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Why the Field Service Industry Must Innovate and Share More Risk with Partners

By
 
John McVicker

It's time for innovation in the IT services space. Without constructive help to create ecosystems, traditional partners may disappear.

All IT services need to be like the Cloud!

Despite everyone agreeing it has to happen, the much-vaunted and all-promising 'as a service' model continues to be an elusive nirvana for many technology business owners in today's partner community.

At a strategic level, it's the evolution in valuation models and a distinct change in what end customers expect products and services to look like and how they want to consume them – that's driving the change.

But don't just take our word for it. A 2018 Accenture survey* of some 1250 C-suite executives found that 78% agree that current business models will be unrecognisable in just five short years, with ecosystems being the leading change agent.  

The fact of the matter is that whether we embrace it or not, a new ecosystem will emerge if we don't deliver what's required. And if you're still in doubt about what that could mean for your business, ask Blockbuster, Kodak, the taxi or hotel industries how well their strategy of being resistant to change worked out.

 

It Has Been Coming for Awhile

Let's be clear. This change has been on the horizon for a long time now. Cloud and' as a service was a concept first hatched in its modern incarnation by Microsoft some 10 years ago, which, in technology terms, makes it almost pre-historic.

Indeed, Microsoft was one of the first to break the mould with a single, upfront licence cost being replaced by an 'as a service' model component with the forerunner to Office 365.  

Software vendors have been the most active in leading this inevitable march, and some hardware vendors' products – such as HPE's Greenlake – have indeed risen to the challenge. But where is the partner left in all this?

 

More than a Financial Cost

Partners with solid balance sheets can afford to turn CAPEX and support into an 'as a service' model. But! They carry all the risk. Others struggle to 'swallow the fish' of upfront costs and the enormous risks involved.

The vendor can assist with financing for the services element of such a transformation, allowing the partner to ease cashflow but pay the penalty for carrying the extra liability on their balance sheet. It's far from ideal because this, in turn, affects valuation, credit rating and, ultimately, constrains their ability to scale their solution without the vendor. 

It can also mean their finance arm being the prime underwriter of the contract and ultimately owning the customer's financial relationship.

The reality is that the time has come for change. And not just any change, profound change.

 

Step Up and Be Counted

The field services industry must create a new ecosystem focused on building value for the partner.

Besides, more innovation needs to be provided to support our partners' success and create a solution that they're seen to own, not the vendor – who could disinter-mediate the partner at the end of the agreement. 

What's more, if the partner provides the solution, they're seen as providing the value to the end customer. It's certainly food for thought.

Commercial models also need to be created that recognise the long-term value of a solution lifecycle. They need to support available solutions as a simple monthly charge to mirror a partner's ideal commercial model, enabling the partner to win more business. 

It's a win all around because operating in this way will help everyone's valuations.

Billing, too needs work. Billing must become 'cloud like' with easy to snap-in contracts that are more than just a bog-standard finance agreement in disguise. Their structure should add value, not be merely functional.

And let's not forget the costs. They need to be simple, repeatable, predictable and scalable.

The entire 'field service supply chain' needs to be available on an 'as a service' basis – either as a complete solution or as a completely unbundled set of products. Whichever way you go, it must be available for a reasonable monthly charge.

The bigger picture is that the emphasis needs to deliver a frictionless customer experience for the new ecosystem to work. 

That's the key to it. Without such disruptive and innovative thinking, the partner community – which, after all, is essential to the success of our IT community – will struggle to maintain relevance and value to the end customer beyond simply offering a nice set of skills or a vendor-led product set. We just can't let that happen, so the time to act is now.

 

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