Some of the biggest takeaways of the CI 2019 State of the Industry report are that business is good, revenues are climbing, and integration firms are growing. But what does “growing” really mean? When you take a closer look at the numbers, the industry is simultaneously suffering from a profitability problem.
Really, this comes as no surprise. Hardware margins have been eroding for years, which is driving integrators to evolve beyond product-centric business models and derive more revenue from services.
Yet, despite widespread acknowledgment about the need to get into managed services and develop recurring streams of revenue, making this transformation is easier said than done. A staggering 26% of the State of the Industry report survey respondents earned $0 via service revenue in 2018; one-third of respondents said that between 1% and 5% of their overall revenue comes from services.
Navigate recommends that integrators set a target of 10% overall annual revenue to come from support agreements or recurring revenue. But the majority of the industry falls well short of this KPI. Why are integrators having such a hard time growing their services revenue?
Once an integrator decides to grow services revenue, it takes deliberate planning and the right tools to make this happen. Many integrators don’t have the right tools in place, which is a significant roadblock. In fact, 52% of respondents say their biggest obstacle to moving to an as-a-Service or managed services model is figuring out how to create the necessary support structure.
That’s why Solutions360 offers its Q360 platform, which gives integrators the financial backbone they need to develop recurring-revenue streams while increasing profitability.
As an NSCA Business Accelerator, Solutions360 understands your industry and your integration business like no other. Their team can show you how to use your software to support your strategic goals, providing you with a platform that evolves along with your company.
Solutions360 is a supporter of the 21st annual Business & Leadership Conference, which takes place on Feb. 27-March 1, 2019, in Tampa, FL. If you’re tired of struggling to develop RMR or increase profitability, stop by the sponsor pavilion to learn more about our Q360 ERP software. We’ll share examples of how we’ve helped many other NSCA members manage their businesses better.