The Right Play: Strategic Service Providers
The key metrics necessary to succeed in the Strategic Service Provider era are diametrically opposed to the metrics in the solution provider era.
The burgeoning Strategic Service Provider era requires completely new skill sets in every partner organization, with high-level business consulting and IT services delivery automation trumping pure technology knowledge. The new automated IT services delivery model in the Strategic Service Provider era is a far cry from the services utilization rate metric with a slew of high-priced technical superstars in the field billing at hourly rates. In this new era, automation based on new software-defined standards for hybrid computing is the big differentiator. It's about scalable, predictable, recurring revenue services.
A good role model for making the Strategic Service Provider shift is TekLinks, the Birmingham, Ala.-based IT services superstar.
David Powell, vice president of managed and cloud services marketing at TekLinks, said the transition to the new model is bigger than any of the other shifts in the history of the IT channel. "You are transforming the business model, the sales model and the operational model, namely how to make IT more standardized and automated," he said.
"Your typical MSP can't break out because they are dependent upon nonscalable assets, which are their people. You need more automation. You have to convert from people to process."
Powell said solution providers that want to cross the chasm into the Strategic Service Provider era would be wise to study the success of New England Patriots coach Bill Belichick. Yes, the Patriots have Tom Brady, and Strategic Service Providers will need some superstars as well—but they will need far fewer than they once did.
"You need Tom Brady, but then you can have Danny Woodhead, Julian Edelman and a number of any other receivers that no one else wanted and the [Patriots were] successful," said Powell. "Bill Belichick's system is successful. There has been a parade of wide receivers and running backs. It doesn't matter because he keeps plugging them into the system, and the system is what generates the results."
The fact is, most MSPs are still far too focused on individuals billing out at hourly rates rather than the automated IT internal delivery system, said Powell. The Carolina Panthers, he said, are a team without a system - subject to a win-or-lose proposition based on the play of a single star, quarterback Cam Newton. "The Patriots' success is not dependent upon one individual player; it is dependent on the system," he said.
One of the keys to successful automation is software applications knowledge and monitoring. That's why TekLinks has partnered with LogicMonitor, a maker of what it calls SaaS-based performance monitoring for a modern IT infrastructure. "Customers used to care about infrastructure and piece parts to make it work," said Powell. "Now you have to focus on the applications use case, not the infrastructure."
Bottom line: The time has come for solution providers to put more focus on process rather than people billed out at hourly rates. The new metric is revenue per total number of employees. Those that make that shift will ride a recurring revenue IT wave the likes of which has never been seen before. Those that don't are doomed.
BACKTALK: What are your metrics for success in the cloud era? Contact Steven Burke at [email protected].