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Mixed signals emanating from IT channel

CompTIA, the non-profit trade association serving as the voice of the information technology industry sees mixed signals emanating from the IT channel

Following a discussion on the current and future state of the market during a meeting at the recent CompTIA ChannelCon 2018 conference, the association’s Directors said that challenges, many related to workforce considerations are keeping tech firms from making even greater progress.

According to Board members, one of the most positive signs coming from the market is the progress companies are making to expand their engagement with customers.

Cementing relationships

Technology companies have seized opportunities to expand their engagement with customers outside the IT department and to find new ways to boost profitability. Many are embracing specialisation in their own portfolios of technology solutions. The movement to the cloud and to extensible platforms has prompted them to engage in the development of proprietary intellectual property, turning some managed service providers into independent software vendors and boosting profitability.

Companies in all layers of the channel are gaining footholds and cementing relationships with decision-makers in marketing, HR, accounting, operations and other departments that are engaged in the evaluation and purchase of technology solutions. With greater insight into the operations and objectives of individual business units and departments, technology providers are better able to create specific solutions to meet the unique needs of each customer.

Current industry trends that are impacting business include:

Customer spending: Software defined networks and unified communications are two examples where more customers are spending money on technologies that don’t necessarily result in an immediate return on investment but will prepare them for future growth and profitability.

Voice: The market is experiencing rapid advancement in the build-out of voice-based solutions in many product areas.

More options: The expanding variety of options for tech products and services is a boom for some companies, but it’s creating challenges for others. Even some of the largest technology vendors are confused about their go-to-market strategies. Wide variances in margins have clouded decisions about which products and services to emphasise.

Speed to market: The window to bring new solutions to market is as small as it’s ever been and in some instances, the quality of products and services is suffering.

What’s old is new: Some companies, including progressive organisations that have identified new service niches as well as those challenged by shrinking profit margins in cloud services, are reverting back to break-fix services as a contributor to the financial bottom line.

Workforce woes: Workforce challenges related to the tight job market are a concern. For some companies, this has resulted in an uptick in staff turnover among IT support technicians and other job categories. Finding workers with skillsets in consultative selling, cybersecurity and product integration remains problematic.

State of security: There is confusion in the market about how companies should incorporate the recommendation of the National Institute of Standards and Technology (NIST) Cybersecurity Framework. This has placed an additional burden on MSPs and vendors, who must train their sales teams on many possible combinations.

MSP vs. MSSP: Market confusion also persists about the differences between a managed services provider (MSP) and a managed security services provider (MSSP). Without clear definitions, companies don’t know where they fit in the spectrum, which limits opportunities and clouds focus.

International scene: Outside the major economies, MSPs are building business models similar to what emerged in the US market over the past decade, with heavy reliance on usage-based consumption pricing.

M&A activity: The channel continues to see a huge amount of merger and acquisition activity. The impact or private equity have never been bigger. But as large roll-ups occur due to consolidation, there is some concern over the lack of transparency over what happens, or could happen, if private equity dollars disappear.

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