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Reaching the Top

There is an old saying in business: “If you’re not growing, you’re dying.” The adage holds true for today’s crop of solution providers, who constantly feel pressure to evolve their businesses to adapt to the ever-changing technology landscape. Evolution without growth, however, spells extinction for many businesses, and solution providers are no exception. Many are […]

Written By: Frank Ohlhorst

May 20, 2008

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There is an old saying in business: “If you’re not growing, you’re dying.” The adage holds true for today’s crop of solution providers, who constantly feel pressure to evolve their businesses to adapt to the ever-changing technology landscape.

Evolution without growth, however, spells extinction for many businesses, and solution providers are no exception. Many are forced into evolving their businesses as a way to survive during turbulent times, losing sight of a more important goal—sustainable growth. This puts them at risk.

With some 105,000 solution providers currently in the United States, according to research firm AMI-Partners, growth can be a tricky proposition. Of course, growth is relative and limited by a number of factors that solution providers must master to expand their businesses successfully.

Figuring out how exactly to accomplish that is a big challenge. Even successful business owners will tell you there is no silver bullet, but rather a combination of factors, and perhaps even some intangibles, which lead a solution provider into a growth path.

“You should base and make your business model decisions on facts,” said David Dadian, CEO of Powersolution.com, but he adds: “The final test for me, no matter what the numbers say, is my gut. Once you make the decision, you must forge forward and stay focused, but always remembering nothing is written in stone.”

Powersolution.com was among a handful of IT channel standouts, such as Neudesic and Touchbase, who were asked by eWeek Strategic Provider to share their experiences in building strategies for sustainable growth—from the twists and turns of the road, to success, to the importance of acquiring and nurturing talent, to ongoing business assessments.

Widening gap
Powersolution.com, neudesic and Touchbase are part of a vast infrastructure of IT channel companies of various sizes—some small, some large and others that could be considered “just right.” Breaking down this population reveals that a large chasm exists between small solution providers and the big players, and that thegap is growing.

Out of the 100,000 or so solution providers, only about 50 have revenue exceeding $1 billion, and that includes industry giants such as IBM Global Services and HP Services. Fewer than 250 solution providers have revenue exceeding $100 million, and the revenue numbers drop off quickly after that.

If the market were illustrated as a pyramid, a small minority of roughly 500 solution providers would inhabit the top, while the majority would make up the pyramid’s base, leaving a vast no-man’s land in the middle. What’s more, most of the larger solution providers were not grown from small businesses, but rather as spinoffs (IBM Global Services, Lockheed Martin, Siemens Medical Solutions) from larger companies, or via mergers and acquisitions (Level 3 Communications, BearingPoint, Atos Origin).

Reaching the Top

Frank Ohlhorst

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