Solutions Providers: Don't Waste A Good Recession

Written by: Kendra Krause, VP of channel sales, Fortinet

Economic woes are all around us. Solution providers need only glance at a newspaper, turn on their television, or engage in a conversation with a customer or family member and inevitably the feared words “recession,” “economic crisis,” “sales losses” will arise. All of this has no doubt caused some fear, uncertainty, and doubt among solutions providers about the future of their businesses. But is there a need to panic? While it is true that many solution providers are facing perhaps one of the toughest business environments of their careers, it doesn’t mean panic need ensue, or that they should throw their hands up in the air in defeat.

Recent research has reflected the view that declines in spending may have bottomed out in Q1 and businesses are prepared to spend again, while perhaps not as loosely as before. A recent poll of CIOs conducted by Robert Half & Associates found that 7 out of 10 interviewed said their companies will continue to invest in information technology (IT) initiatives in the next 12 months. Information security topped the list of projects that executives expect their firms to invest in, accounting for 43% of the responses, followed by virtualization with 28% and data center efficiency at 27%.

So, there seems to be a rainbow at the end of this storm, but solutions providers still must step up their game to succeed in this market. So that makes now the time to take a good, hard look at your business model and vendor partnerships to determine if it is what you need to weather the storm and come out better and stronger. Are you holding onto old, tired business models or vendor partnerships because it is easier not to change or do you assume your customers will simply continue not to question the solutions or value you are providing? Don’t waste this recession — use it as an opportunity to breed innovation, evolution, and success in your business. The companies that will excel in the future are the ones that make greater changes now. It’s time to reevaluate your business and make the enhancements necessary to prosper during this downturn.

Solutions providers should evaluate the following:

1. Your mindset
If you’re still selling point products and not total solutions, then you’ll likely have a tough road ahead. While it is true that businesses have available IT budget, they’re not spending it as freely or easily as once before. Deals are being scrutinized and raked over with a fine-tooth comb. Customers are looking for ways to get more for less — more value from solutions providers and more technology for better value.
In the case of IT security, spending is continuing, but ROI has a new and higher bar. This is driving the trend towards consolidation. According to leading research firm IDC, the unified threat management (UTM) market — which includes security appliances that combine multiple security functionalities or “point” technologies, into a single, integrated solution — is among the fastest-growing segments of the overall security industry; it has already outpaced the firewall market. UTM appliances allow solutions providers to deliver excellent ROI and a more comprehensive solution to their customers for a fraction of the price of purchasing, managing, and maintaining numerous “point” products.
Solutions providers need to evaluate their mindset and let go of the archaic “point solution” sales approach in favor of a consolidated solution approach. Aside from meeting the economic and business requirements of your customers, selling consolidated solutions also helps you run your business more efficiently by reducing the number of vendors and SKUs you need to work with.

2. Your mix
You’ve been hearing it for years: demonstrate value and grow your profits by focusing on selling services not products. Perhaps at no other time has this been truer. Customers are looking to their solutions providers as trusted consultants and are demanding greater value and insight from them. They want proactive thinking and comprehensive solutions, inclusive of products and services, specifically tailored for their unique requirements — whether that is meeting certain compliance regulations or specific company or vertical market requirements.
Demonstrate value as strategic technology advisors by assessing IT needs and thwarting potential problems rather than serving as just rescue workers once the crisis erupts. In IT security that means assessing networks, applications, and endpoints for vulnerabilities before a security breach or threat occurs.

Additionally, budgetary constraints are driving adoption of managed or hosted services — especially in security — that can be very cost-effective for customers from a CapEx and OpEx perspective. These managed security services can provide a new revenue opportunity for solutions providers.

Evaluate your business model mix. Be proactive not reactive in addressing customer’s IT problems. Also, if you are focusing on products or are a generalist, seriously consider specializing in a particular industry vertical, which will differentiate you from your competitors. And, finally, consider shifting your business to a margin-rich managed service provider (MSP) model. It takes some necessary upfront investment but can provide great return down the line.

3. Your vendors
Solutions providers: evaluate your vendor partnerships and align yourself with those that see you as more than just a quota number. Are your so-called vendor “partners” truly partnering with you to help support you in these difficult times? Are they demonstrating their channel commitment by growing their channel resources, or are they cutting channel staff and funding? Are they protecting your deals or taking them direct?

These are the challenging times that separate vendors who truly value, support and partner with their solution providers from those that do not. Partner with vendors that provide you with alternative pricing/financing; support you with channel resources, programs, and staff; partake in lead generation and marketing to help drive new sales; and provide you with quality leads and necessary support through the deal.

So, don’t waste a good recession. Tough economic times separate the weak businesses from the strong ones. Those who focus on innovating, strategically partnering with the right vendors, and listening closely to the needs of their customers to deliver true and necessary value have the chance to emerge from this storm even stronger and better than before.

Kendra Krause is vice president of channel sales for Fortinet, a market leading IT security vendor.