Posted by Kimberly Odom, Director of Vertical Marketing
For the last couple of decades solution providers and value added resellers (VARs) have benefitted greatly from rapid changes in technology, creating greater demand for their services as businesses struggle to keep up with customer demands and competitive pressures.
However, that constant change and demand has put its own pressure on VARs and solution providers through declining product margins, increasing competition, faster technology obsolescence and more complex client requirements. It’s forced them to innovate, constantly keep their skills relevant and up to date all while dealing with the turbulence in the market themselves. Cloud computing alone has had an enormous impact on VARs and system integrators that had made a good living implementing and configuring complex on-premise software, drying up lucrative revenue streams in a matter of years.
Meanwhile, improvements in efficiency are no guarantee for survival, either. Today these businesses need to constantly innovate, adding managed services, new revenue streams and adjusting their revenue recognition models. Ask the finance team of any traditional software company struggling to add a Software as a Service business about the pleasures of adapting business models on the fly.
It’s clear that the sector is now service- and project-driven. Competing on price alone is not sufficient. Solution providers are now focused on client-driven projects that require unique consulting knowledge, skills and experience. This project and technology-driven economy depends on accurately capturing knowledge-worker productivity—how much time, skill, materials and intellectual property are required to produce favorable client outcomes?
Unfortunately, the sector itself has not been immune from the technological transformation. Many VARs and solution providers now find themselves running on a hairball of legacy, on-premise software that impacts the profitability of projects and product sales, and limits insight into accurate and timely financial data. Indeed, many still grapple to measure results and projects with manual and error prone spreadsheets. Yet their clients expect seamlessness, precision and an up-to-date and accurate view of their projects. Struggling with internal systems never reflects well on the capabilities of a VAR or solution provider representing themselves as technology experts.
With customer, financial and project data spread across multiple systems service delivery teams don’t know what deals are in the pipeline, or the skills and resources required for upcoming projects. Finance doesn’t have a view into the estimates, terms and pricing being proposed. Logistics can’t forecast or anticipate future demand. The sales team may be committing to unacceptable contract terms and pricing, exposing the firm to risk and jeopardizing margins.
Solution providers and VARs need unified services resource planning (SRP) software that bring all this information and business processes onto a single platform. Research from Service Performance Insight has found that one of the reasons the highest performing service organizations do so well is because of their use of integrated information technology solutions. In fact, based on results from the 2015 PSI Maturity™ benchmark, NetSuite clients achieved substantially better results than the benchmark average across core metrics leading to greater profitability, thanks in large part to the greater visibility and lower IT overhead a unified system enables. They see lower employee attrition, have the right staff on the right projects at the right time and are well positioned for growth.
For more insight into the benefits of a unified system, download the new white paper NetSuite: The Key to Performance and Profitability for Solution Providers.