The traditional model of IT services just can’t keep up with the pace of change. That’s something I’m learning after two decades of building and managing IT services practices and developing new lines of business. It is now very clear that the service provider model of relying only on in-house talent is not sustainable unless you are a highly specialized practice. If your customers depend on you for their complete, integrated technology solutions, then you are likely running into a service crisis—your customers are adopting technology faster than you can build practices.
For example, if I buy a voice solution today, it’s no longer just an IP PBX and handsets from either Cisco or Avaya. It’s a complete collaboration platform. It may include a cloud or on-premises controller from one manufacturer, PSTN and SIP gateways from other vendors, a mix of video, mobile and traditional endpoints, multiple messaging solutions, web conferencing, customer experience platforms, and API integrations. Each of these have cloud, traditional commercial products, and open source options. They now need software developers to integrate them. How can a service provider staff experts for every combination? There are too many permutations, and the complexity grows every year.
Why not invest in staff education to service these new technologies? As one product gets commoditized and automated, your experts should be able to take on new technologies, right? The problem is, which new products? The fragmented ecosystem means there is not just one new product to learn. There may be a dozen options, each requiring a significant practice investment (especially if you also need to be meet reseller requirements). If you are in network security, your practice now needs AppSec, identity, SIEM, audit and compliance, and mobile technologies. How can you invest in all of these? Whichever products you choose, you will find less and less of the IT pie covered by your own skillsets.
A new approach is needed to keep up with the pace of change. You need more experts, but only a little time from each of them. That is a tough operation to staff. But leading service providers are successfully adapting to this dynamic by extending their teams with specialized partners. Your relevance and profitability depends on a network of trusted, specialized partners you can rely on to cover the rest of the IT pie.
Some IT firms are already there. I talk frequently to new partners for Badged, our technology services marketplace. The most consistently profitable pro services practices are performing 30 to 50 percent or more of their services using subcontractors. The subcontracting model provides a fixed margin, ensuring services profitability, without the long-term fixed expense of employees. More important, it adds to their customer relevance by providing a complete solution stack.
To be fair, contractors come with their own challenges. If you can’t find qualified partners quickly, you lose client opportunities. There is risk that a new partner won’t perform to your standards. Contractors also require new processes to manage them as an extension of your team. Service providers and independent professionals need help to tackle these challenges and succeed in the contractor economy–that’s the idea behind Badged.