Every successful enterprise is unique in its own way. In their journey to success, enterprises face many business and technical issues, and sometimes they solve their problems in unique ways internally leveraging technology. Some of these solutions or assets are core competence or trade secret, but a majority of these solutions and assets are not in that category. These solutions and assets can be packaged and offered to other enterprises in similar or other industries, which will add to both top and bottom lines for the enterprise. Engineering service providers and ISVs can help enterprises in the packaging and monetization of these solutions and assets.
Is this something new?
No, This has been going on for years. The biggest example is AWS, an internal cloud solution built by Amazon which was later offered to other enterprises and helped in the creation of a $500 billion cloud computing market.
Can every enterprise aspire to create an AWS-like spinoff business from internal assets and solutions?
No AWS is probably an outlier, but it shows the possibility. Every enterprise can’t think of launching an AWS-like business, but it surely can monetize some of its internal solutions and assets.
How can enterprise monetize their assets and solutions?
If enterprises have a strong conviction and commitment to monetize their assets and solutions, they can do this internally by developing a new business segment. Like Amazon did with AWS. A recent example is Tata Steel which opened a new division to monetize its IPs and digital solutions, as discussed in the exhibit.
Otherwise, enterprises can take the help of engineering service providers and ISVs, as shown in the examples discussed in the exhibit.
What is the role of engineering service providers and ISVs?
- Identification: Out of many solutions, identify which are unique enough for which there could be demand in the market. Engineering service providers and ISVs who have broad experience across enterprises can help in this identification.
- Packaging: An internal solution or assets has to be packaged as a product or service which will be offered to others. It might require some additional development work, more use cases, documentation, etc. Here engineering service providers and ISVs can help.
- Sales: Solution or assets will need clients. The first target could be enterprise customers and suppliers. Here engineering service providers can help in GTM. The next target could be engineering service providers’ and ISVs’customers who might be interested in these solutions.
- Marketing and Thought Leadership: How will customers know the value proposition of the assets and solutions of enterprises? These enterprise assets and solutions should also be within the scope of the service providers’ and ISVs’ marketing and thought leadership initiatives.
- Delivery: The delivery of these solutions and assets might require consulting, implementation, system integration, and customization for specific clients, which can be done by engineering service providers and ISVs.
- Support: Delivering solutions or assets is not a one-time activity. These solutions and assets need to be maintained with new features, technologies, and active customer support is to be provided. Enterprises will not have that much focus and resources to do, and here engineering service providers and ISVs can help.
What should engineering service providers and ISVs do?
- Proactiveness: Look at your clients’ internal solutions and assets proactively. You know the market need and competitiveness of solutions and assets better than the client. Even before the client come to you, you can be proactive and go to the client and start discussions.
- Strong Business Case: Often, clients’ concerns are around the business opportunity and why other enterprises will be interested in their solutions and assets? There are already solutions in the market, and new startups are launched frequently. Engineering service providers and ISVs can build a strong business case around the solution’s or asset’s value proposition. First, it is tried and tested, so there is value in it. Also, the solution has most probably provided the ROI to the client, so these can be offered at very competitive rates. Product firms generally don’t sell less than 50% gross margin, but the margin threshold for enterprises will be much lower and hence competitive pricing. Make an offer that the client can’t ignore.
- Strategic & 360-degree partnership: Though revenue potential from a particular solution or assets maybe not be that high for the service provider or ISV, it has other advantages of deepening client relationships, more engagements with 360-degree partnerships, and the possibility of nonlinear revenue growth. Service providers and ISVs should treat this as strategic initiatives.
- Organization: It should not be a one-time activity with one client. To make a sustainable program, engineering service providers and ISVs should make an internal team under CTO or similar senior leader who looks after the company’s internal solutions. Give them the mandate to look for clients’ solutions and assets also and plan a pipeline of solutions and assets that they can take to the market the way they do their own solutions or products.
Bottom Line: While monetizing assets is always an attractive proposition, in a tough business environment or recession, it is even more attractive for enterprises. It helps improve the top and bottom lines for enterprises. Who doesn’t like an extra income? It can be reinvested in more growth or capability-building initiatives. The onus is on engineering service providers and ISVs to make it happen for their clients.