Risky Business

If you’re a reseller today you’re probably seeing the dreaded creep of commoditisation. The old advice to ‘get big, get niche or get out’ is still sage; so is another old chestnut about the importance of adding value. In this piece, Mike Cook, Managing Director of Operations and Customer Service at BT Wholesale, talks of a third and fourth leg to this argument and urges Channel Partners caught up in the maelstrom of change to do two things: move very quickly and take chances.

There’s no doubt that the falling cost of hardware is a challenge but then you could probably have made that argument at any time in the last 25 years. The ‘Chinese price’ is only the latest episode and it only accentuates the need to take risks rather than fight a battle of attrition against companies better equipped to battle on price. ‘Risk’ is a word with negative connotations of course but those companies that don’t chance their arms, try things and be ready to ‘fail fast’ will be left in the weeds.

Besides, there is risk and there is risk that is manageable – naturally, we like to feel we’re helpful in the second of those buckets.

Broadband, Ethernet, CPE apparatus, security and configurability are the new table stakes for network resellers – we’ve got them. Partners should develop managed services on a platform with a strong, highly integrated set of services, and a rock-solid network that delivers the fundamentals of reach, performance and high availability. It’s a fast start that means you don’t lose time assembling, integrating, servicing and managing multiple suppliers and we calculate that it’s worth up to 40 per cent in process saving and accelerating time to revenue. But that’s really only the beginning, and from there it’s time to innovate.

This is where risk acceptance and fast innovation come in: OTT services, UC, collaboration and many other services can then be layered on top of ready-made network stacks. But go for the ‘bleeding edge’: those parts of the market that have not yet been saturated and where margins and differentiation shouldn’t be so scarce.

That will almost certainly involve partnering but partnering today can’t be of the lip service variety that we’ve all seen before. In today’s economy and fragmentary supplier landscape ‘frenemy’ relationships and ‘co-optition’ are very real. There has to be a genuine investment in these partnerships and not just a transactional affair. It will be a case of ‘speculate to accumulate’ but those companies that work hand in hand to develop, sell and market will be best positioned for success. Co-curation, co-creation and co-production are trends you might have heard of with reference to museums working together on exhibitions, sports shoes providers letting customers design colour combinations or micro-breweries outsourcing their facilities to peers, but it’s here in our business sector too. Look at cloud computing or crowdfunding: the world has changed and insisting on a DIY approach will only slow you down and chip away at your focus and differentiation.

And what is that differentiation? Of course the underlying technology is important but it’s far from being everything. A few examples:

Target markets. Addressing specific demographic audiences is smart in a tough market. Today the midmarket is particularly attractive: blue-chips have the budgets and capacity to invest heavily in security, for example, appointing CISOs and so on. But that luxury is unavailable to others so, for customers too, partnering is even more of a key to success.

Financing. Differentiation needn’t be at the technology level. Consider cloud: the most attractive aspect for a business might not be technical at all but more to do with opex-versus-capex subscription payment models and being able to move fast. Innovating in the financial offering might trump the ‘techie’ offer.

Service. In the social media age, customer service has to be accentuated. Of course it has always been important. But in these times of Net Promoter Scores, social media experience sharing and customer satisfaction sites such as Glassdoor and Rated People, excelling is more important than ever, especially if you don’t want the world reading about your failures.

It’s never been easy to make money as a reseller. Someone will always want to cut prices and compete where you’re winning but partnering, speed and an appetite for risk are three roads to success.

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David Dungay

Editor - Comms Business Magazine