Drivers and Benefits of changing the Business Model

Hardware technology companies that have started offering software based revenue models are already reaping substantial benefits. 94% see an increase of 11% in revenue on average. They expect further growth in the next five years, with the revenue from software projected to rise to 18%. These changes are also having a positive impact for employees. From the companies that have started changing their business models, 64% retrained their employees, 58% hired new ones and three in five intend to reshuffle employees into different roles.

While it may bring substantial benefits and new opportunities, changing from a hardware-based to a software-based selling model isn't without its challenges.

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The vast majority of respondents who know why their organization has changed/is changing the business model from hardware-based selling to software-based selling believe that being more competitive in the market (97%) and providing a better customer experience (96%) is important to the success of their organization.

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According to respondents whose organization has changed their business model from hardware-based selling to software-based selling, some of the improvements that have been achieved due to this include: reduced SKU (through feature licensing) (86%), a better customer experience (84%), being more competitive in the market (73%) and more flexible packaging (65%).

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50% of respondents from organizations that have already changed their business model from hardware-based selling to software-based selling have seen their organization’s costs increase, 94% have seen their revenue increase.

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Every second company is experiencing challenges around hiring staff with a new skill set to match the software centric requirements. A third of the companies reported challenges around managing and executing new business models with existing legacy systems. 36% of the companies reported a lack of a central strategy as a challenge and noted that growing organically without a central strategy was a challenge with executing software-based revenue models.

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