2016 IT Channel Outlook: Optimism and ObstaclesBy Michael Vizard | Print
The 2016 outlook is generally promising for IT solution providers, particularly those that have invested in mobile and cloud computing and other key markets.
Despite all the technical and business challenges most solution providers regularly face, they largely remain optimistic. While there are clearly challenges, a growing economy is giving many solution providers any opportunity to expand their business. How they go about achieving that, however, tends to differ by region. A solution provider such as Fixed Fee IT in Beaverton, Ore., for example, is likely to have a much different growth strategy than MERIT Solutions in Chesapeake, Va.
"The economy in Beaverton is growing, so we expect to pick up a lot of new customers," said Larry Gray, CEO of Fixed Fee IT.
In contrast, MERIT Solutions President Randall Spangler said the solution provider expects to grow its business by offering additional services to existing customers.
"Most of the potential new customers in our area are already someone else's customer," said Spangler. "If they switch providers, it's usually for a reason that might wind up being more trouble than it's worth to us."
Regardless of the approach to growing their business, the good news is that there are now a lot more budgets that solution providers can tap in order to get an IT project funded. While IT budgets overall are expected to be relatively flat, more departments outside IT are allocating funding to IT products and services.
In fact, a new survey of 161 solution providers conducted by Nintex, a provider of workflow automation software, finds that 45 percent of respondents report that the interaction between IT and other departments is increasing within their customers' businesses. Specifically, the survey shows that 37 percent of the solution providers find that line-of-business executives are involved in purchasing IT solutions, and executives from the finance and procurement departments are part of the process nearly a quarter of the time.
At over 67 percent each, sales and operations lead the way for those who have encountered line-of-business leaders, but marketing is present nearly 45 percent of the time, the Nintex survey finds.
Internal IT departments are often not the primary decision maker when it comes to IT, said Josh Waldo, vice president of channels and strategy for Nintex. "There's been a real change in buyer persona," Waldo said. "It a change that has been taking place over the last two years."
The challenge that many solution providers now face, Waldo noted, is that they don't have enough relationships outside the IT department. As such, the total amount of available budget a solution provider might be able to tap is being constrained by the depth or the lack of depth in the relationships they have with any given customer.
In fact, a similar survey of 500 IT leaders conducted by TEKsystems, an IT staffing and talent management specialist, finds that about three out of five IT leaders report that functional areas other than IT are expected to spend the majority of their organizations' technology budget. Jason Hayman, market research manager for TEKsystems, noted that increased spending on IT solutions winds up making organizations more dependent on external IT service providers that have already invested in the skill they need most.
"We're seeing a decentralization of IT spending," Hayman said. "The internal IT department is becoming less relevant."
While internal IT organizations are clearly still a force to be reckoned with for most solution providers, there's no doubt that business executives are savvier about technology than ever before. As a result, going into 2016, solution providers would be well-advised not only to keep their technical skills sharp, but also make sure they can elevate the IT solution conversation in a way that business executives can really understand.