In the first of this series on Channel Sales for DaaS, I wrote about managing complexity with Channels, developing ‘tee-shirt’ sized DaaS packages with hardware, software, and services which avoid complex configuration. This provides a DaaS business the ability to effectively handle scalable Channel sales without getting lost in the complexity trifecta of configurable hardware, configurable software, and configurable services.

Now that we have a manageable product, let’s look at how you actually set up a channel model to sell something that, by definition, doesn’t have that familiar single-transaction sell/revenue model.  All DaaS models I’ve seen are based on some variant of recurring revenue. But recurring for whom?

Model scenario 1: 

  1. The channel sells a DaaS services product to a customer.
  2. The channel sells the contract they created to a DaaS provider for, say, a commission.
  3. The customer is provisioned with the hardware.
  4. The customer then pays the DaaS provider periodic payments while they use the product.

This fits B2C retail situations well, in fact we see something similar quite frequently, the warranty or service contract we can buy with a product – that word, ‘service’. DaaS sales are service contracts, categorically. The DaaS provider has the obligation to provide the hardware, software, and services, and they take the recurring revenue. Channel is pure sales on a commission basis against a contract.

Model scenario 2: 

  1. The channel sells a DaaS services product to a customer.
  2. The channel then buys a contract from the DaaS provider for fulfilment.
  3. The customer is provisioned with the hardware.
  4. he customer then pays the channel periodic payments while they use the product.
  5. The channel pays the DaaS provider periodic payments for contracted services.

This fits B2B channels models, which tend to be large-scale (perhaps fleet management), where they may be involved in the hardware provisioning as well as services. A somewhat familiar model might look like commercial air conditioning – a channel provider installs, periodically maintains, fulfils warranty. The hardware is from a DaaS provider, and the software that manages HVAC (thinking a Smart Device) is part of what the DaaS provider furnishes. Channel is pure sales, but owns the customer recurring revenue.

Keeping it consistent 

What we’ve seen in other models are simply reshuffling of the two above, with different sequencing of the main variables.

Who performs the sale – makes the contract (from tee-shirt sizing)?
Who owns the contractual obligations (liabilities) – services (and billing) delivery?
Who controls the assets – provisions hardware (fixed assets) to end-user, upgrades,
   and spares?
Who collects revenue between parties – one-time, or recurring?

Green and Go

Green and Go is a fictional solar power company, which builds hardware and software, and has services to install, run and manage power.

                                                     Green and Go logo

Remember our “Green and Go” channel sales story (our fictional company for these articles): they sell solar power ‘as a service’ including an array of devices, software and services some of which they manufacture, some of which they source. They have defined a set of ‘tee-shirt’ sized offerings.

<<< Start >>>

Go Green option

Smart Thermostat, 10kWh electricity from renewable sources, home optimizing software. 

<<< End >>>

<<< Start >>>

Go Greener option

Green, plus 5kW Solar Array primary, grid cost-optimizing software. 

<<< End >>>

<<< Start >>>

Go Greenest option

Greener, plus 5kW Solar Array, 13.5kWh Battery, power-fail home automation, 

<<< End >>>

<<< Start >>>

Go Green Nirvana option

Greenest, plus Optimized EV Car Charging on the road connected to reverse-Grid feed. 

<<< End >>>

Green and Go reseller

Green and Go sells through a retail (DIY) home improvement store for a Greener option. The store contracts Green and Go for the hardware, installation, software and services. Green-and-Go delivers the installation and hardware, as well as the utility connection and rate plan, and flips the switch. The end-user now pays the store a monthly fee. Green-and-Go owns the assets. If you look now at retail DIY establishments in ‘services’ category, you’ll find that this structure is quite common, just not as DaaS.

                                    Green and Go authorized reseller logo

Green and Go home

Green and Go sells through a large-scale home builder. Green and Go supplies the hardware, software, and services, the builder performs the installation while the home is being built. With each home sale, the Green-and-Go pays the builder a commission, and then takes over the contract fulfilment. The end-user pays Green-and-Go a monthly fee. Green and go captures all recurring revenue, and renewals and upgrades. The mortgage company owns the assets.

                                   Green and Go Home logo

If you look now at retail DIY establishments in ‘services’ category, you’ll find that this structure is quite common, just not as DaaS. Channels are all different, but based on a simple offering set we can handle multiple channel sales, services, asset, and revenue models.

Learning to manage your channels


The second takeaway from this series is:
• Look at how the end-customer want to buy (how they will buy).
• Consider who provisions hardware, who provides services, what software is involved.
• Who ends up owning the contracts, owning assets, performing billing?
• Who orchestrates end-to-end DaaS?

Then you should be able to blueprint a channel sales model. But, it doesn’t end there. My final blog will be on how DaaS becomes customized within channel models, avoiding conflicts and creating more channel incentive to sell.

Joseph Francis

Managing Director – Digital Supply Chain Transformation

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