Article On Financial Stability of IT Service Providers Dealing with the Big Techs
By Insight UK / 13 May 2022 / Topics: Cloud Cybersecurity
By Insight UK / 13 May 2022 / Topics: Cloud Cybersecurity
Despite growing concerns about monopolies and the free market, big tech companies like Microsoft, Apple, Amazon, Google and Facebook are still expanding. Although each has its own focus, they all provide platforms, products, and cloud services on a totally unprecedented scale. The advantages for customers are clear: they get access to new, innovative software 100% tailored to their needs without any upfront costs or cancellation fees. Sure, the big vendors can afford to offer flexible subscriptions or pay-as-you-use services. But for a regular IT service provider it’s a different story. Still, many service providers do good business with the big techs.
As the cloud has matured, businesses tend to buy more services directly from vendors. But configuring, integrating, and securing different cloud services remains a tricky business. Therefore, most companies still look for an IT service provider that offers services around the portfolio of well-known vendors. As a result, SPs increasingly choose to partner with the vendor to develop these services. The big tech companies have extensive partner programmes for SPs of all kinds. By becoming a partner, you get immediate access to a broad range of services, tools, and knowledge without significant investments upfront. Sounds good, but there are also risks involved.
Big tech companies are constantly seeking ways to maximize their flexibility and profits. Last year some of them announced considerable price increases that put pressure on the SP business. Some SPs passed the price increases on to their customers. Others settled for lower margins on their services. Either way, they had to deal with this setback. They simply didn’t have another choice. Once you use a specific vendor or platform, it is not easy to move business elsewhere. You (and your customers) are in for the long run since switching vendors always means expensive migrations and new costs.
The main challenge is maximising both profits and flexibility. To do so, here are some best practices to follow.
At Insight, we help service providers in realizing their business ambitions in a multi-cloud world. As a multi-vendor software licensing, workload, and cloud platform specialist, we can guide you through all stages of your strategic cloud journey. No matter where you are in your journey, we help you to find new ways forward and accelerate your business. Contact one of our cloud specialists for a talk.
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