COLUMN: Strategic Service Providers See Astronomical Growth Through Recurring Revenue

If you want to take the temperature on the power of the channel to evolve and transform, look no further than the off-the-charts recurring revenue growth being driven by strategic service providers.

The key to the rapid adoption of the strategic service provider model, which is focused on consumption-based models for customers, is simply a better customer experience. That experience comes from taking all the complexity of architecting, integrating and managing any and all services from multiple vendors and pulling them together into a managed services model across multiple clouds.

Take Dizzion, a Denver-based strategic service provider focused on end-user computing solutions in all major industries including health care, financial services and legal. Dizzion has forever changed the economics of secure end-user computing—incorporating all the pieces from a wide range of vendor offerings including VMware, IGEL, Citrix, Pure Storage and Cisco—into a self-service, end-user cloud model that is resulting in conservatively a 30 percent reduction in infrastructure costs for customers.

“We want the business to be able to provision and build the application they need and not have to go through IT,” said Rob Green, co-founder and CTO of Dizzion. “IT sets up the platform with the guardrails and then the business is enabled to do what they need to do.”

Dizzion’s all-out strategic service provider drive has resulted in a business with 99 percent recurring revenue and a customer compound annual growth rate of 30 percent, moving to 40 percent in 2019.

“‘VAR’ stands for value-added reseller, but the definition of what was valuable 10 years ago has changed tremendously with cloud,” said Green. “Every company has to digitally transform or be left behind. Digital transformation is a function of business survival. So how do you enable that digital transformation and add value? It is all about services and simplifying technology consumption.”

Michael Hogan, president of Hogan Consulting Group, a Chesterton, Ind., strategic service provider, said those adopting the new business-outcome-focused model are driving big gains in net-new customers and in the valuation of their own companies.

“Customers are loving it,” he said. “We are managing more of their environment and providing more innovation and value for them. When you manage it all, you become sticky. It’s great for revenue and value to the customers.”

Hogan said he feels the same kind of drive today that he felt 15 years ago when he started the company.

“I feel the same sense of urgency,” he said. “When I started the company, I felt like I needed to get the next customer to keep food on the table. Now I feel like I need to catch as many customers I can in this huge ocean of fish.”