Discover more from The Business Technologist's Journal
Prepare for the Future: Your Own Intellectual Property (IP)
When planning for the future, you may want to consider a change of business model that can put the product of your skills in front of more customers at a time.
Many may not know that companies like Nintex began their existence as integration service providers, building and servicing networks. As the popularity of Microsoft Sharepoint grew, the customizations they had built for clients along the way were sought by more and more other clients. Soon, they realized they could be far more successful packaging those customizations as products and selling them to customers themselves and through other integrators.
A dozen years ago executives at Microsoft and other software developers began advising their channel partners to start thinking about the intellectual property they were developing and considering packaging and marketing them as products. A different business model, yes, but potentially a huge boost to revenue without an offsetting increase in costs.
The “Reseller's” Greatest Challenge
Since the earliest days of "the Cloud" channel partners have been as truly vulnerable to significant revenue losses as they are dependent upon selling and servicing server and storage infrastructure. As customers transitioned to the cloud, they ceased purchasing system level hardware and software to use on-premises. Those sales didn’t decline. They evaporated.
Network integrators still enjoy a vibrant business providing and managing the fundamental plumbing of networks, and it is likely their business will grow as more and more customers take advantage of the Internet of Things, big data, communication services, artificial intelligence and other productive technology initiatives that can be delivered from the cloud.
Infrastructure-as-a-Service (IaaS) replaces servers with services. There will still be servers and storage sold, but they will predominantly be housed in large cloud providers’ data centers. Fundamentals like maintenance, data backup, even business continuity and disaster recovery, will all be features of the cloud service rather than integrator’s initiative engagements.
The Evolution of Solution
More than a decade ago the then product manager for Microsoft Dynamics, Bill Patterson, observed that customers have long been demanding more from Solution Providers “solutions,” creating a coming "evolution of solution." The fact was that when most "Solution Providers" used the word "solution" what they really meant was simply "infrastructure." Their "solution" was to throw more infrastructure at a problem. A dozen years later his predictions have come true, and infrastructure additions are no longer enough. Customers now demand the "business-relevant" solutions Patterson spoke of all those years ago. With an all-but-non-existent opportunity to sell more infrastructure hardware and software, that day is here.
The IP Imperative
One industry executive recently explained, “I tell channel partners that the most important thing is to figure out what the value add is that you and your company bring to customers and then build all the components of your company to align to that.” He then added, “I don’t believe that channel partners can achieve the same levels of success, or that what they did in the past is going to drive the same return, however they measure success in their P&L, in the future.”
This is a critical point that all channel partners must pay close attention to. Many industry vendors are telling you that you won’t achieve success simply selling software. Innovate new value propositions for your customers, because the return from the old ones is rapidly disappearing. Your real profit opportunity going forward will be more about what YOU and YOUR COMPANY do, not just what you resell for other vendors.
Where Will My IP Come From?
The only partners who are not asking this question right now are those who already know the answer. This includes application developers, content developers, and others who cut code for a living. Others may include those who adapt sophisticated platforms very specifically to large customer environments or perform highly complex data migrations and related services.
Yes, Independent Software Developers (ISV) have a clear advantage here. Their IP is, by nature, the foundation of their business. But we've seen many Business Intelligence (BI) partners morph their services into specific products that they could then market to a broader audience.
Others are adopting the role of “Citizen Developer,” using point-and-click-based platforms to build applications graphically, with little or no knowledge of coding. They are creating consultative services in which they learn about their customers’ processes and use a low-code/no-code platform to create the software needed to automate them. This will continue to grow and develop, so the time to get started is now.
The all-too-obvious underlying answer for everyone else is that your IP will ultimately come from you. You need to gather your troops now, start the conversation rolling now, begin the process of determining what high-value IP your company will be able to produce. What "business-relevant" solutions will you create to replace the defunct infrastructure opportunity of yesterday?