IT and Business Insights for SMB Solution Providers

9 Transformations IT Solution Providers Must Make to Be Successful

Industry consolidation is both inevitable and a good thing; the Partners of the Future will transform for long-term success. By Reed Warren

WE’RE FANS of successful channel partners. After all, who isn’t?

But what defines success? Is it one thing, or multiple things?

We believe it’s a combination of multiple disciplines, all working in unison.

To help IT solution providers achieve the “golden nugget” of success, we have identified nine parts of their business that they must transform. (By the way, it’s much easier said than done.)

  1. Technology: Professional services companies and IT solution providers must transition most, if not all, of their technology focus from the 2nd Platform to the 3rd Platform, which includes the four key pillars of cloud, analytics, mobile, and social.
  1. Focus: IT solution providers should move from being generalists ("all things to all people") to specialists focusing on a certain industry or business processes.
  1. Audience: Channel pros must know their audiences better than ever because they’re smart. Moreover, they should transition from selling to the IT department exclusively to selling to the line-of-business (LOB) buyer, without forgetting about IT.
  1. Sales Motion: IT solution providers need to move away from project-based work and an all-encompassing focus on the up-front "deal," and look more toward long-term customer "relationships” and recurring revenue.
  1. Marketing: With buyers doing their homework online now, channel pros, who often do a limited amount of traditional marketing, must make a much greater investment in digital marketing, including content creation, video, email marketing, social media, podcasts, and paid ads.
  1. Activities: IT solution providers need to climb up the profit stack by shifting from resale to professional services to managed services to building intellectual property.
  1. Competition: Channel pros need to look less for traditional IT-focused competitors and more for nontraditional competitors such as born-in-the-cloud companies, customers turned partners, developers, referral agents, and more.
  1. Alliances: Instead of a "do it ourselves" mentality, IT solution providers must be open to forming alliances with other partners to deliver complete solutions to the customer.
  1. Competitive Advantage: Channel partners can no longer take comfort in long-standing, sustainable, competitive advantages. Short-lived or transient advantages might be the new normal.

Circle of Life

We believe these transformations will eventually lead to industry consolidation.

This is both inevitable and a good thing. Those doing the consolidating will be the Partners of the Future; those being consolidated will be the Partners of the Past. While the industry's firms will consolidate, the IT industry itself will fragment into more and more vertically oriented segments.

Small firms looking to survive will have to become specialized in one of these narrowly defined segments. Midmarket firms seeking to increase value will focus on three to five verticals, and enterprise companies pushing to grow will specialize in six or more vertical markets. The small companies that do well will be highly attractive to the midmarket firms, and they, in turn, will become more attractive to the global community in a highly acquisitive industry. It's a circle-of-life kind of thing.

These business aspects aren’t easy to tackle, so don't get overwhelmed at this list. And the priority in which you address them will be different based on your strategy. The best way to start is to pick two or three transformations to focus on initially.

Profitability may suffer in the short term while you make some of these transitions, but keep your long-term success in mind. It will be better to endure a bump in the road in the short term rather than completely fail in the long term.

REED WARREN, vice president of Revenue Rocket Consulting Group LLC, works with professional services firms and IT companies to identify and understand the barriers to growth while determining strategies required for success. He has a Bachelor of Arts degree from Northwestern College in St. Paul, Minn., and works and lives in the Twin Cities metro area.

Opening image: Pixabay

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