Comms Vision 2021: Business model change underpins Covid-19 rebound

Diego TedescoThis year’s Comms Vision gold standard conference charts the course of mega market disruptions and against this backdrop you would be wise to focus your strategic priorities on flexibility and evolving business models, writes Diego Tedesco, Commercial and Marketing Director at Comms Vision Platinum sponsor Virgin Media O2 Business.

The last 18 months brought profound change for every business. New needs emerged around remote and hybrid working, as well as the digitalisation of services. Businesses acted boldly to survive and stabilise, investing in cloud services to keep employees together, projects moving and customers served. Now, with the national lockdown behind us, organisations can begin to think about the rebound. They have a once-in-a-generation opportunity to build on the extraordinary digital progress achieved, as our study with the Centre for Economics and Business Research (Cebr) shows. It found that if UK PLC continues the pace of digital investment, it could add £232 billion to UK GDP. That’s roughly equivalent to the current size of Finland or South Africa’s economy. Channel partners will be pivotal in enabling businesses to take the bold decisions necessary to grasp this chance to make our economy more prosperous than before the crisis.

But to do so, they need to help customers overcome their agility problems. Fifty seven per cent told us they don’t believe that they are currently agile and capable of flexing infrastructure up and down. And 36 say that being locked in protracted contractual discussions with their connectivity partner prevents them from taking bold, swift action in response to market conditions. To give businesses what they need to recover, the channel needs to embed flexibility at the heart of its commercial model and become more strategic in its approach to end customers. Here’s how.

Rethink current business models

Ninety four per cent of senior IT managers want to invest in digital services that will boost their operational flexibility. The appetite is clearly there. Another reason for optimism is the positivity among the channel community. More than 95 per cent of decision makers feel that the channel has maintained its relevance through the pandemic, according to the State of the Channel report. But 56 per cent of respondents rightly feel that the situation is ‘rapidly changing’.

And our research suggests channel partners could do more to keep up with the pace of this change, especially when it comes to the way they’re setting up their commercial offerings. These simply aren’t working for end customers anymore. Forty four per cent of senior IT managers are paying for services they don’t need.

And 36 per cent say renegotiating fixed term contracts is preventing them from working more flexibly. The amount of time spent on renewals is also proving problematic. Senior IT managers spend six days every year on negotiations - valuable hours they simply can’t afford to give away.

This is worrying because research shows that agile companies – those able to respond quickly to market developments – have outperformed others over the last 18 months, according to McKinsey. So, the channel urgently needs to reconsider its contractual arrangements with end customers, looking specifically at cancellation terms, renewal processes and upfront fees. This is something we’ve been doing at Virgin Media O2 Business.

We listened to what channel partners and end customers were telling us and concluded it was time to rip up the rulebook. We recently launched UltimateFlex, a new contracting mechanism designed to provide the channel community with maximum flexibility. It introduces anytime cancellation, abolishes all installation charges and excess construction costs, and offers benchmarked pricing on installed services, so partners never pay above the market rate.

This involves considerable risk on our part. But we decided the move was necessary to give our partners and their end customers the freedom to take bold, agile decisions. We hope this will inspire our partners to take similar steps and pass on the benefits to end customers. This is an exciting opportunity to free up UK PLCs – letting them take risks and accelerate their digital transformation journey.

Shaking things up can create goodwill among end customers, too. It will allow channel partners to play a more strategic role and turn transactional relationships into long-term partnerships. But what does this strategic role entail?

The strategic role

Fifteen percent say that their channel partner rarely offers strategic consultancy on business issues. And nearly four in ten (39 per cent) would like more advice on the best digital services for their organisations. So, there’s room for channel partners to use their expertise and help customers enhance their digital strategies by filling in any knowledge gaps.

To do that, IT solutions providers can help end-customers better understand their requirements when implementing solutions like SD-WAN, IPVPN and DIA. And help them draw on the solutions like optical high capacity services or 10G National Ethernet services to give them the bandwidth and performance they require.

It can be critically important to select the right underlying connectivity technology that will guarantee performance and longevity - ideally one that can flex as usage and traffic profiles change. As bandwidth requirements grow exponentially and IT environments become increasingly complex, customers need more support understanding and planning their networks.

For example, remote and hybrid working has meant a 148 per cent increase in virtual meetings, a 40 billion rise in emails, and a 66 per cent surge in people working on live documents, according to Microsoft. And online purchases rose by 74 per cent year-on-year in January 2021, reported Capgemini. Business leaders need assurances that their connectivity infrastructure will cope with these changing demands over the long-term. By establishing themselves as strategic consultants and pairing businesses with the right technologies, channel partners can equip their customers for ongoing success.

Looking ahead

We have come through a period of unprecedented uncertainty. In helping end customers survive and stabilise, partners have stepped up to the challenge. But now is the time to help UK PLC recover and prosper, and that requires the channel community to change. By rethinking conventional business models and becoming more strategic in its approach, the channel can play a critical role in adding £232 billion to our economy – and they can set themselves up for success by unlocking new commercial opportunities.

It takes Vision to be a leader

Comms Vision is the leading annual leadership forum for CEO, MD and CTO delegates making up the major league of the UK reseller community. Places are limited and by invitation: If you would like to join us this year, please register your interest to attend at www.commsvision.com

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