Hybrid Business Model Is Route to Success

The IT solution provider companies best positioned for future success are the ones that take a hybrid approach to customers, combining traditional product sales and support with new offerings in managed services, cloud computing and customized application development.

That’s the collective view of four IT industry analysts who spoke Wednesday at CompTIA Breakaway 2011.

“We believe the hybrid model will be here for the next 10 to 15 years, a combination of on-premise equipment with elements of cloud [computing] and managed services,” said Rauline Ochs, senior vice president and general manager, IPED/MarketBridge.

“Understanding your customers dictates what percentage your business mix should be,” Ochs said. “The most successful partners we see offer all three options and can say, ‘I'm going to solve my customer's business problem.’”

Ochs was joined on the analyst panel by Christine Dover, research manager, IDC Software Channels Research; Beth Vanni, vice president, Amazon Consulting; and Lawrence M. Walsh, president and CEO, The 2112 Group.

One element that’s critical to success – especially in a tough economy – is having a significant portion of recurring revenue generated by services.

Ochs said her firm’s research shows that channel companies with a high volume of services revenue faired best during the recession. “Any partners who are highly invested in product implementations that haven’t transitioned to other skills, that’s a very tough situation to be in,” she said.

Transforming you technology business isn’t something that can happen overnight, Amazon Consulting’s Vanni told the audience. “Take it slow. Start a pilot, one industry, one geo, one solution at a time.”

Walsh urged solution providers to invest in hiring more sales staff to stretch their capacity to reach customers; in new products and solutions; and in training. Asked if tight credit markets and financing options are preventing companies from doing so, Walsh said no.

“There's plenty of credit, there's plenty of money sitting on the sidelines,” he said, adding that companies need to be less risk-averse and to aggressively invest in their business.

The panel also debated whether cloud computing is a game-changing innovation or a new name for an old concept.

“We deal in end-points and we deal in applications,” Walsh contended. “The cloud is a way of delivering a solution; it's not the solution.”

Walsh also noted that in all the discussions about the move to the cloud, there’s a critical “missing piece”. Large numbers of solution providers have no engagement with telecom carriers or co-location service providers who are essential to the ability to deliver services via a cloud.

IPED’s Ochs concurs with that assessment, and said it’s another avenue of opportunity for IT channel companies.

“They want you for your mobility skills. They want you for your unified communications skills,” Ochs said. “They want to make bandwidth ‘sticky’ [with customers] and you’re the ones that can make that happen.”

On the topic of vendor-partner relationships, many technology vendors are “really starting to take their partner numbers down,” according to IDC’s Dover. “The vendors are looking for partners who are making money and are engaged versus those who are just hanging around doing one or two deals a year.”