Make Room For Subscription Services

Solution providers that don't prepare themselves now for the dramatic economic changes that come with selling subscription-based software and services will find themselves in a dangerous position, said Alan Marc Smith, president and CEO of DLT Solutions.

This emerging IT landscape will be mostly made up of cloud and software-based services sold on a subscription basis, a trend that's already showing itself in force today, Smith said.

Many solution providers are well-versed in "selling boxes," but even historically hardware-centric vendors like Cisco are starting to shift toward software and services-based offerings, and this is changing the channel landscape as partners know it, said Smith.

CHANNEL ADVICE: The shift toward recurring revenue means a change in cash flow. Solution providers should expect to see a short-term drop in revenue, a shift they might need to incorporate into their banking covenants, Smith said. "Your revenue is going to drop, but it will come back over time," said Smith.