No-one will argue that the level of disruption for technology buyers and sellers is at an all time high. Everything is up for the disruption and will be for the foreseeable term in business time-frames. Therefore every option to win needs to be considered.
Multi brand approaches are real. They work for airlines, retail, hotel chains, auto manufacturers and many other sectors of the economy so why have IT solution providers not considered a multi-brand approach. The Gap group has Old Navy, Gap and Banana Republic, Qantas has Qantas and Jetstar, Volkswagen Group has VW, Skoda Audi amongst many examples. The time has come for IT Solutions vendors to meet distinct client requirements and frankly not let revenue walk out to competitors.
Let’s take a look at the model enjoyed by leading Asia Pacific airlines such as Qantas, and Singapore Airlines. These three airlines, whilst more than capable of frustrating their frequent fliers, have a very strong premium brand. When you fly them you know what you will get. The schedule is usually robust, and if there is a problem it can be resolved, you get experienced crew, and an overall premium experience (I know, a little idealistic perhaps).
If you fly Jetstar, or Scoot you know that you still get from A to B, it is just with less frills and services, and often some tears, but of course, all things being equal, you play less money.
From a car perspective, even though they can share the same platform the experience and cost outcomes between an Audi and Skoda is considerable
The legacy IT solutions vendors need to adopt this model if they are to stay relevant in what is of course an exceptionally disruptive environment. Maintain the premium brand for those organisations who need the full service and can invest the resources. Then create a tiered brand that services those clients who do not want bespoke solutions, rather those who want faster deployments.
The tiered model opens up the smaller sized organisations, specific industry offerings and partnering opportunities that are not always available to the premium model. Just as Qantas found with Jetstar it introduces new economics for potential customers that were either untapped or just went to the other competitors.
A key point is that some will say that this is the role of partners, but it is not as simple as letting the no frills work go to the channel. The partner environment is important but cannot please every engagement or client.
Characteristics of the premium services brand
- Integration depth and testing across Applications, processes etc.
- Availability of premium resource level
- Bespoke service provision
- Core business processes
Characteristics of the no frills services brand
- Stand alone project engagement
- Strong asset and automated solution base
- Inability to significantly modify or customise
- Secondary business processes
The core point is that currently there is not the flexibility to provide such a model. Vendors get themselves caught up in being both premium and no frills. This is where it gets difficult. The success of Qantas, Gap et al is because they know where one brand begins and the other ends. They price and deliver consistently to this benchmark. They also value customer experience and outcomes, just in different ways.
The other area of debate relates to core versus secondary business processes. This is of course debateable, but it is clear that some processes need more technology investment focus than others.
Focus Point
The IT market is undergoing extreme change. The services market is no exception. Whilst it met the challenge of offshore, this is no guarantee that it will meet the challenge of cloud and digital more broadly.
Legacy vendors must consider the multi-tier model that has been so successful for the business model of brands such as Gap, Qantas and Volkswagen. This enables the opportunity to change the dynamics of the services market and have a better chance of winning during the disruption.
If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted by email below,
