Selling IT Services Via Fellow IT Solution Providers Makes Sense
- The changing dynamics of customer demand is one. Businesses are seeking IT solutions that address critical requirements that will help them gain a competitive position and realize operational improvements. Customers are less inclined to deal with a large number of IT solution providers on a regular basis, driving providers to work together to deliver the required customer solutions.
- IT solution providers are seeking ways to increase penetration into new markets, particularly the SMB sector. Providers realize that a direct-sales strategy that targets unfamiliar or diverse new markets can be ineffective. Therefore, they want to leverage other IT solution companies that already have a presence in selected target markets for this growth.
- Many IT solution providers cannot supply an entire solution with their offerings alone and must combine with other services providers to deliver comprehensive systems.
- As buyers focus higher up the value chain for IT services, business processes and applications, IT solution providers that do not play in the upper level of the value chain must partner with those that do.
- The final catalyst is all about economics. During the recent period of extended economic stagnation, IT solution providers sought to expand their sales reach to identify all of the potential addressable market opportunities.
Partnered Services Reach Significant Levels
Recent Gartner research conducted with leading IT solution companies revealed a number of interesting findings and trends:
- Eighty percent of IT services companies are selling their services offerings either to, through or with other IT services companies. By far, the primary reason cited for these efforts is to increase revenue.
- Other IT services providers are expected to be a significant buying center for IT services. Nearly 26 percent of IT services are expected to be sold via other IT services providers this year, increasing to 29 percent next year. Gartner Dataquest predicts this buying segment will account for 40 percent of IT services sales by 2006.
- Operational and support services offerings continue to be the most frequently sold via other services providers, but professional services offerings have gained in focus and frequency since similar research was conducted in 2001.
- The buyers within other IT services companies tend to be business-unit managers and practice managers, not CIOs and other IT department managers.
- Dedicated sales and marketing resources and budgets continue to lag the percentage of services revenue generated via other IT services providers.
- Only slightly more than half of IT services providers are conducting co-marketing efforts. Among those that are, traditional ones, such as cooperative selling, events and success stories, are proving to be most effective. Technology-based co-marketing programs, such as Webcasts and e-marketing, have delivered unsatisfactory results.
What's the Next Step?
The market shift should motivate IT services and solution providers to consider the following actions:
- IT services companies should continue sell-through efforts and consider increases to sell-to and sell-with efforts to take advantage of the expected rebound in the demand for IT services.
- IT services companies should structure services offerings and unique value propositions to take maximum advantage of the growing buyer segment of other IT services companies.
- IT services companies that sell professional services should evaluate their offerings to determine if any can be packaged or positioned for easier and broader sale via other IT services companies.
- IT services providers must allocate sales and marketing resources for these initiatives, and adequate marketing budgets to ensure that these strategies and objectives can be achieved.
- Technology-based co-marketing programs should be used for lead-generation efforts in support of traditional co-marketing elements.
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