Exploration of Service Transition Strategies – Evidence from IT Systems Integrators

1. IT Systems Integration firms are facing margin & cash flow pressures in spite of possessing technical and sales skills because of two factors – changing customer needs and Disruptive Innovation.
2. Changing customer needs create a challenge for companies dependent on IT Infrastructure products while disruptive innovation creates alternate cost-effective solutions, shrinking the market of IT Infrastructure products.
3. However, at this juncture enough evidence is available which reveals that customer organizations have changed their preferences and have started embracing emerging technologies and optimization techniques to remain profitable and competitive in their business. (For example, CXOs trying to create free cashflow by minimizing capital expenditure).
4. With the progression of time and maturity of the hardware industry, prices have become extremely competitive resulting in shrinking margins (single digit margins), for the systems integrators. Conservative commercial terms offered by the customers are a threat to survival.
5. Hence there is an immediate need for Systems Integrators to transform drastically and create new profitable lines of business as well as transform the nature and quality of the existing core business. The problem is to identify the correct strategy to transform keeping in mind the customers’ needs as well as creating value for the firm.
6. This research explores identification of specific strategies to transform product centric midsized IT Systems Integrators to compete under margin and revenue pressure, through service transition with an objective to enhance profitability, growth and accounting metrics.
7. After reviewing management literature, insights emerge around theoretical frameworks and constructs created. However, the uniqueness of this research lies in directly rolling out strategies in a mid-sized IT Systems Integration firm, through an experiment, measuring and analyzing the outcomes. The outcomes are expected to provide a direction to midsized IT Systems Integration firms as well as create scope for further research.