The Quiet Revolution in IT Services and How It Will Affect IT Service Providers

There is a quiet revolution going in terms of how IT services are delivered
that is going to have a substantial impact on the revenue streams of solution
providers.

The first of three new trends in the IT services space is a wave of
increased automation that has the potential to eliminate a lot of the remaining
traditional break/fix IT services business that is out there. There’s not much
profit in this type of IT services business anyway. But it did create an
opportunity to engage clients in a way that might possibly have led them to
upgrade an existing product or buy another one.

However, much of that opportunity may disappear altogether as remote service
tools take hold. For example, EMC, Quantum
and NetApp are all working with a company called Axeda
that provides a platform for performing remote diagnostics and delivering
patches and updates. This doesn’t mean that IT products will stop breaking, but
it does mean that the number that do will be sharply reduced because
maintenance services around any given product are going to be a lot more
proactive.

Axeda today provides these services mostly through OEM partners, but the
company is looking to work with an IT services company that may want to adapt
its technology for delivering remote management services to any product that
has a relatively open API capable of
supporting a Web services framework.

Of course, just as this segment is changing, so too is the rest of the IT
services business. In particular, the services themselves are becoming less
time- and labor-oriented. Instead, they are being sold at a fixed price. In
effect, the services themselves are being turned into products. Unfortunately,
the problem with products is that they are all subject to the laws of
diminishing profit margin as the product increasingly becomes a commodity.

One company that is trying to accelerate this trend is called Digital Fuel Technologies, which
provides software that helps IT services companies organize and manage their
product lines. The company most recently came out with a Service Catalog
offering that essentially allows an IT services company to publish and manage a
list of specific IT services that are available to its customers. The basic
idea here is that there is no need to reinvent the wheel when everybody is
basically providing a variation of the same types of IT services.

But while Axeda and Digital Fuel represent advancements in terms of
automating IT services, the most profound change to the IT services model may
be a new open
model being put forward by Pepperweed
Consulting.

Pepperweed has decided to open up its process model for delivering IT
services to other companies. The move is part of an effort to create a larger
ecosystem around a common IT services model that makes it easier for solution
providers to partner with one another. This model recognizes that not everybody
can be a master of every single IT specialty. But what most prevents solution
providers from working together is the inability to integrate their different
approaches to delivering IT services. The Pepperweed model is a major step in
the right direction in terms of facilitating the development of
partner-to-partner networks that ultimately lead to more business for everybody
in the network.

Furthermore, if you don’t have a structured approach to delivering IT
services, the Pepperweed model gives you a proven framework that you can
leverage without having to make that investment.

There’s a lot profound change taking place in the
world of IT services that will have substantial impact on the profitability of
solutions providers. The more solution providers get in front of these trends
the better off they will ultimately be because, when it comes to IT services,
being proactive always beats being reactive.