There are ongoing conversations in the hardware/software marketplace around business model transformations. Considerations of moves to software-centric business architectures, software-as-a-service (SaaS) models, and subscription-based delivery models are becoming more common.
Understandably there is a lot to consider when making any business change, and the objectives for doing so will vary from one business to another. However, when it comes to independent software vendors (ISVs) and software-focused original equipment manufacturers (OEMs) transforming into a software-only business, one of the common critical objectives will be to maintain a focus on optimizing the solution quality and customer experience. For more about how the customer experience impacts the business transformation process, read our recent blog, Experience is Key to Making your Software-centric Business Thrive.
The goal is to achieve business transformation without adversely impacting customer service levels or technology solution performance. One of the keys to minimizing this risk is selecting a partner with global capabilities and expertise in delivering a fully integrated hardware product offering. In this manner, the ISV’s customers will be receiving a turnkey appliance solution that has been thoroughly tested and certified on the hardware platform delivered to the customer.
The ideal hardware fulfillment partner must have the product lifecycle capabilities to perform these integration services and the global supply chain and logistics capabilities to ensure timely and flexible product delivery and provide post-sales warranty support services. Depending on the ISV’s software licensing or subscription activation requirements, this fulfillment process may also be critical for ensuring timely revenue recognition. This situation occurs when the software billing is dependent on the customer deployment of the hardware or requires reference to the unique hardware identifiers (e.g., serial number, MAC address) to activate the licensing or subscription billing.
In working with various OEM and ISV partners over the years who are evaluating alternative go-to-market strategies, this solution delivery method is typically a key consideration. As part of their business transformation, it can be tempting to exit the hardware part of the solution and rely on channel partners or customers to select and purchase the hardware. They trust that the software installation goes well and that they can procure the proper hardware on time. This model often delays the deployment of the solution or results in potential software application performance issues. Most ISVs ultimately realize the inherent risks associated with this strategy to both customer experience and time to revenue.
Stay aware of these critical elements when evaluating your go-to-market strategy as part of this ISV transformation journey.
Arrow has successfully enabled ISV business transformation while also assuring they optimize the solution quality and customer experience. In guiding customers on their business transformation journey, we assist in developing business models to suit growth needs by managing the global supply chain, logistics, compliance, finance, and accounting, together with product and engineering aspects. We provide support and guidance to ensure full integration and transition to a successful software-centric business model.
For an in-depth look at the hardware/software model shift and what to consider when embarking on a business model transition, please download our whitepaper, Enabling the Transformation to a Software Focused Business Model.
