In the IT channel, the term reseller may still be alive and well, but it has undergone significant transformations in the past five years. While many providers still count on PC and other infrequent hardware sales to top off their coffers, many industry experts believe the bulk of new channel revenue now comes from the cyber world. When mobility solutions are factored into the mix, it’s hard to see how companies that rely heavily on the traditional reseller model will remain competitive.
That’s not to say those organizations and their services are without value. After all, many small businesses still rely on their traditional PCs and software to run their operations — and it takes a highly skilled IT professional to keep the oldest systems up and running. But that type of support comes at a high cost to the organization providing it. Their personnel expenses are often as high as their cloud-service peers, but their employee utilization is typically much lower; customers who continually delay hardware upgrades won’t likely pay top dollar for repairs. They often end up reducing their hourly rates to remain competitive, taking a huge bite out of profitability.
While the traditional reseller model is far from dead, the opportunities for building a successful new business based on the hardware-centric premise have certainly diminished. Solution sales and recurring revenue simply create a more stable financial situation for enterprising entrepreneurs.
Transitioning to Virtual Specialties
Whether building an IT services company from the ground up or transitioning from a break/fix operation, a company’s long-term success depends heavily on its ability to become virtual specialists. Mobility, cloud and managed services each require their own mind- and skill-set. From application development and customization to specialized remote support, providers may need to enhance or acquire a variety of diverse technology capabilities through advanced training or the hiring process.
Despite the time and effort it takes to nail down the technical side of a virtual services portfolio, the business changes required can be a longer, more difficult battle. Traditional resellers who want to transition to recurring services must carefully scrutinize the options and opportunities, including:
The market: What do their current and prospective clients want from a virtual provider and what are they willing to pay? CompTIA provides a plethora of industry research on related topics, like the latest Trends in Cloud Computing report, plus studies on the opportunities in managed services and enterprise mobility. Of course, a review of local economic and business prospects should always be conducted before making significant organizational changes. Competition: In the virtual service environment, rivals are just a click away. Can the organization deliver a unique value proposition to prospective customers, such as specialized small business support or integration services? The value-added component is a critical differentiator, especially when going up against large regional or national competitors without a local presence.
Long-term objectives: What will success look like? Creating specific operational and financial goals with relevant timelines helps management more accurately track and grade their progress and make proper adjustments.
Strategy: From sales, marketing and financial perspectives, what will it take to achieve their goals? Cash flow can be a particularly difficult problem during the transition, as investments in new infrastructure, personnel and training often outpace revenue.
Gaps: What technical and business skills are they missing? Consider all the investments and resources required to create a successful virtual specialization.
Business transformation is a challenging process for any organization, but when all the added complexities involved in running an IT services companies are added in, that task can be quite overwhelming. CompTIA and its members understand those challenges, especially related to virtual specializations. That explains why the collaborative CompTIA communities are so adept at developing useful IT channel training and educational programs for cloud, mobility and managed services. Their involvement has been critical to the creation and validation of several industry renowned business credentials.
Community members make an ongoing commitment of their time and energy to build the resources solution providers need to make successful IT business transformations. Whether building a virtual specialization from the ground up or simply adding a new practice, every channel entrepreneur should check out the portfolio of peer-developed resources. They may not only help keep the lights on, but solidify their chances for enjoying long-term prosperity.
Brian Sherman is founder of Tech Success Communications, specializing in editorial content and consulting for the IT channel. His previous roles include chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at bsherman@techsuccesscommunications.com
