Why the service providers market will grow double digit

One of the best places to be, these days, is the service provider market. The shift of IT-consumption towards the cloud is driving revenue to canny third parties that combine technical expertise, business savvy and proximity to the customer. Topping it up with some good partnership with market-leading vendors assures service providers of future success.

Choosing the right vendors to deal with is – in my eyes – the easiest part for service providers, systems integrators and outsourcers. I can wholeheartedly recommend working with Dell Technologies and Dell EMC. Partnerships will only work between companies that win together and have a “we win, they win, we lose, they lose” attitude.

Dell EMC regards the partners in its alliances program as an integral part of the value chain. Working with partners is embedded in our go-to-market philosophy. We strive to build deep and lasting relationships with the organizations we team up with. Personally, I don’t believe in being vendor-agnostic. That attitude only allows third parties to build a procurement relationship, not a true partnership.

Being good partners is mutually beneficial, as it allows us to deliver an outcome beyond the sum of our components, and to provide transformational value, exceeding customer expectations. And we all know expectations are high.

Take away the complexity

Over the years, IT has become much more complex, even to experienced CIOs who have seen new trends and hypes come and go. Computational power has grown exponentially (Moore’s Law, remember), yet the expectation of what automation can do, seems to be outpacing that increase in horse power. Unburdening the IT department of this complexity is one of the tasks that service providers and systems integrators are extremely good at.

Opportunity #1: consulting

For a long time, cloud computing promised to make the lives of CIOs easier, by out-tasking workloads and repetitive routines. We know better now. There are so many flavors of cloud out there and so many product offerings that the complexity needs to be tamed again.

Most companies have a number of clouds that require managing, consisting, for instance, of long-term archiving hosted by a local telco, an on-premise converged infrastructure solution managed remotely by a managed service provider, a Software-as-a-Service (SaaS) application from Salesforce and a public cloud hosting Office 365. This diversity can turn into a major headache for a CIO, who needs to orchestrate these clouds, and has to evaluate what workload should be moved to what cloud.

Working with top-notch external companies is his best bet. IT decision-makers are looking for competent partners to guide their organizations towards the digital era and tackle difficult questions about how to transform IT, the workforce and cybersecurity. The ideal partner sees the big picture and can address the full spectrum of IT, with edge-to-core-to-cloud capabilities. Only when you have this helicopter view, can you help clients make the right decisions in build vs buy, OpEx vs CapEx and on-premise vs off-premise.

Opportunity #2: SaaS

Each of the cloud offerings mentioned above presents a market opportunity to service providers. According to recent research by Everest Group, 80 per cent of enterprises are well along the road to SaaS adoption, having either piloted adoption or already adopted SaaS solutions. As SaaS is no longer a fringe construct, and has become a prime investment focus for enterprises, this proves an excellent hunting ground for service companies. While many are assuming SaaS is easy to deploy, integrating cloud packages with legacy systems and setting up system security measures is a job for professional integrators. As Everest Group found, over 40 per cent of the budget among service providers for SaaS engagements goes on consulting and customization.

Opportunity #3: specialization

With IT having become so complex, it’s difficult to master all domains perfectly, unless you’re one of the big, global, players. By specializing in just a few solutions, a service provider can carve out an interesting and lucrative niche. Focusing on big data, an offer of ‘Datalakes-as-a-Service’ is certain to stand out. Ever more of our partners are putting ‘Back-up-as-a-Service’ in their catalog, using Dell EMC products like Avamar and Data Domain. Others are making their name in the area of information security. These are all ideal opportunities to deliver value to enterprises.

Opportunity #4: proximity

The European market consists mainly of medium-sized companies that prefer a local partner. The fact that public cloud vendors like Microsoft and Amazon are regarded as American players that will host data on US soil rather than close to your home, is definitely an advantage to European players or service providers that have strong local subsidiaries. Anyway, local companies prefer local partners. Proximity is a key characteristic that local service providers can leverage in their discussions. Being close to clients always pays off, as it allows you to get involved early on in the process, effectively assisting companies in designing their solution and making technology choices. Customer intimacy is the name of the game!

Keeping know-how up, keeping prices down

Although the opportunities are plentiful, the market for service providers brings challenges too. Technology is evolving so fast and vendors are investing so much in research and innovation that keeping pace has become a daunting task. Training the workforce is an imperative which is at odds with being price-competitive. Finding that right balance will never be easy.

Service providers too will need to streamline their organization and for partners building their own datacenters, the mantra of automation and orchestration apply perhaps even more than to the average CIO. Every extra per cent of economies gained in operating the datacenter will go straight to the bottom line. Industrializing the inner processes allows companies to focus on adding value for their clients. And that, of course, is something Dell EMC can also help its local partners with.

About the Author: Dell Technologies