The IT market is transitioning, as it always has and will continue to evolve. However the most recent change is a sea change similar, but more drastic. It spans all technologies: the adoption of PCs, mobile phones, virtualization, etc. All of these added up to the latest change to cloud, managed services with its various adjunct models. Hindsight is 20/20, these changes contributed and led up to this latest transition.
The key difference with cloud and its variations (i.e. consumption models) is and can be far more explosive as it requires vast encompassing changes it the IT ecosystem. It is also a disruptive change such as:
- The new consumption models will challenge existing IT leaders to adopt, integrate, and accept the these new acquisition models to keep their leadership status.
- Emerging vendors will raise the bar as they emerge without the encumbrances of the massive overhaul of existing environments/ processes.
- Traditional IT partners need to move at warp speed to change their delivery, and in many cases many of their processes, including sales approach and sales compensation models.
- The largest impact will be on the infrastructure partners.
- Software focused partners are moving faster.
- The financial impact of the consumption model causes a shift from resale to subscription that will shift and affect the balance sheets deferring revenue over months/years versus getting the immediate financing of on premise sale.
- “Crossing this chasm” will be most difficult primarily for infrastructure partners.
- Software providers and associate partners will be less impacted as services continues to be a significant part of their revenue.
- Sales skills become far more consultative
- The focus will be on business solutions including payment options CAPEX versus OPEX as an example.
- This will require expanded customer contacts at end users.
- Compared with infrastructure, application sales will grow faster, via consumptions models.
- This is also true for software-focused partners.
- Software has a different financial model than hardware, which is more dependent on services, than pure license sales.
Many people seems to forget that software needs infrastructure. This is not like Solomon splitting the baby. They are co-dependent, and go hand in hand. The difference in the financials further confuse the issue for the market. This may be the dog wagging the tail, as software and its partners seems to be moving faster to pursuing the new consumption models, trying to drag the infrastructure along hoping to ride on the infrastructure’s coat tails. Unfortunately, reality says otherwise. When the pendulum swings so widely, the market is looking for an enormous shift. The market will change as customers’ adoption change, and as suppliers and partners model shift.
Smaller customers, and partners focused on these customers, are now and will continue to adopt the new consumption models faster than midsize or larger partners focused on midmarket and larger customers. These companies have a lot less to lose, less investments, are more nimble, and have a lot more to gain. Larger partners will move more slowly for the converse of all the reasons the small companies will move quickly.
This is not a Teutonic market shift, as some would like to portray. Not all customers are going to the new consumption models, not all apps are either. The market buzz seems to make this seem imminent, across the entire market. That is not the case. It is a transition and adjustment. At this time, it is too early to say “the fat lady ha