Many resellers will soon be out of business unless they make some tough choices about where to concentrate resources. That is the sobering conclusion reached by Gartner research vice-president, Rolf Jester, in light of a global study on IT sourcing.
Describing a polarisation in how IT services are delivered, Jester said many resellers looking to add services to their portfolio would need to look closely at their business to assess their strengths and weaknesses.
Only then could they make the decision to concentrate on services or withdraw completely and become a pure infrastructure reseller — maybe even selling to other resellers that take the service route.
Failure to do so would see them “sucked into a black hole”, he said.
“Resellers are looking to IT services to generate not only growth on their top line and margins but stability in their revenue streams,” Jester said. “But if the world moves towards business service provision, a lot of the infrastructure service providers will be selling to the business service providers. They will have to ask themselves whether they want to become service providers to other service providers. If so, their whole marketing focus and all the mechanisms they have got in place would have to change — right down to the people they are hiring.”
Any reactionary shift towards bolting on services to products and infrastructure and calling it business service provision is, according to Jester, excessively opportunistic.
He also suggested broaching the question internally could be difficult.
“Service providers need to ask themselves ‘What is it that we do well?’ From my experience very few companies come up with a satisfactory answer — and that’s worrying,” he said.
At the Gartner Sourcing Summit, held at Sydney’s Exhibition and Convention Centre this week, Jester described four possible scenarios for the IT department, one of which would dominant by 2013.
The scenarios ranged from one where existing IT investments slow the business down to Jester’s Holy Grail, where organisations bought external services for all non-core activities.