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As part of its regular coverage of telecom and IT channels, Channel Partners covers the transformation of channel business models. This blog includes entries from its ongoing coverage, including case studies of partners in transformation.

The Transformation of White Glove Technologies - Part 4

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WHITE GLOVE TECHNOLOGIES
Transformation leader: Tommy Wald, CEO
Number of employees: 90
Year established: 1993
Original transactional business model: VAR
Post-transformation business model: Managed services provider (MSP), with more than half of overall revenue coming from recurring commissions.

How has your company been challenged by the transformation away from a transactional business model?

During our transformation from a product-based company to services-based (specifically, managed IT services), our company was challenged with evolving how we produced gross margin from our business. As an IT provider, we had gone through a shift from generating a majority of our gross margin from product sales and a smaller part from services. Our transformation required evolving our business model to the inverse of that, whereby our gross margins would be primarily generated from service offerings. This was a paradigm shift for the entire company. And we had to be careful about moving in this direction so that we maintained our total gross margin production throughout the transformation. It was like trying to change the tire while the car is still moving. We could not just stop selling product and shift to services, as the revenue stream from services was not fully developed or producing. So we had to continue to maintain our product business, even though our sales focus and business model was shifted entirely to a services model.

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