Dawn of the Business IntegratorBy Pedro Pereira | Posted 2008-03-03 Email Print
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The market is moving to utility models that deliver technology as a service, and providers are throwing out the traditional models ... and titles.
As the IT industry evolves into more of a technology-as-a-service approach, solution providers, distributors and vendors are all looking for ways to position themselves in this new world order.
Saying that a new brand of solution provider called "business integrator" is emerging, Gartner analyst Tiffani Bova told solution providers March 3 during a presentation at distributor Ingram Micro's VentureTech Network event in New Orleans that they have some choices to make.
Bova told VTN members that much of the market is moving to utility models that deliver technology as a service, such as managed services and SAAS (software as a service), rather than through project-based sales of hardware and software. By 2011, Gartner predicts that 40 percent of early adopters of technology will be buying IT infrastructure as a service rather than as a capital outlay.
"You need to make a decision," Bova said. "Do you want to stay selling this way or do you want to go selling that way?"
Already channel newcomers are throwing away the traditional approaches to the business, she said, and they are the people that existing solution providers will have to compete against.
Bova, who is vice president of research for indirect channel sales strategies worldwide for Gartner, said a 24-year-old just getting into the business would use social networking Web sites such as Facebook and LinkedIn to get recommendations and find partners. The 24-year-old, she said, wouldn't invest in overhead and would talk to customers about business needs as opposed to technology.
Acknowledging that not all will move to the technology-as-service models, Bova nevertheless urged solution providers to consider how they can adjust their businesses to embrace the ongoing changes.
Larry Baum, owner of the Computing Center, a VTN member in Ithaca, N.Y., said despite all the recent talk about new models and move toward services in the channel, too many vendors are still focusing primarily on moving product and trying to boost their profit margins on those products. So, what's a solution provider to do?
A vendor representative who didn't identify himself responded to Bova's comments by pointing out that if the channel undergoes as much change as she predicts, many of the solution providers present at the VTN won't be around in 10 years. Calling it "needless churn," he argued that vendors may resist that kind of change.
Bova acknowledged that vendors have to be careful not to disintermediate their channel partners and those partners, likewise, must avoid doing that with customers. She also pointed out that while some major vendors have done little or nothing to embrace technology-as-a-service models, solution providers may want to look at alternative, younger vendors that understand those models.
Providers also have the option of working with Ingram Micro, whose Seismic program offers a managed services alternative for those channel companies that don't want to invest in the infrastructure required to deliver the services. Brian Wiser, Ingram Micro senior vice president of sales and vendor management for North America, said the distributor is making investments in initiatives such as Seismic to help solution providers take advantage of the move toward services-based models.
Wiser added that just as Ingram Micro has invested in adjacent markets such as point-of-sale and consumer technologies, solution providers should also be looking at which new markets they could get into that would make sense in relation to their overall business. He cited digital signage as an emerging technology that is experiencing healthy growth and deserves a look.