Comms Value Chain

7-9 NOVEMBER GLENEAGLES

COMMS VISION CONVENTION

Redefining the new Comm In the ‘Age of the Cloud, the Customer and the Platform’, how will the Communications Value Chain adapt to these new business models? Ask Comms Vision 2012 Content Director John Chapman.

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ince 2006 the Comms Vision Convention has been helping the directors of communications companies anticipate and plan for the technological and business changes that would affect their companies.

In particular, over the last two years the focus on Business Transformation has helped organisations make sense of a whole myriad of developments at all levels of the industry. Now for Comms Vision 2012 we will make our boldest ever step by trying to define the new ‘Comms Value Chain’, in light of enormous changes in the buying behaviour of customers, the changing delivery model brought about by the Cloud and revolutionary business models that challenge our traditional value chains.

such as hardware supplier, lines and minutes service provider, application software company and maintenance provider. Often the only complexity within the chain is the use of distributors to ease access to next-day delivery of products, as well as ancillary products and services.

In any industry there are usually two value chains, the overall chain that links all the organisations involved in the delivery of the product or service to the end customer and then there is the internal value chain within each organisation that creates their distinct competitive advantage. In the communications channel the overall ‘Comms Value Chain’ has tended to be linear in format with reseller organisations choosing a small number of partners, usually one in each area

Within each channel organisation management teams tend to use the Porter Value Chain model, whether consciously or unconsciously, to ensure they create their competitive advantage when selling communications solutions to their customers.

This model is geared around managing the relationship with suppliers, ensuring internal operations, process and procedures support the delivery of products and services effectively to the end user, and that after sales support is ‘best in class’.

The relationships between partners in the chain tend to be governed by formal partnership agreements that define the terms and conditions of doing business and include accreditation schemes covering both technical skills and salesmanship.

These accreditations are promoted heavily to end customers to establish the overall quality of the product or service and the credibility and competence of the delivery model.

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Sales and marketing is the cornerstone in this model ensuring that the quality of products and services and the reputation of the company are promoted aggressively to secure new business and expand the company.

The current ‘Comms Value Chain’, based on these simple structures, has worked relatively successfully for the last 25 years ensuring a healthy channel and some very successful businesses. It has been able to accommodate and support the evolution of new technology offerings, the entry of new vendors and providers as well as the development of new business practices. However, for the first time the confluence of three major business trends is challenging the overall ‘Comms Value Chain’ and at the same time making organisations re-evaluate their own internal value chain in terms of how they create their competitive advantage.

These three new business trends are considered to be so influential they have all had the words ‘the Age of’ attached to them in articles and books trying to define what they are and their likely influence on traditional business models.

The first of these business trends and the one most communications channel companies are already

John Chapman

At Comms Vision this year we will make our boldest ever step by trying to define the new ‘Comms Value Chain’ trying to grapple with is the influence of ‘the Cloud’. The reason why ‘the Cloud’ is so important to the comms channel is that it changes the traditional delivery mechanism of the industry, opens the market for new competitors and changes the economics model.

way they build and maintain their customer relationships.

‘The Cloud’ model also removes the barrier for entry for new competitors and allows vendors and service providers to bypass channel partners if they wish and deliver solutions directly to end users.

Being able to deliver a solution without the need for large capital outlays and almost with no delay in switching on the service, switching it off or changing supplier challenges both the business model of a traditional company and the

For most comms channel companies however it is the economics of the cloud that are most challenging. As well as adjusting their business model to accommodate recurring revenue rather than capital sales, they are already finding that ‘the

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7-9 NOVEMBER GLENEAGLES

COMMS VISION CONVENTION

munications Value Chain Cloud’ lowers the competitive advantage making it more difficult to differentiate their offerings. This is already leading to price and profit erosion. ‘The Cloud’ is thus at the heart of all discussions within the industry. It is a phenomenon that cannot be ignored and most importantly must be embraced.

The second trend that is driving business thinking and changing the way companies organise themselves is all about the customer and the way they want to buy, consume and build relationships. Technology has in its broadest sense, with the web, the Cloud, mobility and ‘apps’ leading the way, changed forever the expectation of the customer.

They now feel they should be able to buy or consume a service at the touch of a button. They expect technology to be intuitive and easy to use. They also want to access their company applications, entertainment, favourite applications and web sites on any device and from any location.

Most importantly they feel empowered to comment on their likes and dislikes and

Darren Farnden

www.commsvision.com

influence the quality, price and service of what they purchase. This extension of social networking into the heart of the marketing cycle is making organisations completely rethink their sales models and strategies. In particular, in a typical comms channel company, whose sales model has a ‘Hunter’ led approach, the ‘Age of the Customer’ would indicate that the ‘Farmer’ sales approach might be a more sustainable model for the future. A real challenge to today’s thinking and practice.

Building on the effect of the cloud and more importantly the changing relationship with the customer the third major trend has been termed ‘The Age of the Platform’

by Phil Simon in his book of the same title. In his book he looks at how Amazon, Apple, Facebook and Google appear to have created a new business model that challenges traditional thinking and is making other major multinational organisations completely re-evaluate their go-to-market strategies.

By using new technologies and a deep understanding of how to build relationships

with today’s customers these organisations have been able grow at phenomenal rates, despite in some cases launching unsuccessful products or services that to a traditional company would have been fatal or severely damaged the company. The ‘Platform’ business model that Phil Simon describes has enabled these organisations to fly in the face of traditional product introductions, to build relationships with competitors for mutual gain as well as building partnerships with flexible extensions and get out clauses to match the business requirement of the time.

Most importantly the ‘Platform’ model is customer facing. It is based around being customer led and understanding what they need and what they might need or want in the future. It is about not doing everything yourself and building partnerships that allow you to match the customer demands.

In many ways the ‘Platform’ model challenges the traditional ‘Value Chain’ in that it is more flexible and particularly more customer focused. There are some

For channel companies, winning business with certainty rests on customers having confidence that their supplier really understands them and has the capability to provide a realistic solution.

Considering Entanet’s own position in the Value Chain, we encourage channel partners to really get close to what a customer wants to achieve rather than simply try to sell what they have in their portfolio. It’s about creating long-term relationships and we’ve made changes in our engagement with partners to give them the help they need to do that.

Darren Farnden, Head of Marketing, Entanet International

The interplay of new working practices and technologies is snowballing to overturn the working world. The ‘one size fits all’ model is simply unviable in supporting the Work Rob Hutton 3.0 generation of businesses which need to be populated with interoperable best-in-class technologies. A shift is needed whereby vendors contribute to an ultimate solution, working alongside other vendors rather than competing.

Resellers will be critical in delivering this.

Rob Hutton, VP UK Sales, Mitel who will argue however that it is a model that is more appropriate for bigger companies that want to build on their large customer bases than smaller companies that are still establishing themselves or who focus on specific market segments.

in the future? Does the comms channel need to redefine the ‘Comms Value Chain’ in the light of these new influences? At Comms Vision 2012 we will explore the ‘Comms Value Chain’ and its relevance to today’s comms channel companies.

For the comms channel the ‘Platform’ model might be a way of taking back control of their business by enabling them to get closer to customers and thus define to their suppliers how their relationships should be structured to maximise the business potential of their customer base.

It may change the partner program and accreditation led relationships of today.

It would almost certainly reshape the internal value chains within the organisation and redefine what competitive advantage means.

In the Open Sessions we will discuss the overall marketplace in 2012 and what all these new trends mean to the comms channel, we will address creating Competitive Advantage in this new world and also about defining and delivering excellence in a customer lead world. In the closing session we will draw together all these views as well as input from delegates to see if there is relevance today for the ‘Comms Value Chain’ and if so how it needs to evolve to support a comms company’s go to market strategy.

There is no doubt that the ‘Value Chain’ model has been successful to date for the communications channel.

However in the ‘Age of the Cloud, the Customer and the Platform’ is it relevant

Comms Vision 2012 will be the most stimulating event ever for the directors of comms channel companies and I look forward to meeting you all there joining in the debate. n www.commsvision.com

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