DoaSS: Coping & Profiting

Over the last four posts I looked at the major factors contributing to the death of the IT solution providers in the SMB sector. To quickly review, we’ve seen a lot of people hang up the hat because:

1. They were too focused on technology they were comfortable with 
2. Their value proposition did not match their market (they pitched big expenses to small businesses)
3. They could not cope with the competition from larger providers, global companies and former suppliers that passed them by
4. They underestimated the length and severity of the downturn combined with the changing taste for technology

The truth is undeniable, we all know a lot of people who used to be in this business that are now doing something else. And when faced with the prospect of looking at our peers failure, we have a fair amount of grief to deal with. Elizabeth Kubler-Ross outlines the five stages of grief:

• Denial – There is no IT downturn in IT, so many SMB solution providers are still thriving. Plus, how are Dell, HP and Cisco growing?
• Anger – It’s all Apple, Microsoft, Google, Dell and Obama’s fault (that last one I threw in for my buddy Chris Rue)
• Bargaining – If we redesign our business, and SWOT and change our marketing, surely we have a shot?
• Depression – Whatever, we can’t compete against Google so we’ll just focus on being a small specialty provider.
• Acceptance…

Acceptance

Lot’s of people will surely want to pick a fight over the many, many points I’ve made here. I encourage you to. Please write your own public blog post or write a comment on any of the four pages because I will not be addressing personal emails written on this subject – there are far too many people that read this blog that are dealing with this problem and we owe it to one another (in this industry) to have this discussion in the open while we’re still talking about the present (and future) not the past.

The IT Solution Provider industry (VARs, MSPs, etc) need to accept the fact that the good ol’ times of “investing in technology as a competitive advantage” are gone – everyone has technology now.

We need to accept that there is no such thing as “local presence” anymore and that global is the new local – bringing with it lower wages, more intense and more competent competition.

We need to accept that the days of the right solution being the only solution are gone – thanks to the many alternatives and substitutes the building blocks of a technology solution have permanently changed the taste and the demand.

Determination

If you’re capable of making it past the previous section, it’s time to make a decision. The simplest one is to say Screw you Vlad, you’re wrong. Or…

Opportunity: You could look at the clients that passed on your solution and ask them why? What did you pick? How come?

Sure, you could embrace the cloud but there are only going to be so many players left there. When it comes to competing with the likes of Microsoft and Google (which have huge cash cows sustaining their deep losses in their effort to work directly with the consumer) the odds are against you.

Yeah, you can charge people a markup for the cloud, but how does that make you competitive – everyone can do that. Maybe you can be an expert at moving people to the cloud and charging a service markup – yet again, you’re becoming an expert at something that everyone can do. And already does!  You’re just shifting your existing service to another platform (be it virtualization or cloud) and with it the same stuff that the clients don’t care about and you get no differentiation from.

Trust me: If some genius figured out the above paragraph, they’d be rolling in billions, not sitting in zip code 12345 pretending to be an expert.

What is going to make you sufficiently different from your competition when you’re using the same platform, same suppliers and at relatively similar cost structure?

This is something that I’ve spent the last 8 or so months trying to figure out. I think you’ve seen OWN (if you actually work closely with us, not the blog posts and public stuff) starting to go in that direction.

Supporting vs. Patronizing

I’m sure that many of you will see this as a very unsupportive message. But Vlad, if all of us are screwed, where does that leave the only OWN client – the partner? You go under too, right? Go back up and read about denial.

My job as the CEO of OWN is to help our partners grow. Not to sit idly by and pretend like there are no problems out there and patronize folks to their slow and inevitable death. Yes, I’m pretty sure that most of the service providers will be gone within 24 months – so my job is to figure out a way to push the ones that will be left around in the right direction and provide support systems for them to compete.

And that, dear friends, is what separates successful people from the failures. Ignoring problems doesn’t make them go away – embracing them and trying to find a solution is a trait that has and will sustain companies with the technical evolution, no matter where it takes us. The question is, can you spot it?