Picture a Unicorn in Your Mind
Nobody knows for sure when the term unicorn was coined exactly. A horse-like creature with a spiraling horn is represented in ancient Greek mythology. Picture one in your mind right now. I bet you can.
A symbol of fantasy and rarity, the term has also become synonymous with technology start-ups. Fast growing, often cloud-centric, apps, services, and products that are quickly adopted. Tech unicorns are often renowned for garnering significant multiples of value based upon on their subscription revenues.
Investors are interested in companies that show growth via a recurring revenue stream over time as this demonstrates a predictable path to profitability and return on investment.
Cloud and Subscription Revenue Are Key
Annual recurring revenue (ARR), monthly recurring revenue (MRR), annual contract value (ACV), and total contract value (TCV) are increasingly the important buzzwords de jour when it comes to analyzing the health and profitability of not just technology vendors, but increasingly all types of businesses, especially solution providers and managed-service providers.
In a recent discussion with Larry Walsh from Channelnomics, he outlined how their research shows that partners who drive meaningful ARR are more valuable based on revenue predictability and reliable forecasting.
Cloud is not an alternative to on-premises IT resources; it’s the norm and, increasingly, the primary choice of customers. Partners who can deliver cloud infrastructure, applications, and management support will have greater alignment and engagement with their customers, enabling the generation of recurring revenue. The benefit is more than just knowing money is coming in the door, but the high valuations that come with contractual versus transactional sales models. Simply put: Services-based companies are more valuable because they’re more stable and less risky due to the revenue predictability.
— Larry Walsh, CEO and Founder, Channelnomics
Rod Baptie, the founder of Baptie & Company and creator of the highly renowned Channel Focus Community, recently surveyed the top performers in their community of 9,000 managed service providers. According to the research, successful partners are aiming to have at least 60 percent of their annual sales in MRR, stating “MRR is the key to increased business valuation.”
In a blog post, renowned industry analyst Jay McBain of Forrester put it this way: “Consumers are now demanding online experiences; happily virtual; wanting seamless digital procurement and provisioning; and wanting everything at the click of a button. The delta between B2C buyers and B2B buyers has collapsed during the pandemic. It’s all about speed, convenience, and remote, whether the buyer is acquiring a Peloton or a software product.”
He goes on to write, “Product-led growth (PLG) is an end-user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion, and expansion. … Companies with successful PLG strategies are able to grow faster and more efficiently by leveraging their products to create a pipeline of active users who are then converted into paying customers.”
This, to me, is the special sauce for partners. Not just shifting to the cloud services provided by vendors like Citrix — but building your own “as-a-service” offerings!
Last year, in partnership with Citrix, Enterprise Strategy Group (ESG) conducted primary research into the rapidly evolving opportunities with Citrix Workspace and remote work. In that study, Kevin Rhone, Practice Director, and Ed Parolisi, Senior Consultant, outlined three key areas where partners can extend their value to customers through integrations, microapps and services. These recommendations can also be productized in your offerings to drive ARR:
- Replace homegrown apps that are misaligned to employee workflows
- Correct suboptimal user experience while addressing cost and ability to scale
- Create applications [and services] that stich together workflows faster
Making it Real with Citrix
As we outlined at Kick Off, the time is now to drive cloud adoption and Workspace consumption and to accelerate our shared on-premises customers’ path to the cloud. With our ever-expanding portfolio of cloud products including Citrix Web App and API Protection, Citrix Secure Internet Access, and our recent acquisition of Wrike, there is no better time to be a Citrix partner.
Six Steps to Building a Recurring Revenue Stream and “As-a-Service” Offerings:
- Need help making the leap to cloud? If you aren’t already, become a Citrix Partner today! Already a Citrix Partner? Dive right in with the following key resources.
- Drive cloud and Citrix Workspace adoption with our cloud resources and tools.
- Learn about Citrix Ready services in our Citrix Ready Benefits Matrix.
- Develop microapps for the Citrix Workspace platform through the Developer Partner Program.
- Learn about FinOps and how it can help drive revenue during the transition to cloud. This emerging discipline, which is focused on Cloud Financial Management, is critical for companies leveraging XaaS subscription and/or consumption models. Access the Cloud Value Management Playbook.
- Grow with Citrix + Wrike. It’s especially critical as you work to help customers with arcane or outdated workflows or wonky transitions between products or processes. Check out the Wrike Partner Resource Hub.
