Intelisys Partners See An Upsurge In Cloud Services Recurring Revenue

Intelisys partners are seeing a dramatic surge in recurring revenue after transitioning to a subscription-based cloud services model with the help of the master telecom agent.

LanYap Networks, a Phoenix telecom consultant, for example, is now billing $1 million in recurring revenue each month, up from just $200,000 in 2009, when it began the cloud services march with Intelisys, said LanYap Networks co-founder Angie Tocco.

And LanYap is just getting rolling, as the company has plans to grow its recurring revenue business by as much as 50 percent, to $1.5 million, by the end of next year, said Tocco.

[Related: Intelisys Offers $1M Bounty To Top Cloud Performer]

LanYap is one of a growing number of Intelisys partners benefiting from the master telecom agent's guidance and support in order to successfully navigate the often treacherous move to cloud services.

Tocco, for her part, credits the master telecom agent with helping her business overcome the many challenges that come with the transition. She says the biggest boost came from the Intelisys Partner Investment Program, which helped LanYap get through the initial financial hit that comes with the change in business model.

The partner investment program helps partners cope with the transition to cloud services by posting an interest-free loan to help businesses stay afloat until their recurring revenue builds up.

"It's pretty horrific," Tocco said of the initial challenges that come with the transition. "I come from a background of making a salary and commission. It's tough for 18 to 24 months, until you get your feet under you and really start to produce. We see a lot of one-man shops out there, and it's easier on them than on ours, as we don’t have salespeople. We have operations people on our payroll. They need to eat and they don’t get paid percentage. They want a large salary. Trying to juggle all of that on recurring revenue when you are used to a big paycheck is tough."

Intelisys is stepping up its aggressive initiative to get more solution providers to adopt a recurring revenue model. The company hosts several hundred partners at each of their Mindshare events that they hold across the country to discuss best practices for boosting recurring revenue.

More than 145 partners attended the April Mindshare event in Boston, up from 80 last year, while about 300 attended the event held at New York's Madison Square Garden, almost tripling the number from last year.

Andrew Pryfogle, senior vice president of cloud transformation at Intelisys, says the biggest issue for partners is tackling the sales compensation changes that come with the move from what was a several-hundred-thousand-dollar, capital-expense-based on-premise IT model to a several-hundred-dollar, operating-expense-based monthly subscription model.

"A lot of IT solution providers haven't tackled that problem," Pryfogle told CRN. "How do I pay my people when it's not all upfront? How do I get the money in faster through something like our partner investment program? How do I structure a compensation plan that will drive the right behavior that will result in my business growing? That's a lot of one-on-one work. By mentoring these guys and showing them the financial models, we're helping them figure that piece out."

Ed Terry, founder of Expert Technology Associates, an Intelisys partner based in Plymouth Meeting, Pa., says Intelisys provided him not only a practical road map, but the sales and technical talent to capture a bigger piece of the fast-growing cloud services market.

As a result, he said, his recurring revenue business is now 80 percent of his total sales, up from 57 percent just three years ago.

Expert Technology Associates starts the conversation with customers, and then brings in Intelisys sales and technical talent to hammer out specific services and pricing.

Taking a back seat on that part of the conversation was a big challenge, says Terry, but it has paid off in robust recurring revenue sales gains. "It's tough for [partners] to take a passive role and let someone else be the subject matter expert," he said. "A lot of guys know their space real well. When they talk to a customer, they are the expert in that field. That psychologically is not as easy as it sounds. Forget all the years you've had success. Flip the switch and do it this way and you'll still have success. It's not easy."

Terry says the increase in recurring revenue has dramatically increased the valuation of his business. "No company will buy your business if you don’t have recurring revenue," he says.

PUBLISHED MAY 6, 2015