If 2020 highlighted anything for technology and service providers (TSPs), it was the need to constantly adapt and evaluate business models, products and marketing for the current business environment. Given the pandemic and civil unrest, planning five weeks ahead became a challenge, let alone long-term planning.
But this idea of constant adaptation isn’t relevant only to COVID-19 — organizations need to be constantly alert to any changes or threats that have the potential to shift or disrupt the business entirely.
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“In ordinary times, savvy customers, well-financed competitors and a rapidly changing technology landscape would provide all of the challenges a technology leader would need,” says Rajesh Kandaswamy, Chief of Research and Gartner Fellow. “However, some forces acting on a provider present a more fundamental threat — anticipate and evolve, or be disrupted.”
Six key forces
Gartner has identified six key forces that will have the greatest impact on TSPs through 2025. These sources of these forces may be outside of the organization’s control, but nevertheless, the impact will be significant in the coming years.
Disruption from geopolitics and world events
COVID-19 shut down businesses, supply chains and entire countries, and changed the way companies buy, sell and work. But other events like trade wars, legislation, and regulations can all impact technology providers. It’s not about predicting these events as much as identifying existing trends (i.e., work from home, e-commerce) that will accelerate if these occur.
Changing customer demand and expectations
Customers demand products and services that meet their particular business or IT needs. In a broader sense, customer demand and expectations are shaped by cultural changes and world events (e.g., stay-at-home orders increasing demand for distributed work tools). User experiences and trends like mobility or subscription and freemium pricing, which were made popular in consumer markets, have led IT customers to want the same benefits from technology providers.
Disruption from emerging technology and trends
Emerging technologies may seem like novelties when they first appear, but when these technologies become a trend, they can profoundly shape buying and selling behavior and enable new business models. Over the next several years, today’s immature technologies and “weak signals” have the potential to disrupt what your product does, who it serves and how you deliver it. Product leaders must identify, understand and leverage emerging technologies and their potential impact on all facets of TSP businesses.
Industry dynamics affect how you compete and how you partner with other participants. Product leaders need to choose an ecosystem in which to participate, weighing factors such as the ecosystem’s audience size, areas of white space, likely competition, and marketing and sales support from the ecosystem provider.
New (and old) entrants
Changing industry dynamics and rapid development cycles make the dedicated pursuit of competitive intelligence an absolute must for technology providers. However, following your known list of competitors is no longer enough. In an era when “every company is a technology company,” product leaders will have to compete for market share against a range of new entrants, including non-tech providers, end users and mega vendors.
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Disruptive business models
Sometimes the key to success for technology providers is not what they sell, but how they sell it. Through 2025, disruptive business models will provide opportunities and threats to TSPs with long-lasting impacts. Delivering products to satisfied customers requires investing in the right technology, executing go-to-market strategy flawlessly, hiring talent and more. Capturing value to achieve such explosive revenue growth requires product leaders to select the optimal business model for their organization and offerings.