The road to business excellence is rarely straight, often goes unpaved and should never have a destination. That philosophy isn’t a new one, but after listening to a number of TED talks and sitting through several high-profile industry peaking sessions over the past year, it seems some have forgotten its impact on the channel. Change is key to survival in today’s business world, and those who learn to transform their organizations most effectively often come out on top.
That lesson isn’t lost on the entrepreneurs in our industry. Nearly 8-in-10 U.S. channel firms have experienced some form of transformative activity, according to CompTIA’s IT Industry Outlook 2015 report. That includes providers moving from transactional product sales to recurring revenue models, incorporating new cloud portfolios, adding vertical market expertise or converting to managed services. Access the full report here.
In the IT space, change is not only good for business, it’s an extremely critical factor in ensuring an organization’s long-term success. The real concern is that many solution providers consider transformation a one-and-done proposition. After working hard to improve their operations or enhance their portfolios, they take time off and, in some cases, reap the profits without scoping out where they should go next.
Solution providers who don’t assess and alter their operations and offerings to address the rapidly shifting needs of their clients risk losing their relevance and competitive edge today. What was once hardware and onsite support for many VARs has transitioned to managed and cloud services. While a significant number of channel firms made that initial leap, their transformation processes shouldn’t and can’t stop if they plan to keep their current customers — let alone recruit new ones .
Some of the most cutting-edge IT firms aren’t investing the time and effort required to be relevant in the next three to five years. As technologies move from analog to digital platforms, how many solution providers are truly prepared to provide the assessment, implementation, management and support needed to operate the next generation of services?
Those who haven’t mastered the early stages of cloud and mobility are already falling behind the curve. While some scoff at the small business prospects of Big Data and the Internet of Things, others are already assessing their clients’ needs and testing out the appropriate solutions. Social media management and app development fall in that same category.
Evaluate and Innovate
How can IT firms keep transformation a consistent, top priority? The answer for most solution providers is simple:
- Incorporate transformation in your mission statement. Companies that instill the idea of change within their corporate philosophy are more likely to see it through.
- Schedule periodic reviews. Keep the transformation discussion a prominent fixture on your calendar. Assess the progress of current projects and reevaluate future plans monthly — at a bare minimum.
- Assign a chief change agent. Without a champion, projects often encounter significant and numerous delays or simply fail. Companies that assign an insightful employee to develop and manage business transformation projects have a greater chance of achieving their goals.
- Invest and assess financing plans. Are you not only ready and willing to transform the business, but does the firm have the means to do so? A three to five year financial strategy should also include future project cost estimates as well as any transformations’ impact on the organization’s cash flow. With the current credit concerns, it’s a good idea to start planning early.
The Hybrid Option
Some experts fail to ignore one aspect of change that can have a major impact on a channel firm’s revenue and its client base. Solution providers who make a major transformation don’t need to burn their bridges with past offerings. Many IT firms successfully retain the most lucrative parts of their existing portfolios as they implement new offerings and strategies. Rather than pass up profitable hardware or software sales with their existing clients, newly transformed managed or cloud services providers can often delegate those one-time transactions to lower-salaried employees. Some simply carve out that part of the business and streamline the operations to keep costs low and margins high.
Why hang on to any part of the old model? Two simple reasons:
- Why give up a profitable part of the business? As long as you can keep margins up and maintain your focus on growing the new model, these services can help pay a lot of bills.
- Why risk losing clients? Many of your customers may still need or simply want hardware, software and even traditional break/fix services. If your company or a trusted partner can provide them at a profit, it will significantly reduce the chances of having a competitor move in.
Regardless of what your company has accomplished over the past 12 months, if your next business transformation isn’t already underway, it’s time to get started. Bring the team together, do some market and industry research, and get the plan together ASAP. Your company’s future depends on it.
Need some help? Take advantage of some of the many business transformation resources available on the CompTIA Channel Training page. Premier Members: Learn to define channel types in an age of convergence and transformation with CompTIA’s new presentation, Partner Business Model Definitions. Not a premier member? Consider an upgrade.
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.
