New entrants are increasingly gaining a foothold in the service provider market today. By 2024, 80% of technology products and services will be built by those who are not technology professionals, according to Gartner. As more companies become technology companies, the role of traditional tech providers changes too.
The emergence of the cloud has a huge impact on the way IT infrastructure and services are sold and consumed and so on the IT channel itself. While vendors used to sell indirectly to end customers through the IT service provider channel, those same vendors are now doing business directly with end customers.
In parallel, a whole new breed of innovative companies is entering the IT market not with a background in technology, but in manufacturing, finance, retail or elsewhere. To better meet their customers' needs, be more productive and competitive, these non-technology players are providing their IT services directly. So what happens? The intermediary channel is disrupted, causing service providers to compete with these new entrants for market share.
What has caused non-tech companies to enter the world of IT so quickly? One reason is undeniable: the cloud has created a connected world. There is a 24/7/365 demand for IT services, delivered as quickly as possible, when and where the customer wants them.
Do you have to be an IT geek to develop and deliver these services? Not any more: the introduction of low-code tools or AI-assisted coding has made software development a piece of cake. As a result, innovation is no longer the exclusive domain of IT companies, but has become an open road for non-tech companies.
Who are these non-tech newcomers entering IT? One such company is car manufacturer Tesla, a pioneer in smart vehicles, which relies heavily on AI, IoT and cloud technology to support autonomous driving. It is rumoured that Tesla, like Apple, is even planning to develop its own in-car app store. There is Netflix, the video distributor that evolved into a billion-dollar on-demand streaming platform with its own content delivery infrastructure. Or take Walmart, which is developing the future of brick-and-mortar retail with a brand-new high-tech distribution centre and a tech-empowered physical shop with in-store automation for stock reading and order picking. And there are many more, big and small.
Disruptive changes will continue, so it is better to embrace them rather than fight them. As a service provider, you need to redefine your role to future-proof your business. Have a disruptive, or rather a pioneering look at your own business strategy. Be receptive to emerging trends and new market developments. Explore how you can connect with successful non-tech companies and develop, build and manage their IT with them. Seek partnerships in new ecosystems to build a stronger market proposition together.
Disruption does not mean that the battle is lost. Service providers inherently have the technological expertise and vertical market experience that the non-tech entrants could very well use. If you want to create competitive advantage, adapt your valuable skills to the new reality. Disruption means movement and movement creates opportunity. Don't let yourself be disrupted; act now.
At Insight, we help service providers in realizing their business ambitions in a multi-cloud world. As a multi-vendor software licensing, workload, and cloud platform specialist, we can guide you through all stages of your strategic cloud journey. No matter where you are in your journey, we help you to find new ways forward and accelerate your business. Contact one of our cloud specialists for a talk.