Increasingly, firms are finding their post pockets of growth inside the ecosystems of software companies’ partner programs. Why that is and what to do about it.
“Consulting is shifting to the right.” Five years ago I made this comment in an early episode of our podcast, Rattle & Pedal. No, I’m not talking about the political environment for consulting services… that would be a different post altogether. Rather, I’m speaking to a shift in when clients involve consulting firms in their technology buying process.
Historically, clients hired firms to help think about how to apply technology to solve a business problem. Finding the best solution to the problem was the goal. The firm was valued for its objective advice on solving the problem. And for its ability to identify which technology or software system was the best fit for solving the problem. Firms touted, and clients valued, their objectivity.
Today, clients are more likely to pick a software platform they want to invest in then, seek a services partner to help them implement it. In effect, when consulting firms are hired has shifted to the right in a quasi-linear buying process. The technology decision has already been made. Now, the client is looking for a partner to help implement the solution as quickly and effectively as possible.
As a result, many of today’s fastest growing consulting firms are fixtures in the partner ecosystems of today’s fastest growing software companies.
Directories, Inbound Capital, and High-Flying Firms Show This to Be True
Historically, review sites (aka directories) like Capterra, Gartner, Trust Radius, and G2 focused predominately on reviewing products (i.e. software). Now, many of those companies are turning their eyes towards services businesses. And, logically, they’re doing it by tracing their way back through the partner ecosystems of the software companies they’ve been studying for decades.
Simultaneously, capital is flowing into these services firms. There is external capital investing in the services industry in general (witness the rise in private equity investment in the A/E industry). But my sense is that even more capital is flowing into technology-backed services businesses; particularly those that are aligned within specific partner ecoystems. Examples of this include:
- Growth equity firm, Tercera (a Rattleback client), which is focused primarily on investing in IT services firms connected to high-growth platform ecosystems.
- Private equity firm, Recognize, that’s focused a bit more broadly at investing in technology services firms in general.
Finally, over the last few years we’ve seen first-hand, the rapid growth of many IT services firms driven largely by their decisions around which platform ecosystems on which to “hitch their wagon.”
- From firms focused exclusively on narrow implementations of specific software solutions like Lev that focused on Salesforce (and sold to Cognizant) or Anavate Partners that focuses on Anaplan ….
- To firms focused on connecting the benefits of a few technologies like Braze and Segment to create new client value …
- And, firms like Spaulding Ridge that believe that their central client value proposition is in picking “winning technologies” and investing in them ahead of the curve. Thus, enabling them to ride the wave of growth when the market and their clients are ready to adopt.
How This Trend Impacts Professional Services Firms
To start, I think it’s changing the value proposition and the nature of some firms.
Historically, a lot of technology firms saw their central value proposition as their objectivity. This is particularly true of the Microsoft partners that emerged in the 1990s and 2000s. While they were primarily Microsoft shops, most of these firms saw themselves as objective advisors in the technology stack.
Many clients are looking to other places for the objective analysis on what technology makes sense for their organizations. Companies like Real Story Group have emerged as alternatives to traditional analysts, like Gartner and Forrester to offer objective takes on the strengths and weaknesses of a given technology. And, frequently this objective advice can be bought on subscription, “as a service.”
As a result, those clients are looking to firms, not for their objectivity, but for their ability to accelerate their speed to market. They value firms with the implementation expertise, and their ability to get a new technology from adoption to scale much faster than they could ever do on their own.
And, as it turns out many of the fastest growing software companies offer limited or ineffective professional services organizations. In fact, many software companies lack both the ability and the interest in building high-performing professional services organizations. In fact, frequently they’re hungry for channel partners that can successfully implement their technologies. For firms this means accessing a sales pipeline and healthy flow of deals that they otherwise struggle to find on their own. Also, many software partners come armed with venture funds to put additional fuel behind the marketing investment.
5 Things Firms Can Do Now
If yours is a firm that currently doesn’t have any partner relationships, here are a few things to think about and actions to take before going down this path.
- Culture. What do your clients value from you most? Your objectivity and selfless guidance? Your ability to help them get things done to move the needle on importance issues?
- Business Model. To quote my podcast co-host Jeff McKay, “when do you show up as your best selves?” Are you at your best when you’re challenging clients existing assumptions about how they’re thinking about our solving a problem? Or are you at your best when you’re helping clients accelerate a path they already have in motion?
- Client Needs. If you haven’t already, spend some time with your clients, outside your client work, to understand the business challenges they’re trying to solve with technology right now. What systems are already a mainstay in their business? What technologies do they see as exciting or emerging or on the horizon? What’s holding back adoption?
- External Resources. Look at external resources, like the Tercera 30, that can help you understand where the best investment opportunities might be in the near future.
- Invest in Options. If you’ve checked all those 4 boxes and see a few technologies of interest, make some targeted limited investments in the one or two you see as most promising. Get to know the technology, get to know the makeup of the partner program, get to know some of the account managers in their channel. In short, give yourself the option to go deeper later by taking a few small first steps now.