No Purchase Necessary!

That's why solution providers of all shapes and sizes are scrambling to revamp their value propositions. For those that can't evolve from simply being a dealer of new technology to something more useful to their clients, the future grows dimmer by the quarter.

It's no secret that in the late 1990s and into 2000, things were good--maybe a little too good--for IT solution providers. End users focused primarily on the early stages of technology adoption, spending wads of cash on new, unproven technologies that offered only the faintest promise of ROI. After all, there was good reason to do so back then: expansion was regarded as the be-all and end-all business strategy, and money was flowing from all angles. Every e-business software package, CRM solution or e-marketplace offering was awarded "must-have" status. The problem was that most, if not all, of those investments did little in the way of increasing companies' actual performance. But that was okay back then, because the money was still coming in--at least until the economy collapsed under its own weight and took all notions of gleeful expansion with it.

Today, things are a little different for the average solution provider. For one, the optimistic exuberance of line of business managers and CIOs has been replaced by the harsh skepticism of CFOs, who refuse to approve expenditures that aren't directly tied to a company's bottom line. What's worse, it looks like the red tape associated with getting projects moving has increased exponentially. (One New York-based VARBusiness 500 solution provider I spoke to recently said that in the last six months alone he has seen the number of approvals on standard IT contracts increase from one or two John Hancocks to more than half a dozen. So much for the days of fast turnover.)

And how can we ignore the behemoths and their ugly little secrets? Though they won't admit it publicly, the industry's largest solution providers, desperate to hold onto clients and keep their armies of consultants from sitting idly on the bench, have been cutting prices drastically on new technology solutions in recent months, putting immense pressure on smaller players to follow suit.

"They are literally giving away business just so they don't lose clients," one frustrated executive from a mid-tier solution provider told me recently. "It's having a huge impact on us because we can't compete on that level."

Then there's stepped-up competition from vendors' services arms, which seem to be growing by the hour.

So what's a solution provider to do, stop selling technology? I'm only half kidding. It's no coincidence that a number of VARs and integrators are changing their go-to-market strategies to fit these new realities. In doing so, many are redirecting their pitches away from the notion of selling anything new. Instead they are positioning themselves as trusted partners whose experience can save clients money on the technology they already own. (Perhaps the new sales message for today's solution providers to prospective customers should be: "No Purchase Necessary.")

Take Keane, for example. With IT budgets expected to remain slow or even remain flat, the VARBusiness 500 veteran predicts that companies will look to reduce operational costs as a way to fund new development. One obvious way is through IT outsourcing (Fortunately for Keane, it's already got that area covered). Another way, the company predicts, will be through consolidation of legacy apps.

That's why Keane execs are busy putting the final touches on a new offering they hope to unveil later this year called "Application Rationalization." The basic idea is that if you look deep enough inside a large corporation's operations, you'll find a bevy of end-of-life applications, redundant functionality and mongrel technologies that cost way more than they're actually worth. But since these perpetrators of waste often involve low-key, outdated applications, many of them have dropped off internal IT radar screens.

"CIOs kind of know but don't talk about it," says Larry Vale, spokesman for the Boston-based solution provider, who gives the example of a large insurance company that because of recent M&A activity is running more than a dozen individual claims processing systems

"Every time you've got a regulatory change, you've got to pay to ripple that change through 15 systems," Vale says. "One of the big problems is that you don't know what those things are actually costing you."

That's where Keane wants to step in. The company would start with a study by its IT consulting division looking at a client's applications as a portfolio of assets, figuring out how much each asset costs and comparing that cost to the return it delivers. Then it would work up a plan to better manage those IT resources, either by eliminating redundant applications or decommissioning end-of-life systems.

Aside from creating a new line of business, the company hopes to create goodwill among clients by showing them how to reduce costs, ultimately giving Keane a jump on the bigger contracts as money starts flowing again.

Then there's Sapient, another VARBusiness 500 solution provider that has been making moves of late to position itself less as a dealer of new technology and more as an expert in leveraging existing investments. Just like Keane, the company is pushing the notion that it can help companies evaluate their existing IT infrastructures and figure out the best way to use them to meet their future goals. Sapient, which set up new advanced research and advanced technology teams to support the effort, has coined its new offering "Enterprise Architecture Planning."

"It's not just a question of rationalizing technology in the abstract or in a vacuum," says Maria Bezaitis, vice president of Sapient's advanced research team. "When you're dealing at the enterprise level and thinking about architecture planning, you're also thinking about business process. It's inherently a problem that relates to people and how they do their work."

The interesting thing, according to executives at both companies, is that a lot of the demand for this type of solution is coming from companies that bought legacy technology from other sources and want help putting it in order. In other words, for solution providers savvy enough to capitalize on it, this can provide a great way to find new business.