Changing rules of IT business

The business of selling IT products in the country followed fairly simple rules. You had a clear set of vendors, an identified distributor and reseller network and more or less clear discounting practices. Every body was comfortable in their respective comfort zones. But all that is changing, and sometimes changing fast.

I am able to discern five major changes that are taking place in the horizon that can have a major impact on the way tech business is done in the country.

To start with, we are in for shorter buyer-seller relationships. Gone are the days when a vendor, once he sets his foot inside the customer's doors is home for good. With a plethora of choices available, both the seller and the buyer are keen to scout for fresher pastures, to try out new stuff and above all to keep their options open.

Partly as a response to this trend, some, if not all, vendors are trying to move away from a buy-sell positioning to a service leveraged one. While this has been around and talked about for some time now, I am beginning to see acceleration in the pace of its adoption. The increase in the user's propensity to outsource IT infrastructure-related work is only driving this further, with the bigger vendors taking on the role of infrastructure service providers and not just hardware, software or solution vendors. For every big deal that gets talked about, there are many more that are happening every day.

Along with shorter buyer-seller relationships, buyers are also getting more aggressive in driving the best pricing deals, and they are using technology to the fullest in driving better bargain. Internet-based reverse auctions is a new trend that is catching up in this area. Briefly, vendors are invited to bid over the Net for equipment purchases. The bidding window is kept open for a predetermined period of time. The vendor with the lowest quote gets the order.

Like with reverse auctions, more and more applications are moving on to hosted environments, partly so that geographically spread out offices can access the same application. One of the benefits that the buyer gets is the need for lesser number of licenses and lesser hardware to run the applications on. The more-or-less abundant availability of bandwidth is only helping accelerate the move towers hosted applications. Such hosting is happening not only at the third-party data centers, but also on servers owned by the user organization, hosted at the end of fat pipes.

For a long time, IT purchase decisions were the exclusive domain of the IT departments within user organizations. To that extend, sellers knew whom to talk to, and what to talk about. But not any longer. Line managers are fast getting tech savvy and are increasingly becoming key and knowledgeable decision makers in IT purchases, with the IT departments playing supporting roles. The problem for the vendor is that they talk completely different languages. They talk the language of plastics or medicine or oil or the stock markets and not that of IT. The prospective vendor has not only got to understand those businesses, but also talk those very same languages.

Users and vendors who understand these changes in the landscape and are able to leverage or ride on them stand to benefit as the next cycle of IT purchases kick off.

Krishna Kumar