Surviving as an IT Service Provider in a Time of Digital Disruption

by:
on December 9, 2016

Since the arrival of the “new economy” in the 1990s, digital businesses and startup culture have popularized terms such as “pivot” and “disruption.” Today, those terms are so commonplace that they’ve become punchlines in tech industry parodies.

Whether or not the terms are overused, digital technologies have definitely enabled some companies to disrupt the heck out of their respective industries. On-demand television providers such as Netflix and Hulu disrupted the decades-old delivery and pricing models of the big name cable TV providers.

Meanwhile, ride-sharing companies such as Uber and Lyft are leaving many taxi companies broken down on the side of the road.

Q2 YoY growth/retraction of subscriptions to traditional cable TV (MVPD) compared to on-demand TV services. Source: Business Insider

 

IT services industry upstarts are driving many of these changes. New technologies are often brought to market first as IT services, and those services are then often used to create the tools that lead to further disruption. Twilio’s communications platform powered the ride-sharing revolution, and Netflix might still be relying on the postal service, if not for Amazon Web Services.

But if you’re not disrupting, then you’re being disrupted. This is true for all companies, including providers of IT services.

In this article, we’ll look at two common results of widespread disruption in the IT industry. We’ll give advice to help service providers pivot—or better adapt—to the disruption around them and to customers’ changing expectations and demands.

Cloud-Based Technologies Create New Opportunities

If your company provides cloud-based technologies—SaaS, PaaS, IaaS, BPaaS etc—your future looks quite bright, compared to businesses providing on-premise solutions. To understand why, let’s look at how these types of IT products are qualitatively different. And to do that, we’ll begin with a definition.

All of these businesses selling cloud-based solutions can be grouped together under the “public cloud services” or “public cloud computing” umbrella, and are defined by Gartner (content available to Gartner clients) as:

“A style of computing where scalable and elastic IT-enabled capabilities are provided as a service to external customers using Internet technologies—i.e., public cloud computing uses cloud computing technologies to support customers that are external to the provider’s organization.”

Salesforce is a great example of a company that took advantage of new cloud services technology, and popularized it. As a result, the company and its shareholders have been well rewarded.

The Upside of Being the Disruptor

Salesforce’s stock price shows why it’s better to be a disruptor.
Source: Google Finance

 

“Just do what Salesforce did!” is certainly not our advice…our heads aren’t totally in the clouds. But if your business hasn’t considered offering new services that take advantage of the flexibility and scalability of public cloud platforms, then you may be the one getting disrupted.

After all, Salesforce didn’t just create a new product, they created a new market. There are now countless small companies creating products and services related to Salesforce.

As Stephen Cummins wrote in “Demystifying the Numbers behind Salesforce.com’s AppExchange”: “While Salesforce is by far the largest SaaS (Software as a Service) company on the planet, it is a fraction [of] it’s own ecosystem.”

New Buyer Behaviors, Preferences and Expectations for IT Service Providers

B2C companies stay competitive by aligning their processes closely with customer behaviors, preferences and expectations. As customers change, so do the ways companies offer their service.

But things have always been different in the B2B world. Longer buying cycles, more complex partner relationships and the intricacies of corporate decision-making processes often overshadow softer factors such as the preferences and expectations of individual buyers.

Yet this is changing, and B2B companies that bank on continuing the status quo are more likely to join the ranks of the disrupted than become a disruptor themselves.

B2B customers are increasingly expecting to be treated like B2C customers.

As new IT services and tools proliferate, businesses have more sellers to choose from. They’re able to make decisions based on softer factors; factors not directly related to the core technology offering.

Take a look, for example, at the huge selection of live chat vendors. Since the core live chat functionality is largely the same, buyers make purchase decisions based on factors such as the service they receive, the flexibility of the vendor’s contract and options for integration.

The Gartner report “Digital Disruption in the IT Services Industry” (available to Gartner clients) presents the following examples of how buyers of IT services today differ from those of years past:

  • Clients no longer tolerate big IT projects that last for years before they see any benefits. They look for more value, faster time-to-value and more innovation from their service providers.
  • In some cases, clients are willing to look for alternatives to their usual partners to help them with more agile and innovative projects.
  • Gartner’s 2015 CIO survey found that 70 percent of CIOs expect to change their technology and sourcing relationships in the coming years. Forty-six percent of CIOs recognize that they need to work with new categories of partners.

As an IT service provider, all of that should be good news. Whether you’re competing for the largest enterprise clients or building up your supply of satisfied small and midsize business customers, disruption in the IT services industry results in more market fluidity, meaning more opportunities to win over more new customers.

Surviving as an IT Service Provider in a World of Disruption

Just like the cable TV and taxi industries are adapting to a world of digital disruption, so too are IT services companies. They not only need to stay up to date with changing technologies, they also need to meet changing client expectations.

The report mentioned above offers the following suggestions:

  • Focus on emerging technologies and their impact on client expectations, which are constantly changing. Develop a mindset, culture and processes that embrace adaptability.
  • Develop bimodal work styles to optimize services that can provide agility and quick wins for clients, while driving innovation across your business. (You can read more about this topic here.)
  • Hire the best digital-savvy talent with a focus on the future of the business, including embracing online talent and crowdsourcing marketplaces.

Remember too that buyer preferences and expectations are changing, and that many B2B buyers expect the same high level of service they’re used to from the B2C world.

Next Steps

For a quick refresher on current customer expectations, and the tools you can use to meet them, you can start by reading “How a Customer Self-Service Portal Improves Customer Experience” and “Top Self-Service Channel Implementations.”

If you’d like assistance narrowing down your selection of customer-facing support software, call us at (844) 852-3639, and we’ll help you create a shortlist of products tailored to your needs in a free 15-minute phone consultation.

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