During TELLUS Business Workshops which have been delivered over the past two years, it has been interesting to see how different Microsoft partner categories have started to blur and I believe it is harder to differentiate partner types going forward. Today, I read Redmond Channel Partner Scott Becker interview the new Microsoft Channel Chief Phil Sorgen, whom I had the pleasure to meet at our local IAMCP DFW chapter meeting in his previous role. When Mr. Becker asked Mr. Sorgen about partner categories, he concluded that a better and more effective way is to view partners based on solution orientation, as well as vertical specialization. I have been campaigning about this for quite a few years during our workshops.
When working with system integrators specifically, it has been evident that many of the traditional SI’s are struggling to identify where they add value in the overall delivery of solutions. If your delivery is entirely based on low pricing, you will be driven out of the market as there are just too many “me to” organizations doing the same thing. When I was running a SharePoint SI organization, it became evident that several organizations were discounting the pricing to the extent that larger players could not to meet lower prices, and this caused significant disturbance in the marketplace. Many of these smaller vendors could not complete a proper delivery, which means that the entire industry suffers from poor deliveries. Selecting a vendor based solely on price does not typically translate to quality. There are many less expensive delivery organizations and many offer exactly the same value proposition, mostly based on low price. This causes pain for the system integrator vendor selection process for end user organizations.
Why do I think that the vendor categories are blurring? System integrators have realized that they have to build a new business model and many organizations have built intellectual property (IP) in different areas such as vertical industries or specific functional workloads. A very natural phenomenon for these SIs is to capitalize on this IP and with the new app economy. This will be a logical step for the SI’s to identify new opportunities, find clients and even build subscription-based business based on this IP. From the other spectrum, there are software vendors (some traditional) building software solutions and adding new service layers to broaden the business and to survive the transformation of traditional business to cloud business.
Many of these software vendors “accidentally” become system integrators to sustain the business and cash flow that is needed for the transformation. If you think about this model as a line or pendulum, you will have these two vendor categories at each end and now they are moving closer towards the middle.
If you talk to any system integrator, they will eventually admit that they are building IP and considering options to how to capitalize on it. However, system integrators do not have a tradition of productization of software, which limits many organizations to take the steps that are needed to build solutions that can be sold and are packaged.