Are You Ready for the Next Big Shift In Revenue Patterns?

Over the last couple of years, analyst chatter about a fundamental shift in technology architectures has increased. Why should we pay attention? Analysts get their information by talking directly with technology experts and top-level strategic executives at the leading edge of new product development. In this way, analysts can signal pending changes months and sometimes years in advance of when they hit the market. 

Composable software architecture (also known as flexible consumption, microservices, consumption as a service, etc., depending on which analyst firm you’re following) offers significant benefits for both customers and manufacturers, so we can expect it to define the future landscape of business technologies. 

As an office equipment dealer or business technologies reseller, you don’t want to get caught unaware and thereby adjust too late to thrive as revenue patterns shift beneath you. Let’s dive into what composable technologies are, and how they’re likely to impact the office equipment space. Finally, I’ll walk through some specific adjustments you’ll want to start making now in order to position your business to get the most out of this opportunity as it emerges. 

What is composable? 

A composable software architecture changes the way businesses consume and pay for technology. Instead of building software that offers licenses to entire products filled with features, composable technologies allow businesses to curate features based on usage patterns and needs. These products offer very small feature bundles, known as packaged business components (PBC), that can be combined and recombined by an organization as their strategies and technology needs change. 

This entire repertoire of feature bundles is always on—no need to license separately. Simply use what is needed and at the end of a billing cycle, the invoice will reflect what was used and how often. The change means that organizations no longer pay for capabilities they don’t use in order to license the features they do need. Each business will have a slightly different generative solution that is clearly linked to their own unique business strategies.

Frank Muratovic and Ayo Odusote with Deloitte explain, “Customers want to be able to choose where, how, and how much they consume and pay for.”  It’s an idea that appeals to software manufacturers because they don’t spend time and effort developing little-used features, and customers love it because they can smart size tech spending to exactly match their needs. 

How will composable impact the office technology market?

What will this trend mean for the office technologies market? We can expect a handful of interesting effects to emerge over time. Before we jump into them, though, it’s worth encouraging you not to dismiss the change as something that won’t catch on or as something that will have little impact on your business. IDC reports that at least 60% of businesses are interested in shifting some of their digital infrastructure to this model, and companies that do will enjoy peace of mind by smart sizing their tech spend to match actual use. By paying only for capacity that gets used, minimizing the drag of “technical debt,” and trusting technology to flex to accommodate business needs as they change, companies are smartly positioned to support growth.  (For example, one estimate indicates that these companies will implement new tech 80% more quickly than competitors, and they are 2.6 times more likely to accelerate their digital transformation projects. )

Composable technologies offer three big benefits to office technology sellers.

1. When customer relationships are proactively managed, a flexible consumption model can create renewable, sticky revenue streams.

2. Composable technologies will help your bottom line thrive. “… since the flexible consumption model enables dealers to serve each customer at scale, they can ensure healthy profit margins.” (Read more in “Access, Not Ownership” in the December 2022 Imaging Channel.)

3. Significant visibility into technology consumption habits gives smart dealers a chance to carefully tailor marketing efforts, sales scripts, and even customer support toward a focus on elements that have real value to the customer. 

How will composable buying impact you?

Thanks to the appeal of buying technology this way, the change to a microservices-based architecture will become widespread over the next decade as software manufacturers convert their products. Much like the move to cloud services, you’ll need to adjust your product lineup, and those who move quickly into this trend will reap the biggest benefit. 

First, teach yourself about microservices and stay abreast of new product releases in this area. You’ll want to carefully evaluate product options to find those that best fit into your product lineup while positioning your business for future market demands.

Second, though composable revenues will recur, it is likely to be less predictable, and income may arrive in smaller chunks from individual customers. Don’t panic! You survived the transition from large upfront software purchases to smaller recurring monthly revenue payments with cloud services. Composable will also change revenue patterns … and you’ll survive. The key to strong revenue potential in a consumption-based world is customer sales and support. These teams will need to become expert product educators, who make customers aware of how unused PBCs may be beneficial to their business efforts and who understand how to combine packaged components in the most effective ways to solve business problems. You can make smart choices now to prepare your personnel to accommodate the changes. You’ll also want to carefully review and consider your own cash flow patterns to spot areas you can adjust to flexibly accommodate less predictable revenue patterns.

Additional strategies to maximize your opportunity:

1. To protect existing revenue and grow the value of each account without incurring new acquisitions costs, retrain sales and support personnel to really get to know your customers’ businesses and to consult with them about available services they may not yet be using.

2. Regularly inform customers about new (and old) services, so they know where to turn as their needs evolve.

3. Position yourself as a partner in your customers’ cost-reduction efforts by marketing the value of the partnership you create with them to smart-size tech spending with composable tech.

4. Since your customers are already familiar with click fees and monthly invoicing, they’ll easily adapt to composable billing, so bundle it with maintenance and service contracts. 

5. Monitor and understand how customers are using feature bundles, so you can proactively adjust marketing messages to match emerging trends. Flexible products offer unprecedented insight into technology usage, so leverage the information to grow your opportunities. It’ll also help you spot areas where your staff might need additional training to better support customer needs. 

Conclusion

There’s still time to prep your business to leverage the switch from a cloud services and software licensing world to microservices. As you adapt, you’ll enjoy new customers, market growth, and expanding revenue. Most software manufacturers are still investigating and rearchitecting the core of their product offerings to allow micro-consumption of capabilities and consumption-based billing. Get on top of this important trend early to maximize the value to your organization and better meet more customer needs going forward.

Charles Darwin is credited with saying, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”  Just like species, businesses must be willing to flex as the world around them shifts in order to grow. 

Christina Robbins

Christina Robbins is Vice President of Communication Strategy and Marketing at Digitech Systems LLC, one of the most trusted choices for intelligent information management and business process automation worldwide. Celebrated by industry analysts and insiders as the best enterprise content management and workflow solutions on the market, Digitech Systems has an unsurpassed legacy of accelerating business performance by streamlining digital processes for organizations of any size. For more information visit www.digitechsystems.com.