CompTIA: Road to Partner Business Transformation Riddled with Operational Potholes
As channel-partner firms change their business models, they’re experiencing more complexity in operations. When that complexity impacts the bottom line, it’s time to rethink internal business processes in order to stop hemorrhaging profit margins.
That guidance is included in CompTIA’s new “IT Industry Outlook 2018” report. The report predicts strong IT sector growth (5 percent) for 2018. While that might translate to more opportunity for the channel, revenue alone doesn’t spell long-term business success if it isn’t paired with efficient internal processes.
When it comes to fine-tuning operations, the report points to areas from sales, marketing and finance, to human resources and supply-chain logistics. It also suggests that partners examine the state of operational efficiency before transitioning to a new business model.
In a December survey by CompTIA, conducted for the report, the majority of respondents said their businesses are undergoing a moderate or high degree of business transformation; for example, transitioning to a recurring-revenue model such as managed services, specializing in a vertical industry or other niche, or becoming a business consultant focused on helping customers adapt to the digital economy.
At the same time, nearly half (45 percent) of respondents said that their operations have become more complex in the past two year, with 43 percent reporting about the same amount of complexity, and 11 percent citing less.
Here’s what partners say is driving more complex operations: more streams of data to manage/analyze (53 percent); expansion in new business lines/models (49 percent); customer engagement being more challenging/complex (47 percent); introduction of emerging technologies to their portfolios (48 percent); and more vendors/suppliers in the mix (38 percent).
Those companies that reported being further along with business transformation also rated their operational efficiency more favorably; more than one-third (36 percent) said they were highly efficient. Contrast that self-reported efficiency figure to that of respondents who divulged either a low or moderate degree of business transformation (13 percent and 15 percent, respectively).
“It’s likely that early movers are far enough down the road in their transition to cloud and other business models that they have smoothed out the operational speed bumps that inevitably arise in business and model shifts,” the report states.
There are best practices that survey respondents say are critical to making operations more efficient. The top two, cited by more than half of survey-takers, are calculating ROI/time to profitability before embarking on new projects, and creating repeatable processes across the company.
It’s not surprising that profit-margin leaks are the top concern for all channel partners. Survey participants cited pricing pressure from customers as the top impediment to maximizing profit. They attribute pricing pressure to expanding customer alternatives and negotiating strength, as well as to new types of competitors, according to the CompTIA research.