Executive Strategy: Realizing Value In A Recurring Revenue Transformation
- Jamie J Bourassa
- Apr 3
- 2 min read
Updated: Apr 11
Recurring revenues generate increased company valuations; they create sticky customer relationships, enable steady and predictable revenue streams, and create incremental shareholder value. To realize these benefits, executive leaders must transform their legacy business. Companies of all sizes and industries have succeeded in monetizing hardware as recurring revenue.
HPE Launched GreenLake in 2018 and in 2024 had 1.5B in recurring revenues growing at 37% [1]
Peloton generated 63% of its 2.7B revenue from subscriptions [2]
Schneider Electric reported 15% YOY growth of ARR valued at 1.5B [3]
But not all who attempt to transform succeed and according to Forbes 84% of companies fail [4]. One of the most famous failures of a transformation from hardware to recurring revenue is GE’s Predix. In 2016, Predix was going to change the way industry operated using connectivity, data & services, but by 2020, it had cost GE $7 billion and was divested without generating much revenue. So how can it go wrong?
There tend to be (3) recurring themes in failed transformations: .
Lack of a clear strategy: this includes overestimating the value and or underestimating the cost and complexity of change
Inability to drive organizational change: from poor stakeholder management with ineffective communication and alignment
Poor Leadership: enabling an organisation to realize value and removing the barriers found in nearly all change programs
In hindsight, it is easy to see how any one of these themes may have contributed to a failed transformation, but by the time this has occurred, it is too late. The question that leaders should consider when looking to take on a transformation is, “Is there a way to minimize the occurrence of common failures?”
Like a math equation, a transformation program has key parts, from defining a transformation strategy to developing and deploying products/experiences to recognizing results. For each part, a specific objective with tools ensures stakeholder alignment with clear success requirements. If a leader applies the right technique and talent to the moment, the potential for failure decreases.
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