Articles
RSSThe Convergence Opportunity
December 14, 2006
Technology convergence presents a significant opportunity for solution providers who support data capture and POS (point of sale) technologies. Traditionally, data capture and POS were considered niche technologies that required discrete solutions and support distinct from other IT needs. Today, more customers are seeking to integrate their data capture and POS solutions with related IT technologies to enable efficiencies, drive incremental revenue, or both. This growing demand for converged solutions offers solution providers a great opportunity to strengthen customer relationships, provide more value and service, and further differentiate themselves from competitors.
The convergence opportunity is driven by the benefit customers receive by implementing complete IT solutions to solve business problems or enable growth. For example, in the data capture space the increasing need for mobility has led to a need for wireless networks and security that supports the data capture solution. Customers also require related technologies to fully benefit from the solution, such as servers and storage to manage the information collected on handheld terminals. In POS, adjacent technologies such as digital signage and IP surveillance often provide significant incremental value versus just installing the POS system itself. Every merchant also needs networking, servers, and data storage solutions to manage their business.
In each of these examples, the customer benefits when one solution provider can manage the complete installation. Multiple providers inevitably produce a suboptimal solution since each provider is looking at a subset of the overall business need. Moreover, multiple providers can multiply the logistical headaches of scheduling conflicts, price negotiations and budget discussions. Likewise, having multiple providers also can result in finger pointing if something goes wrong. By contrast, if one solution provider can serve as trusted and comprehensive advisor, much of the headache and hassle goes away and the customer relationship becomes stronger. From our perspective as a distributor, we often see this dynamic in practice. Solution providers offering discrete support for a subset of the overall IT need are becoming disadvantaged versus those who are focused on providing complete solutions.
Becoming a trusted IT advisor may require the development of additional internal capabilities. Data capture and POS solution providers have an inherent advantage in doing so, as they often are already addressing the more complex technical issues. The related technologies typically are easier to support despite requiring additional knowledge.So one approach is to learn about your customers' overall IT needs and, if required, develop incremental capabilities internally to support them.
Alternatively, rather than developing subsidiary capabilities internally, some solution providers may seek out partnerships to achieve those capabilities. These solution providers strive to become trusted advisors without making significant investments. Partnering allows them to support complete solutions by subcontracting parts of it. They reap the benefit of deeper customer relationships and incremental revenue, as a fee typically is received from the company providing subcontracting services.
One way to foster such partnerships is through solution provider communities and industry alliances such as the Ingram Micro Service Network. This is a network of solution providers that partner to complement each other's capabilities and win more business by delivering complete solutions and stronger customer service. Little risk is involved, because Ingram Micro maintains the network, managing service levels and ensuring that the lead solution provider retains the customer relationship throughout the process. The partnering approach has enabled hundreds of solution providers to grow faster and develop stronger customer relationships than if they had gone it alone.
Whether solution providers expand internal capabilities or seek out partners in adjacent spaces, capturing the convergence opportunity should be a priority in 2007 and beyond. Acting on this opportunity today adds value by yielding stronger customer relationships and increased revenue and profit. Solution providers that continue to focus on niche technologies alone will find themselves disadvantaged over time as competitors capitalize on convergence and the inherent customer need for complete solutions. Becoming a trusted and comprehensive advisor is the path to future success.
