3 ways to successfully maintain your leadership in IT industry
In my last blog I discussed how the delivery of a quality service requires a set of skills that aren't easy to replicate and take time to build. However, I'm certain that there will a number of these organisations that will succeed in maintaining their leadership positions in the new world.
Here are some of the factors that, personally, I think will prove critical in achieving that success.
Continue to Innovate in Products -- For Real
Over the years, these companies' success has been driven by the quality of the products that they developed and sold. Innovation has always been critical. This is nothing new.
At the same time, however, in the past, these incumbents have been able to rely on another key asset in addition to their ability to innovate -- their brand.
Now, brand still matters and it remains an important asset for these companies. In the new world, though, the power of the brand is being eroded. In many cases, customers don't know and don't care about the brand of the technology used in the clouds that power their applications. They are choosing a quality cloud provider and they trust that provider to choose the right technology. Cloud Service providers are engineering heavy organisations with a lot of experience. They are less swayed by brand than by the enabling nature of the technologies that they select.
At the same time, cloud providers actually design their own infrastructure. Technology Manufacturers' customers have become a new competitor. These companies have found that they can achieve far greater performance for lower cost by actually engineering their own hardware. In fact, there are even a number of consortia of cloud providers such as "Open Compute" that share their engineering designs.
So with new competition and a weakening importance of brand, truly innovative and differentiated products has become more important than ever.
Change Your Channel to Reflect the New Reality
In a world where customers don't care about the hardware behind the service and in a world where customers are looking to service providers to meet their IT requirements, the historic resale channel is quickly becoming obsolete.
Companies whose core strengths remain the ability to engage with customers to sell equipment from a trusted brand and to learn the specific capabilities of that equipment often lack the abilities required to convince customers to adopt one "as-a-service" offering over an another.
They cannot help the incumbents attain the much sought after leadership position in the IT industry of the future.
Instead, these players need to adjust their channel. They need to work with service providers who can and want to incorporate their technology into their service offering. That's why real differentiated products are so important. Incumbent products have to move from being "stand-alone" to something that is incorporated into someone else's service.
Many manufacturers already have similar programs for OEMs (Original Equipment Manufacturers). Under these programs, a company buys products from a vendor and incorporates those products into their own manufactured products. In this case, as well, brand plays a far less important role as customers pick the solution based on the OEMs brand and reputation.
A similar program is now required for Service Providers. Something like an OSP -- Original Service Provider -- program is needed and companies need to build a new channel of capable service providers that can leverage their technology.
Compensate Sales People on Selling the Service and not only the Product
In a cloud world, a new sale does not necessarily mean a new order for hardware or software. Cloud Providers build out their infrastructure on their chosen technologies and then only purchase new hardware and software when their existing infrastructure hits certain capacity constraints.
Over time, obviously, more sales will mean more hardware and software purchases. However, the relationship is neither direct nor immediate.
As long as incumbent organisations limit their sales reps compensation to the actual sale of hardware or software, they will often find themselves at odds with the service providers that use their technologies -- their most important channel for the future.
To the extent that service providers have platforms that take advantage of the manufacturer's technology, driving sales on that platform will help the manufacturer in the long term. It doesn't deliver the immediate gratification of a new order but it will provide a basis for long-term sustained growth in the new world.
The IT industry is changing and the historic leaders need to adapt. Not all of the current "household names" will continue to thrive as the industry rockets forward. Who will succeed and who will fail? Now, that is the question.