It was extremely gratifying to hear both GartnerGroup and IDC predict at their respective trends briefings this month that within the next three years the IT industry is set to enter an era where service providers become the primary drivers in IT decision making.
Both analysts identified the same pattern. A few years ago a user would base its purchasing decisions on what best complemented its database. In today's environment, decisions revolve around the user's ERP system. In the next era, users will outsource buying responsibilities to a service provider. This makes perfect sense. Year after year, when analyst companies survey the top concerns of CIOs, aligning IT with business ranks at the very top. Users don't want to buy technology. They want to buy a business solution, one that saves them money, or better still, makes them money. That's why they turn to service providers.
Vendors sell technology, service providers sell solutions. The vendors are starting to recognise this shift. While the low end of the channel is facing rough times with the threat of vendors going direct via the Internet, the top end is flourishing.
Vendors like Oracle, who have been predominantly direct, are restructuring to embrace the channel. Or so they say anyway.
However, while they want to work with the channel to benefit from its services capability, they are also desperately trying to keep ownership of the customer. They might do this by acting as a facilitator, bringing together various partners to piece together a total solution or they may establish their own professional services organisation that front-ends the solution sell.
The vendors' justification for this is that the user wants one person to point a finger at when something goes wrong. I think they're right in that respect, however, whether the user wants to point the finger at the vendor is another matter. Vendors face a tough battle from large professional services companies, like EDS and CSC, and even big integrators like Com Tech, who all have strong brands and independent suppliers. Smaller resellers and integrators are also going to find it tough to compete if they try and tackle these guys and vendors head on.
I've said in the past that a reseller's first priority must be to "own" the customer. Maybe that's the wrong approach in this upcoming environment. No matter how big these services companies get they are never going to have a complete range of skills and services and so must partner with other channel players.
We're already seeing this model in the Federal Government. EDS, for example, took a group of smaller partners into its recent bid at the Australian Tax Office. To flourish in such an environment, resellers must be absolute specialists and be technically superior in their chosen niche. In this environment, the generalists die.
ARN breaks the number of stories we do every week because we have the best journalists in the business. Mark Jones, who starts as news editor with ARN this week, is going to fit right in. Mark was previously with ComputerWorld and last year won The Bell Awards' best newcomer to journalism award.