IT providers should look to premium brands for inspiration in their pursuit of profit by finding ways to add niche, tailored services to otherwise commoditised product offerings, according to Computer Information Agency founder, Robert Crane.
Crane, who spoke at Ingram Micro’s Cloud Connection conference in Sydney on 25 October, said IT providers face a rapidly changing client landscape as technology evolves and millennials begin to occupy an increasing number of decision-making roles in Australian organisations.
“Last year, the millennials became the largest demographic in the workforce, leading to a complete change in the way they expect work to happen,” Crane said.
“They do not appreciate email. Their main method of communication is social media. If you don’t have a business that caters to millennials, they will probably want to work somewhere else.
“The same goes for your customers. More millennials are becoming key decision makers in a business. The millennial will say, why not choose cloud computing over that additional server?” he said.
At the same time, the technology landscape is changing at an ever-increasing pace, with mobile taking over conventional desktop systems, and cloud-based services replacing on-premise IT kit.
“In 2015 mobile browsing became the most common way to access the internet,” Crane said. “The market is no longer restricted to the areas you can physically reach.”
These changes, combined with the increasing commoditisation of IT, have resulted in a landscape where IT providers need to look for ways to add value if they are to increase their profit margin.
This advice will come as no surprise to most, if not all, IT partners in Australia, who face a very different playing field today than they may have faced a decade ago. Yet, Crane offers some specific strategies for technology resellers to consider when negotiating the current landscape.
On the mobility front, Crane suggests that partners can tap into the emerging dependence on mobile devices for business purposes by introducing solutions around the extended network endpoints in which mobility results.
“How many of you have a mobile policy, or a mobile product to manage a customers’ mobile fleet?” Crane said.
“Can you control the security around those devices? You do managed services for desktops that sit forlorn while users are out there, untethered, on their mobile devices. You need to move in this direction to provide services," he said.
The move to mobility, and the emerging trend of technology users going out and buying their own mobile devices to use at work highlights one of the greatest challenges for resellers today: the commoditisation of technology.
While commoditisation presents profit margin pressures for smaller resellers that don’t have the potential for scale and volume that larger players do, according to Crane, it also presents new opportunities for IT providers to differentiate themselves from the competition.
“The pure play reseller that just adds margin to product and sells it to a customer will not survive,” Crane said. “Dick Smith is one commodity player that’s failed; Masters is another. The commodity market really only speaks to the largest providers.”
To combat commoditisation, resellers should look at providing additional services around commodity products, according to Crane.
This could involve tailored software development to solve specific problems, creating services to automate time consuming and repeatable processes, and building end-to-end services for clients.
“Think of all the silly little processes you do, day-in day-out, and those done by your customer repetitively, they should be automated, and you can do it for them,” he said. “Equally, if you’ve got a great idea, you can do full-blown software development, or you can outsource it. It’s all about software.
Resellers should also identify areas where they do their best work and make that their niche, according to Crane. By becoming niche players, IT providers can stand out from the crowd.
“You want to become the outstanding provider for that niche. Focus on one thing and become really good at it. Resale of products is simply a bonus. Pick the right products to service customers, and pick products you can add unique value to,” he said.
Don’t be afraid to go for the premium options, he suggests, citing prestige car manufacturers and how they boost their profit margin by offering customers unique or additional features.
“Look to premium brands for inspiration,” he said. “The premium products generated can charge premium amounts. Think of a Rolls Royce versus a Commodore. You can create premium, tailored, end-to-end products.”
Most importantly, IT providers need to be able to talk to small and medium-sized businesses in terms of return-on-investment and how new technology can improve their profits.
“You have to show your customers how they can generate more profit using the products and services you offer,” Crane said.
“When you sell something like Office 365, always sell the premium products. As soon as you get push-back on price, you have failed. At any point you hear a customer say it’s too expensive, you have failed to show value.
“You need to add value to the customer in the customer’s own mind,” he said. “Revenue means nothing, profit is what is important.”