George Mellor - KloudReadiness, LLC
Jeff Bezos and Andy Jassy would say Yes!
Many organizations we work with have a very tough time committing to the change required to create a viable, valuable, and sustainable subscription services business.
Well, imagine if Amazon had had the same reluctance and not created Amazon Web Services (AWS)… Amazon, the darling of Wall Street that jettisoned its founder into the stratosphere as the world’s richest person would not have occurred, if not for AWS.
For those of you who don’t know the story behind the birth of AWS or need a refresher on the subject, please allow me to give my version of the story, which admittedly, might lean towards folklore versus the facts.
Essentially, the original impetus that sowed the seeds of AWS occurred in the year 2000. Amazon had the same issues that many organizations suffer from – their IT infrastructure and approach towards providing services consisted of technology islands & silos, systems that couldn’t talk to one another, and an environment that was inflexible and could not scale to meet the needs of its burgeoning eCommerce business.
So, some smart folk’s at Amazon determined that if they created an environment that was modular, scalable, flexible, and could be shared amongst multiple business units to create the services required to drive the business - they would have a winning strategy that accelerated the execution of their business plan and removed the obstacles that impeded the progress necessary to achieve their objectives.
Fast-forward to 2006 and someone within the walls of Amazon saw an opportunity to “rent” idle or underused IT assets that had been constructed for the exceptionally large peaks that Amazon needed to address.
Essentially, they could provide cycles to others who needed capacity, but did not have that capacity within their own private datacenters.
Those others happened to be software developers who understood that software was indeed eating the world and they liked the idea of paying for only what they used, it could be provisioned instantaneously, and there was no upfront cost to scale-up quickly, so there was no lost time sizing & building out infrastructure.
It was a perfect product-market fit that set the stage for Amazon to create AWS and begin their journey of adding more and more solutions to their suite of services.
This positioned AWS to expand far beyond the original developer community into the C-Suite as all businesses have become Digital Businesses.
Now AWS is almost fifteen (15) years old and has grown from a business that had $0 in revenue in 2006 and has grown to a revenue run-rate of just over $40B as we kick-off 2021.
Oh, and if $0 to $40B isn’t impressive enough, they decided on Day 1 to adopt a subscription business model.
Think about it this way, on December 31st AWS exited the calendar year with a ~ $40B run rate in the cloud, and when they awoke on New Year’s Day 2021, they started the year with $40B, not zero – Zero is where most of you start in the transactional world of CAPEX transactions.
As Adam Cole of SIPPIO has said many times – “you want to know what the best thing is about recurring revenue?... it’s recurring!”
AWS, like Salesforce.com, created a market that really did not exist until they planted their flag and changed the way people adopt, use, consume, and pay for technology.
Microsoft, Google, and many others have moved fast to catch-up as they look to take share from AWS, however, going up against someone who has the first-mover advantage is a tough fight, especially when that first-mover is innovative and thrives on executing their strategy.
So, if you are hesitant about change or the impact that subscription might have on your legacy business – just look to AWS and many others.
They committed to developing the skills, business model, and approaches necessary to create a business that is incredibly strong & profitable and is aligned with how customers want to procure services these days.
Now, don’t abandon your core business, rather, create subscription capabilities that will allow you to capture all of the opportunities that your clients and prospects present.
Remember, this is all about allowing your customers to purchase IT (or any other service or product) from you on a monthly basis easily, without you having to turn yourself inside out trying to provide it.
As you have seen in this outline – Subscription is truly the gift that just keeps on giving… Start your journey today - we can help!