On Growth

9 Signs You're a 'Partner of the Past'

The IT market is changing, but many partners are having a hard time changing with it. Mike identifies the symptoms of an IT services company in peril.

• By Mike Harvath
• June 13, 2016

This is going to be a two-part series: part one, my look at broadly defining Partners of the Past, and part two, the same for Partners of the Future. The idea for this series comes from an IDC report published in November titled, "Partner of the Future: 10 Transformations IT Solution Providers Must Make."

I was intrigued by this report and its findings in large part because I also see these trends unfolding first hand in the market, and I believe it's an accurate pulse on the market. The report lays out why and how IT services companies have to think about the industry going forward.

Specifically, as the report states, "The fact is, maintaining the status quo will be a failing strategy for IT solution providers. These business partners of some of the world's top IT vendors are going to have to make multiple changes, and soon. The hard part is that the market conditions that are forcing all of these transformations are happening all at once. This is a very interesting time to be an IT solution provider."

I'm on board with the report in that what distinguishes the environment right now is the coincidental nature of so many transformational forces driving the industry. In the past, most of the transformational innovations and changes were more sequential in nature, and thus a bit more manageable. Now, it's going to take some management chutzpah to drive your company into a more challenging future, and in the process it's going to separate the aforementioned status-quo'ers from those with a more ambitious growth imperative.

I'll confine this discussion to the recent past, with which we're all most familiar, and the conditions under which so many IT services companies continue to operate. I'll draw out these conditions as a way to help executives identify those most in peril, and who have some hard choices to make about where to take their business in the future -- for example, selling to a better-positioned company; making a strategic acquisition of your own to fortify your position in the market; implementing much-needed changes in terms of technology, operations, sales and marketing, and so on; or simply staying where you are, which is not recommended if you're looking to still be in business in the future.

Among the conditions that define partners of the past are:

• Companies continuing to occupy the low ground of generalist, best defined as doing anything for anybody, worst defined as doing anything for a buck. Not the best place to be.
  
  
• Incremental growth, not growing with the market, losing out to specialists or better-positioned competitors.
  
  
• Downward pressure on profits; 10 percent or less EBIDTA contribution.
  
  
• Continued boots-on-the-ground, on-premises business philosophy, with no or little remote capability.
  
  
• Continued reliance on time and material, and fixed-bid project work.
  
  
• Selling exclusively to the technology buyer, and either forgetting or not knowing that this audience, while important, is not always the way in or the decision maker.
  
  
• Struggling to attract new leads.
  
  
• Inefficient sales and marketing, with too heavy a reliance on vendor-supplied leads.
  
  
• Poor valuations of your business in the market, owing in large part to all of these points.

According to the IDC report, "The fact is, the VARs, MSPs, SIs and ISVs that have had it so good for so many years are finding out that it's a whole new world for them. They're being asked for new capabilities from new buyers at their customers. They're being outpaced by new solution providers that have only recently appeared on the scene. And they're being forced to break out of their comfort zone in terms of the technologies they have long worked with, in favor of new ones."

Next month I'll take a look at and comment on what IDC offers up as "the 10 key areas of transformation that most IT solution providers need to address to become a successful 'partner of the future.'"

More Columns by Mike Harvath:

• How Cloud and IP Are Changing the IT Services Market
• For Microsoft Partners, Now Is a Good Time To Think M&A
• Archive