best strategy to fill them. If you have the capital, then perhaps you acquire a company that focuses on a singular aspect of the business to help cover your gaps. That way, you’ll own the capability and can quickly build your new services business.
You may discover, however, that it makes better financial sense to build strategic partnerships with a trusted services vendor who understands the significance of and challenges presented by the urgent drive for transformational change. By outsourcing aspects of your business, you can focus your core team on upskilling and strategic development efforts without losing traction with existing customers.
Strategic partnerships that offer global delivery expertise can help expand your customer engagement, operations and delivery processes worldwide. Outsourcing delivery and product lifecycle management functions can also free up resources so you can focus on delivering more innovative and sustainable service offerings across the board.
Depending on your internal gaps, you might outsource services for:
- Legacy business support: A product and customer lifecycle services vendor can maintain and manage your existing customer relationships throughout the life of your products, offering services such as installation, maintenance, repair and IT asset disposition on a global scale.
- Expanding global reach: Expand support for either your legacy products or your services delivery in new regions without the overhead of setting up a physical presence.
- Market transformation: An expert partner that knows the global markets can help you shift your message and rebrand your business, including recruitment of new channel partners, pipeline generation and customer success management.
- Global supply chain management: Provide equal and equitable access to your products in new regions while adhering to local legal and regulatory compliance concerns.
For some OEMs, outsourcing some of that traditional, on-premises implementation, onsite maintenance and customer support can be the catalyst to launching a new services business. Having a partner who understands how the new and old work together can make the entire process go even more smoothly and can help customers transform in ways that work for their businesses. Regionally based partners who also have a global perspective can help ensure your brand is consistent while providing ongoing, regionally sensitive customer engagement. Providing that rapid, onsite support — regardless of geographic location — can go a long way toward ensuring the future success of your global services offering and your customers.
Create Consistency with a Global Lifecycle Management Partner
When selecting a partner to provide services on your behalf, it’s important to strive for consistency. Many businesses are global themselves, so creating an experience that’s consistent regardless of region can help you build credibility and brand preference with your customers. Rather than engage with different partners in each region, strive to minimize the number you work with to help ensure this consistent, seamless customer experience. Ideally, you’ll want to select one partner that can manage all the aspects of your business you need covered.
A single, global lifecycle management partnership offers several key benefits, including:
- Relief from the financial strain of having to hire expertise in each global location to manage supply chains, procurement, integration, deployment and repair of products
- Dedicated customer engagement, including training, maintenance and support as well as customer success management
- Rapid response on a geographic level, including having the right skillset on the ground at the right time
- Unified, integrated services across the globe that optimize processes and preserve the brand experience within diverse global requirements
Future-Proof Your XaaS Delivery
It’s clear that the XaaS business model will only grow as a dominant driver of transformation in the technology market. Making strategic investments and developing a plan for your XaaS strategy helps future-proof your business against the rapidly and dynamically shifting market.
Partnering with an expert in global delivery like Tech Data Global Lifecycle Management (GLM) can help your company — and your customers — align with XaaS. GLM’s capabilities and global reach enable you to more easily manage hardware, software and services in nearly any region. With GLM working as a natural extension of your company, you can rapidly scale your workforce and deliver holistic support that surpasses customers’ needs and strengthens relationships for mutual, long-term success. You’ll simplify processes with trusted, streamlined services while freeing up your staff to focus on the road ahead.
Learn more about how technology OEMs can turn demand for services into a strategic business opportunity in the “A Roadmap for Technology OEMs” whitepaper from Harvard Business Review Analytic Services in association with GLM.
About the Author
Mariano Dy-Liacco X serves as vice president and general manager of Global Field Services for Global Lifecycle Management (GLM), a specialized solution business within Tech Data. He is responsible for the strategic direction for GLM’s global field services business along with the development and execution of current and new offerings and solutions. Dy-Liacco X leads a team that provides OEMs and channel partners across the globe with world-class services. He brings 25+ years of services experience and leadership to GLM, from the channel to Fortune 100 companies.