IT and Business Insights for SMB Solution Providers

Moving Up the Value Stack: How to Turn Specialization into Profits

Meet three channel pros who have used specialized skills and services to keep their bottom line strong in an era of eroding margins. By Rich Freeman
Reader ROI: 
OFFERING A SERVICE few peers can provide, like Internet of Things solutions, is a reliable route to strong margins.
SO TOO is providing strategic IT consulting to clients through a virtual CIO service.
SPECIALIZING IN A COMPLEX, critical field like security can also separate you from the competition.

ROUTINE MAINTENANCE AND OFFICE 365 deployments are low-margin services likely to get even more automated—and hence less profitable—in the future. Making real money as a channel pro these days requires cultivating vertical expertise, delivering strategic advisory services, and otherwise moving from IT basics to specialized offerings only you can deliver. Here’s a look at how three channel pros “moved up the value stack” from commoditized services to differentiating, high-margin ones.

Luis Alvarez, President and CEO, Alvarez Technology Group Inc.

Knowing how to do what others in your profession can’t is a surefire ticket to sticky customer relationships and consistently high profits.

Luis Alvarez can prove it too. Being among a select few channel pros capable of developing Internet of Things (IoT) solutions has been a serious moneymaker for his business, an MSP and integrator in Salinas, Calif., with more than 200 clients.

Alvarez practically stumbled into that line of business though. Some years back, a trucking company he supports needed help figuring out the most efficient way to assign trucks and drivers to deliveries without violating laws limiting the number of hours drivers can work in a shift. Alvarez created a system for the customer that provides concrete answers by combining data from truck-based sensors with vehicle, booking, routing, and HR information stored in multiple systems.

Since then, Alvarez has used the knowledge his team acquired building that first solution to deliver IoT systems for other clients. “The first step is education,” he says, noting that IoT solutions involve sensors, gateways, development platforms, and other typically unfamiliar technologies, and require vertical industry knowledge as well. Mastering all of that takes time but pays off competitively.

“Being able to talk to customers about how all of these connected devices can be managed by one company is going to differentiate you,” Alvarez says.

It also produces a steady stream of consulting and integration fees. “There’s a lot of project work that comes out of this,” says Alvarez, adding that demand for IoT solutions is increasing fast.

“We’re seeing it everywhere now,” he says, suggesting that channel pros who wish to cash in on the IoT opportunity should get started soon. Alvarez recommends focusing on specific vertical industries and solution categories.

“You can’t be all things to all people,” he says.

About the Author

Rich Freeman is ChannelPro's Executive Editor

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