A whitepaper from NovaStor finds managed services will significantly alter the IT channel landscape.
A decreasing reliance by businesses on client-server based
infrastructures to deliver IT services is drastically changing the
business landscape for many traditional IT channel players, including
classic IT dealers and Value Added Resellers, according to a
whitepaper from data protection software specialist NovaStor. The
paper, "Managed Services: How to Adapt to the Channel Model of the
Future," provides an assessment of the challenges facing the IT channel
and describes how IT resellers can transform the growing demand for
managed services from a threat into an opportunity for future business
Ongoing pricing battles in the software and hardware segments have
caused many IT resellers to resort to price reductions to win
customers, thereby throwing themselves into competition with large,
anonymous online software outlets, according to the report's author
Stefan Utzinger, who is the CEO of the NovaStor Software Group.
Utzinger said these large, anonymous online stores have an advantage
over smaller resellers when it comes to economies of scale, which makes
it impossible for the smaller reseller to compete on price alone.
The report concluded what they lack, however, is the ability to design
a solution or install and administer the products they sell--services
which businesses are increasingly willing to invest in as it allows
them to focus on the business benefits provided by their IT solutions
rather than the product alone. "Resellers who embrace the managed
services model and stress their consulting competency by offering
services instead of products alone can exit the pricing battle, add
more value to their offerings, and dramatically strengthen customer
relationships and loyalty," Utzinger wrote.
Utzinger's research determined cloud based solutions are of particular
interest to small to medium-size businesses SMBs and many specialist
dealers, VARs and system integrators are therefore worried that
customers may start purchasing their products directly from
manufacturers or global providers. As the report points out, according
to recent studies this fear is unjustified.
Only approximately 16 percent of all SMBs questioned by Utzinger for
the study said they were thinking about purchasing their products or
services directly via the manufacturers. "A large majority wants to
maintain their business relationships with local providers, and a
whopping 50 percent even want to purchase via local VARs and remain
loyal to their previous suppliers," he wrote.
The paper concluded the ability to access the managed services market
would be decisive factor with regard to the future of dealers, VARs and
system houses and integrators. While Utzinger noted significant market
potential exists, the economic and technical challenges necessitate
realistic planning when developing managed service solutions.
"Critical success factors include realistic financial planning as well
as the selection of an appropriate software provider for the cloud
computing and cloud backup infrastructures," he wrote. "Furthermore, it
must be ensured that the service in question genuinely fulfills client
requirements. Another key factor for ensuring success when accessing
the managed services market is a realistic alignment of provider and
customer expectations with the services in question."
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.