A few days ago Gartner published the first data regarding the trends of the IT sector expected for 2019.
If you are a system integrator or an IT company, these forecasts affect you directly, and, as they say, there is good news and bad news.
The good news is that the forecasts for the sector over all, are comforting. Gartner predicts an overall growth in the technology sector.
The bad news, is that this growth could affect only a small part of IT professionals and companies.
Essentially, there will be more money, that could end up in the hands of those who are able to adjust in a flexible and fast way to the market transformations. Everyone else will be left with crumbs.
So what are these transformations?
In this article we will attempt to interpret the data published by Gartner, and the consequences for those like you who operate in this sector.
This way you can stay ahead of the game and plan the right strategy for your business over the upcoming months, allowing you to achieve all of your revenue objectives.
“The global spending projection for IT products and services in 2019 is $3.8 billion. An increase of 3.2 percentage points compared to 2018.”
Therefore, 2019 should not be a difficult year for system integrators.
Nonetheless, we must consider that we are dealing with a very generic piece of data – data that takes into consideration the industry at a “macro” level.
To understand what direction the market will take, we need to go into more detail.
We must understand, specifically, which products and services will push growth in 2019.
This is how Gartner justifies the increase in spending:
“While investments in digitalization in companies proceed, the passage towards a pay-per-use model will continue.
Software as a Service (Saas) will push growth in almost all software segments. Cloud software will grow more than 22% this year, compared to the 6% expected from all other forms of software.”
At this point, it is clear which direction the market has taken.
On one hand, the professionals of the IT sector will be able to find new opportunities in the growing demand for technology.
But the condition necessary for achieving 2019 growth budgets is to respond to clients’ requests for technology as a service.
The forecasts provided by Gartner are a precise picture of what is taking place in the technology industry.
Technology as a service with small recurring payments to the System Integrator is the relentless trend that is shaking up the entire IT sector.
In its publication, Gartner reveals the specific reasons for this transformation:
“[Pay-per-use] permits companies to face the continuous and rapid change that characterizes digital business.”
Technology is a powerful business accelerator.
A modern company cannot do without instruments like invoicing software, CRM and Unified Communications.
But at the same time, it must be able to quickly adapt to these ever changing instruments. The different types of technology that were previously installed on the company servers, represent a great limitation in terms of flexibility.
And not to mention the difference in economic expenditure that the client must face, truly tipping the scales in favor of as a service.
An income investment (“CapEx” in jargon) is much less attractive in the eyes of the client compared to a small monthly fee in order to be able to use the same functions (if not even more functions).
In view of this evolution in the IT industry, the million dollar question for an IT professional such as yourself is the following:
Is your company ready to provide technology as a service?
If most of your revenue comes from one shot sales, the expectations for the future of this industry will force you to reflect.
Carry out an in-depth reflection on the methods with which you offer your products and services.
It’s clear that in 2019 the comparison with a competitor who puts technology as a Service on the client’s table would be an unfair match.
Can you really challenge this natural technological evolution and continue to offer the purchase of the technology, hoping to find the clients ready to invest large sums of money?
The answer is no. The forecasts of the analysts do not leave room for interpretation.
This is why the fastest and most painless solution, to not being excluded from a market overwhelmingly requesting as a Service solutions, is to gradually insert service options with recurring fees.
Changing your business model overnight, turning your entire business upside down, is not a feasible route to take. But you can face the evolution of the market in a gradual way, choosing new technologies designed to be sold as a Service.
Technologies that you can quickly include in your services portfolio with the same flexibility as that with which the clients ask of the system integrators.
And that make it possible for you to rapidly increase the recurring revenue fee, giving you the necessary serenity to face the market growth.