Overview
Revenue growth is not the same as quality of earnings. This technology services company faced two familiar risks. Seventy percent of revenue came from one client, which made the business fragile. The model also leaned toward value added resale, which created volume but thin and uneven margin. The owners set a clear goal to move from roughly eighty percent resale and twenty percent managed services to a healthier seventy percent managed services and thirty percent resale, while cutting costs with discipline and strengthening the operating system.
They treated the work as transformation rather than a collection of side projects. Leadership supplied conviction and clarity. Disciplines created structure across finance, risk, service delivery, vendor strategy, and people systems. Lifecycles set the rhythm so choices were reviewed and refined. Culture gave meaning so new habits would be lived, not just announced.
The Challenge
As the team looked across the business, five barriers stood in the way of durable performance:
- Revenue concentration. With one client at seventy percent, pricing power and forecasting were exposed. Any change on the customer side would ripple through sales, operations, and finance.
- Margin mix. Resale activity was high, yet margin was thin and unpredictable. Managed services and professional services were present but not packaged or priced to support steady renewal and expansion.
- Fragmented operating system. Sales, finance, service delivery, and vendor management worked hard, but there was no single view of pipeline, capacity, or risk. Decisions moved by email instead of shared evidence.
- Costs sized for yesterday. Tools overlapped, partner programs were not aligned to value, and handoffs created rework.
- Cultural fatigue risk. People were proud of the company, yet the pace of change called for steadier rhythms, visible symbols, and practical support.
Together these signals made one thing clear. More effort would not fix the problem. The operating system needed to mature.
The Solution
Leaders moved directly into execution and sustainment using the transformation lifecycles, so progress could be seen and trusted.
- Diversification guardrails and focus. A simple rule set the tone. No single client should exceed twenty percent of revenue within the planning horizon. Leadership defined an ideal customer profile in a few priority verticals and limited target lists, so pursuit energy stayed high quality. Messaging shifted from product features to business outcomes clients would feel. Weekly pipeline reviews emphasized stage by stage evidence rather than quote counts. The message was steady. Protect concentration and margin before chasing volume.
- Service offering redesign and pricing clarity. Managed services and professional services were repackaged into three clear bundles that customers could grasp quickly. Each bundle included plain language commitments, measurable service levels, and a quarterly value review that linked work to results. Pricing moved from discount drift to value-based bands with non-negotiables that protected margin. Professional services were offered as practical accelerators that prepare customers for managed care. The path from consult to managed service became simple and repeatable.
- Incentives that match the strategy. The compensation plan told the same story the strategy told. Managed services and professional services earned higher credit than resale. Expansion, renewal, and multi-year commitments received additional recognition. Early wins were celebrated and shared so the field could see what good looked like. People were paid to sell the future, not the past.
- Governance that integrates disciplines. A small Transformation Management Office connected strategy, finance, risk, delivery, vendor strategy, and people practices. One integrated roadmap made dependencies visible. Concise decision briefs brought options and evidence to the same table, which meant choices were made once and together. A single dashboard blended financial outcomes, risk resilience, delivery reliability, adoption signals, and cultural markers. Cadence honored the lifecycle. Execute with clear owners. Sustain with baselines, targets, and thresholds so progress remains visible and trusted.
The Results
Within a year the company looked and felt different. Numbers will vary by firm, yet the patterns are instructive.
- Revenue mix improved. Managed services moved from about one fifth to more than half in the first year, then crossed the seventy percent goal shortly after. Professional services grew as clients used accelerators that prepared them for managed care.
- Concentration risk declined. The top client share dropped steadily, and the twenty percent guardrail became a shared habit across account planning.
- Margins and cash strengthened. As mix shifted, gross margin improved. Net revenue retention rose as expansion outpaced churn. Days sales outstanding shortened as billing became cleaner and more predictable.
- Costs were right sized. Tool consolidation, partner re-tiering, and simpler handoffs reduced waste. Onboarding sped up and first month satisfaction improved because roles and steps were clearer.
- Operating clarity increased. The dashboard placed leading and lagging indicators side by side, turning debate into decisions.
- Culture gained energy. Engagement improved, enablement completion rose, and voluntary attrition eased as people experienced clarity with support.
These gains reinforced each other. Better offerings have made renewal and pricing conversations easier. Visibility turned anecdotes into action. Savings funded enablement and client experience, which lifted adoption and expansion. People saw proof, which is the foundation of trust.
Takeaway
Reducing concentration and improving margin mix is not about pushing harder. It is about building a system you can live with. Start with a few non negotiables. Redesign service offerings and pricing so value is obvious. Align incentives so the field sells managed services and professional services. Use a Transformation Office to integrate the disciplines, run the lifecycles, and keep evidence at the center. Reinforce the culture with simple rhythms so people feel supported as they build new habits.
Do these things with care and consistency and diversification will stop feeling like a campaign. It will show up as the natural result of a coherent operating system where leadership, disciplines, lifecycles, and culture reinforce one another every week.
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