IDC Keynote: The Seven Transformations IT Solution Providers Must Confront

The Seven Transformations
IT Solution Providers Must Confront
Darren Bibby
Program Vice President, Channels and Alliances Research
@darrenbibby

@darrenbibby
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 2
Evolution
or
Revolution

3
Photofinishing
Retail
Film
Manufacturing
Photofinishing
Wholesale
Agx paper and
chemicals
Camera retail
Camera
Manufacturing
Film
retail
Memory
Manufacturing
D-SLR
Manufacturing
Photo Printers
Manufacturing
Digital Camera
Retail
Photo printers
retail
Digital imaging
software
Memory retail
Digital compact
manufacturing
Rolled & Single
use film mfg
Film camera retail
Imaging Industry Profits
http://www.telco2research.com/articles/BR_Silicon-valley-2012-money-moving-are-telcos_Full
1995 - $1.9B
2005 - $3.7B

@darrenbibby
The Kodak Story
On Top of the World
 Market leader for nearly 100 years
 1976 – 90% market share in film
 “Kodak Moment”
 1975 - Developed a Digital
Camera

@darrenbibby
The Kodak Story
Leading the Digital Revolution?
 Digital camera was quashed by the
powerful Film division
 2003 – Fujifilm had 5000 digital
processing labs in USA
 Kodak had < 100

@darrenbibby
The Kodak Story
Strategic Responses:
 Discount Film
 Catch up in digital cameras
 Acquire Sterling Drug
 Create inkjet photo printer business
 Sue Everyone! Patent Trolling

@darrenbibby
The Kodak Story
And In the End…
 Bankruptcy Protection

@darrenbibby
8
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
CDSC Owning U.S. Households Smartphone U.S. Households
Imaging Industry – Digital Still Cameras

@darrenbibby
Digital Camera Growth
USA WW
Digital Still -40.7% -30.2%
Interchangeable Lens -23.2% +3.1%

@darrenbibby
Digital Camcorder Growth
USA WW
Traditional Camcorder -22.9% -51.2%
Point of View +34.5% +14.9%

@darrenbibby

@darrenbibby
“There is no such thing as Sustainable
Competitive Advantage anymore.
Only Transient Competitive Advantage.”
Rita Gunther McGrath, “The End of Competitive Advantage”
@darrenbibby

Partner Transformation
FROM TO
Technology
Customer
Sales Motion
Time Horizon
Marketing
Activities
Competition
@darrenbibby

Partner Transformation: Technology
FROM TO
Technology 2nd Platform 3rd Platform
Customer
Sales Motion
Time Horizon
Marketing
Activities
Competition
@darrenbibby

FROM TO
Customer
Sales Motion
Time Horizon
Marketing
Activities
Competition
On-Prem to Cloud Software
 $127B of Public IT Cloud
Services Revenue by 2018
 22.8% CAGR
 5.5X IT Spending Growth
 As of 2014, over 50% of buyer
firms have adopted some form
of Cloud.
@darrenbibby

FROM TO
Customer
Sales Motion
Time Horizon
Marketing
Activities
Competition
From Servers to Services
 IDC predicts that service
providers will account for over
43% of total server shipments
by 2017
 By 2016, over 50% of compute,
70% of storage capacity will be
installed in hyperscale data
centers
@darrenbibby

FROM TO
Customer
Sales Motion
Time Horizon
Marketing
Activities
Competition
Cloud Consumption Model
 70% of CIOs will embrace a
“cloud first” strategy in 2016
 By 2018, it is predicted that
nearly 27% of all software
revenue will be subscription
based.
@darrenbibby

Partner Transformation: Customer
FROM TO
Customer IT Business & IT
Sales Motion
Time Horizon
Marketing
Activities
Competition
By 2016, LOB
executives will be
directly involved in
80% of new
IT investments
@darrenbibby

FROM TO
Sales Motion
Time Horizon
Marketing
Activities
Competition
CIO CMO
Now
Then
@darrenbibby

FROM TO
Sales Motion
Time Horizon
Marketing
Activities
Competition
FROM
 IT Complexity
TO
 Business Outcomes
@darrenbibby

Partner Transformation: Sales Motion
FROM TO
Sales Motion Deal Relationship
Time Horizon
Marketing
Activities
Competition
Sell Use
Transaction
@darrenbibby

Partner Transformation: Time Horizon
FROM TO
Time Horizon Short Term Long Term
Marketing
Activities
Competition
Typical Project Based Business
Typical Recurring Revenue Business

FROM TO
Marketing
Activities
Competition

FROM TO
Marketing
Activities
Competition
@darrenbibby

FROM TO
Marketing
Activities
Competition
@darrenbibby
“The stock market values
companies with more
regular cashflow more
highly.”
Tim Worstall
Forbes
June 18, 2013

FROM TO
Marketing
Activities
Competition
@darrenbibby
“Even if the revenues were the
same,
the costs the same,
the profits the same,
moving from a variable revenue
stream such as upgrades
to a more regular one as in
subscriptions
should boost the value of Adobe
itself.”

FROM TO
Marketing
Activities
Competition
Potential
Valuation
Traditional
Revenue
Business
Recurring
Revenue
Business
Revenue
Multiple
0.2 to 1.5 X 2 to 6 X
EBITDA
Multiple
2 to 2.5 X 5 to 14 X
Source: IDC Partner Valuation Study 2014
“For the average sub $5 million a
year VAR, it’s tough to get past three
times EBITDA”
Brent Twist, Encore Business Solutions

Partner Transformation: Marketing
FROM TO
Marketing Traditional Digital
Activities
Competition
Internet
@darrenbibby

Partner Transformation: Activities
FROM TO
Activities
Resale
Pro Services
Services
Services
Mgd Services
Creating IP
Competition
Services to
Creating IP
Professional to
Managed
Services
Resale to
Services
@darrenbibby

Partner Transformation: Activities
FROM TO
Activities
Resale
Pro Services
Services
Services
Mgd Services
Creating IP
Competition
Resale to
Services
Services to
Creating IP
Professional to
Managed
Services
GrossMargin
@darrenbibby

Partner Transformation: Competition
FROM TO
Activities
Resale
Pro Services
Services
Services
Mgd Services
Creating IP
Competition Traditional Non-traditional

FROM TO
Activities
Resale
Pro Services
Services
Services
Mgd Services
Creating IP
@darrenbibby

@darrenbibby
FROM TO
Activities
Resale
Pro Services
Services
Services
Mgd Services
Creating IP
“Culture eats strategy
for breakfast.”
Peter Drucker
Culture

Evolution
or
Revolution
@darrenbibby

@darrenbibby
“There is no such thing as Sustainable
Competitive Advantage anymore.
Only Transient Competitive Advantage.”
Rita Gunther McGrath, “The End of Competitive Advantage”
@darrenbibby

@darrenbibby
“If you don’t like the feeling of change,
You are going to like the feeling of irrelevance
even less.”
Darrin Nelson, Sirius Computer Solutions
@darrenbibby

IDC Keynote: The Seven Transformations IT Solution Providers Must Confront

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IDC Keynote: The Seven Transformations IT Solution Providers Must Confront