~Mohan K Madwachar
The System Integration business was facing bigger challenges before Covid-19 itself.
- Shrinking margins
- Few OEMs accessing the customers often sharing prices, and entering into negotiations directly
- Few OEMs introducing competing partners to the stronghold customers of existing IT partners
- Several distributors limiting their Credit terms
- OEMs auto-debit policy from the Distributors
- Few Customers preferring lowest quote ignoring technical skills, and loyalty of incumbent partners
- Need to have regional offices for delivery, warehouse and local billing
Has the Covid-19 increased these Challenges to multi-fold? Well, there are a positive and negative sides of the story:
- System Integrators can remodel their pricing strategy: Reduce overheads of infrastructure and operations. Now, ‘Work From Home’ is no longer ‘bad’.
- New entrants to the System Integration business believed that low margins are good for customer acquisition. They will realize that healthy margins only can help organizations to deliver high quality services.
- OEMs will stick to horses for long courses than dabbling with new comers
- Credit model will change
- Customer payment delays may put further pressure on the entire eco system
- Customers will go back to their time-tested partnership. They will be more open to part away with few more extra % on price
- Products will shift from heavy on-prem appliances to online, software-based, and cloud-based solutions. This will reduce the top line for sure, as well as the bottom line. But, the associated overheads of transportation, storage, insurance, handling, return materials authorization, and hardware failures will come down.
- System Integrators will be able to focus on higher value activities than doing the racking, stacking, cabling, mounting, and power-on-self-tests
- Customer will discuss more on outcome-based solutions than relying only on price or analysts’ reports
- System Integrators with high standard technical team, and who have invested on skilling their resources will come out as winners
- Supply-only IT traders will have to upskill themselves if they want to continue to compete with these established players
Customers will have to realize that their core business is ‘their core business’ and not evaluating, testing, aligning IT solutions. This part they may have to leave it to their trusted IT partners. System
Integrators, on their part, will have to gain the trust and confidence of the customers by positioning time tested solutions than experimenting with new solutions at the cost of the customers.
This phase, if I have to say, is test for ethics, values, and trust between OEMs, distributors, customers and partners.
