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How IT Provider Can Build Recurring Revenue with the SAAS Model

/ ~ 5 minutes read

IT service businesses are chasing subscriptions over project-based sales, even though they are more accessible. What’s the reason behind it, and what are they trying to achieve through it?

Also, what would be the best option if you chose to have a subscription-based revenue for your business? 

In this article, you'll learn how to build a sustainable business, based on recurring revenue.

What is a Recurring Revenue Model?

In a recurring revenue model, an IT business sells software as a service on a subscription basis. This business model is based on predictable revenue streams that bring long-term stability. 

It is a priority for most businesses today, as it addresses your concerns related to revenue forecasts, acquiring new customers, and business valuation.

Recurring revenue’s impact on a business:

  • Improved Cash Flow 

There is a high level of predictability associated with subscription-based recurring sales. It will help you keep track of how much money is flowing into the business and when and how much it is going out.

  • Predictive Future

Having a clear understanding of your business's revenue and expenses can help you forecast future earnings.

  • Scope of Scaling Up the Business

With a clear view of your cash flow and future earnings, you can grow business with minimal risk. A recurring revenue model helps you create a predicted and reachable growth plan.

Here is a comparison that explains why software as a service (SaaS) is gaining velocity over one-off sales:

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There is significant growth in the number of businesses joining this winning model.

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Businesses are Moving from Software to Subscription Model for Survival

High inflation, unfilled positions, and high operating costs are forcing small businesses to improve profit margins to stay competitive.

A recurring revenue model is the main way to win the predictable revenue battle.

In the long term, they get more time to scale rather than finding new clients. Also, this allows them an accurate prediction of available funds. This helps companies to make better investments and expenses efficiently. Lastly, this model demonstrates the actual value of a business— there is more clarity and certainty in this venture.

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Introducing Automation-as-a-Service

After being only affordable for large enterprises for a long time, business process automation has moved to the mid-market. Now SMBs can access it on subscription and fix with their operational challenges.

Within the automaton space, the Software-as-a-service (AaaS) model is experiencing significant growth. 

According to SkyQuest Technology, the Global SAAS Market is expected to reach a value of $720.44 Billion by 2028, at a CAGR of 25.89% over the forecast period (2022 - 2028). *

Smart IT businesses are making a subscription revenue by offering it as SaaS. They allow businesses to use this premium technology at a lower upfront cost and provide value to the user. 

What are automation service providers getting from this deal? They win on these metrics:

  • Build recurring revenue
  • Receive consistent profits
  • Build a loyal and long-term clientele
  • Scale up the business.
  • Expand business by upselling

Furthermore, the AaaS-model makes it easier for IT departments to create an Orchestrated Data Center (which includes cloud and external services) to access and leverage data.  

“...far more than just robotic process automation (RPA) is needed to deliver resilient operational excellence. Organizations are shifting, or have shifted, to consume more impactful integrated hyperautomation technologies….”

Gartner, Predicts 2022: Accelerate Results Beyond RPA to Hyperautomation.

To accelerate Automation's global adoption, MSPs offer a variety of pricing models to meet the needs of SMB businesses and assist them in building operational efficiencies. Automation will continue to thrive in the AaaS market.

It is a great opportunity for experienced IT Service Providers to win a new market in automation on subscription models.

Upselling Opportunities in Automation on Subscription Business

Upselling is a sales strategy for expanding the services adoption of your clients. Expand your engagement with them by offering automation for other processes and workflow. When done right, upselling enhances the value of your service for the client. It also improves subscription-based recurring revenue for your business.

There is a lot of scope for up-selling services on subscription, as you understand your client’s business already. It is easy to help them see value in making further improvements. Help them transform operations for efficiency and more significant profits for your business. 

“Your existing customers are your biggest opportunity…understand your customers’ pain points, let them know you can create this automation which can solve this problem for them…”

Filum Ho, CEO, Apollo Digital – ElectroNeek customer. 

If you want to learn more about how to sell automation by subscription, watch the webinar, where ElectroNeek’s experts will give tips on how to build a SAAS business.


Next Steps

Automation as a subscription service is a highly profitable and scalable offering that helps you build recurring revenue. SMBs are also fast adopting it to break the complexity in their processes. Serve this growing business segment to generate more revenue.

Here are the few benefits ElectroNeek offers to IT Services Providers to empower them to provide better service to their clients:

1. Free bot licenses so the MSPs can pass on the cost savings to their customers

2. Low-code/ no-code platform, so your developer can quickly adapt the system, and build and deploy bots within a few days

3. Product training program directly within ElectroNeek’s platform

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