As IT channel companies shift their focus from hardware sales to service-centric business models, they are contending with new and complex operational challenges that affect the bottom line, according to a new report from CompTIA, the world's leading technology association.
While operational challenges aren't new, a company's ability to operate efficiently has taken on heightened importance – and complexity. In CompTIA's survey of 400 U.S. IT firms, nearly half (45 percent) said that operating their business has become more complex than it was two years ago.
Among the factors that have made business operations more complex, 53 percent of executives said they have more streams of data to manage and analyze. About half cite expansions into new business lines and models; the introduction of emerging technologies into their portfolios; and customer engagement that's become more challenging and complicated.
Just 20 percent of surveyed firms assess the current state of their operations as very efficient. Another 39 percent deem themselves mostly efficient.
"Running an efficient organization is a money issue that often gets overlooked," said Carolyn April, senior director, industry analysis, at CompTIA.
"How well, or how poorly you run your business has a direct impact on your profit margin," April explained. "If you're captaining a leaky ship, it may be the difference between a 10-percent margin and a 25-percent margins for the year."
Business Transformation Accelerating
The number of firms that reported experiencing a high-degree of business transformation nearly doubled between 2013 and 2017, while the percentage of those acknowledging a low-degree of transformation dropped nearly 10 points during that same time frame. In general, most respondents – just over half – characterize their degree of business transformation as moderate today.
Why are they reinventing their businesses? For one, customers are pushing them in new directions. More than half of respondents (53 percent) said customer demand is the number one reason they are making changes.
"Customers have myriad choices today, including self-provisioning applications and services all by themselves," April said. "As they grow accustomed to consuming established and emerging technologies as a service, technology firms need to embrace the cloud, managed services, and business consulting acumen to deliver what customers want."
Cloud computing's ascendance was cited by 53 percent of firms as the reason they're changing their business model in some fashion. Another 49 percent cite emerging tech.
"Many of today's new technologies, from artificial intelligence to virtual reality to block chain, will require tech firms to develop new skills and new ways of doing business," April said.
All this activity places even more emphasis on running a tight ship operationally, whether a company is moving to a new business model or just trying to boost its bottom line.
"The most important thing is to do is make an honest gut check of how well you run your operations today," April concluded. "If you're running a loose operation currently, if you don't shore up how you run things today, you won't be in a position to survive tomorrow."
The CompTIA report "Operational Efficiency in the Channel" is based on a December 2017 online survey of 400 U.S. IT firms.