5 KEY IDEAS FOR FUTURE PROOFING THE SOLUTION PROVIDER

The days of pushing boxes for Solution Providers are long gone and the Solution Providers who become trusted advisors for migrating, expanding, and assisting companies’ with their technology needs are the keys to the kingdom. It’s a stated imperative among some of the most successful solution providers and industry experts that they must shift from transactions and products to trusted advisors assisting companies’ with their business goals.  And to complicate shift further, line of business decision makers, according to new research by CompTIA, now make about 50% of the technology decisions in enterprises and mid-size companies today. Line of business decision makers don’t care much about the technology for technology sake – they care about their business outcomes and a 3-6 month payback on their investments. For example, with public cloud a marketing or sales leader who wants a new app for their team can swipe a credit card and purchase the App they need and build the required solution; instead of approaching an internal IT stakeholder & IT developer team, and waiting months or years for a solution fix to a challenge.

Solution Provider as a label incidentally seems to be one from the 90s; the Informat Think Tank members and Informa as a company has moved to the Digital Service Provider as a new vernacular in the industry to reflect the nature of what the Solution Provider of the future’s business must become.  True Digital Service Providers are entities that help drive customer success through adoption and usage of software platforms, and who solve complex business problems for their clients.

  1. Diversifying business models is a must.  We use the transaction versus project services example.  It’s about the partners’ overall value to customers, deeper industry and vertical capabilities, and their ability to look at what’s happening in the industry and capitalize on those trends with new offerings.  For example, a partner might find that a 43% average margin on Project Services is a great way to improve his/her balance sheet and deepen the trusted advisor relationship the partner has with the customer. The smart partners of the future are thinking about how to drive their profits leveraging forward thinking capabilities and services.  
  2. Recurring revenue is fast becoming at least 30% of the solution providers business.  We don’t mean break / fix maintenance recurring revenue; we mean public cloud and professional services ‘sticky’ recurring revenue because this revenue is based on customer consumption and is highly valued by the customer.  The stickiness of this type of revenue is powerful for the solution provider; it’s the gift that keeps on giving. In addition to that, if a solution provider has ambition to sell his/her company, then a dollar of recurring revenue is anywhere from 2-10x more valuable than a dollar from a capital expenditure purchase.  
  3. Packaging intellectual property is a ticket to innovation.  Progressive partners, from large companies like Accenture to small Digital Service Providers in a city now package up intellectual property. They build customized applications, proven and repeatable valued business processes for clients.  LightRiver, a networking transport system integrator, recently completed an acquisition of a software development company so it could develop customized intellectual property for its’ customers. Packaged intellectual property like customized applications, custom processes, and custom services, that have been packaged into an offering give a company higher forward valuations than an organization that has no intellectual property.
  4. True business advisory services to IT have become a differentiator. The partner who has gone into their clients’ IT organizations and helped them become more valuable the rest of their organization, to their line of business decision makers, and to the executives is a true value add.  (through education, through advisory, coaching, mentoring) Become the Digital Service Provider who educates, advises, coaches, and mentors the IT organization of your client for long term business success.
  5. Digital Service Providers who have shifted the profile and skills of the technical employees to have high collaboration and softskills are ahead of the game.  –The employees of the solution provider must give a career path for technical teams.  It used to be that one vendor’s certification carried its’ weight in gold, but now the real value is in a ‘hybrid cloud certifications’ that combines multiple vendor solutions together and in the technical teams having deep collaborative selling and softskills so they too become trusted advisors to clients and partners.  These individuals need to be counted on to help drive and deepen the overall value the Digital Service Provider brings its’ clients. They must have strong collaborative and consultative sales skills in order to be successful with their clients. Visit: www.achievemasterclass.com to learn more about programs we offer.

 

The industry is in a continued state of rapid change.  Solution Providers of the Future, Digital Service Providers, are more important than ever to assist companies and organizations with their technology challenges and decisions.

 

Theresa Caragol, CEO Achieve Unite



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