The tech value-added services (VAS) business used to be so easy: Your channel partners would provide installation, configuration, training, and maintenance services for all vendor products that they resold. Their — and your — primary value target (i.e., whom they sold to) was the IT organization. And the required expertise was in the products, not the customer’s business. But technology itself — including cloud computing and the Internet of Things (IoT) — has upended the VAS market. Forever.
· Cloud technology has pretty much wiped out the installation services business. And it’s not just tech products/solutions that are affected. Pretty much everything B2B is now offered to customers “as a service.”
· IoT technology promises to do the same to the maintenance services business. For example, Thermocable, a British manufacturer of heating cables, with the help of IoT developer Concirrus, created a remote monitoring solution that generates automated alerts on a cable breakage or damage, as well as triggering technology to take remediation action remotely — in effect displacing partners’ onsite support services.
The first conclusion one might jump to is that the VAS business is dead (or dying). But that couldn’t be further from the truth. In the age of the customer, customers’ appetite for value-added services is greater than it’s ever been. The VAS landscape isn’t drying up. But it is shifting — from traditional IT-oriented services to more business-oriented (read: business outcome) services, as detailed in my new report: “Channel Partners’ Shifting Value-Add — And Their Digital Potential” (https://www.forrester.com/Channel+Partners+Shifting+ValueAdd+And+Their+Digital+Potential/fulltext/-/E-RES119183), which covers:
· New services. Yes, the demand for traditional tech services is in decline. But consider customers’ growing call for cloud vendor management, performance benchmarking, change management, big data strategy, mobile application infrastructure design, and legacy application modernization. Or even more business-oriented services: customer experience strategy, organizational redesign, productization-of-services design, omnichannel strategy, and supply chain optimization.
· New buyers. Just as line-of-business (LOB) decision-makers are getting more involved and influential in technology product decisions, they’re also becoming more integral in deciding and directing the value-added services that bear the business outcome value.
· New service providers. If traditional (read: IT-oriented) channel partners don’t get on the new business VAS bandwagon . . . well, they will lose out to others that are beginning to weave tech solutions into their traditional business services offerings. For example, insurance agents and brokers are getting increasingly involved in risk management services, disaster planning, identity theft protection, and, yes, IT security — many of the same or peripheral services offered by traditional VARs, but with a more business-oriented flavor, and for increasingly important LOB decision-makers. And the prospective “business-service-cum-technology-providers” list goes on: CPAs, energy service providers, facilities management outsourcers, commercial real estate brokers . . .
The first step is to quantify and substantiate those tectonic VAS shifts for your channel partners. We can help. Get their attention; make them understand the opportunity (and urgency); and enable them to take advantage and deliver (e.g., via a productization-of-services program for partners themselves or an online services marketplace). From there, it’s off to the services value-chain reengineering races. Because while the new VAS opportunity is wide open now, it’ll be the early ecosystem birds that get the biggest worms . . . and new market power.