value-added resellers (VARs)

Another business model that is familiar to many in the IT industry, value-added resellers (VARs) came into existence as technology vendors needed pathways for getting their product to market. As computing use exploded from a select few large companies into the general business market, vendors could not directly reach every interested customer. VARs provided a way to achieve scale, and the “value-added” part of the equation ensured that they could capture more profit through integration or training rather than just acting as a facilitator. Even in a cloud-based world, physical hardware is still required in many situations, so this model has traction even as many VARs also diversify with other business models.
Managed Services

One of the most common models for diversification is managed services. This model moves away from one-time projects into ongoing work (also shifting from one-time sales into recurring revenue). In many cases, managed service providers (MSPs) act as virtual IT departments for their clients, performing the tactical work of keeping IT infrastructure running or monitoring network behavior for security incidents. The managed service sector has become its own cottage industry, with MSP-specific tools such as professional service automation (PSA) and remote monitoring and management (RMM). While the offering is technically an ongoing service, this model is still tied fairly closely to vendor products—the thing(s) being managed typically come from a company higher up the chain.

Solution Building

This final business model is where the crystal ball gets murky. While the other three models have been in place for years (or decades), the creation of unique solutions is a recent response to a major shift in IT operations. Our whitepaper on The Role of Emerging Technology in Digital Operations describes the way that IT activities once-focused on the platform for computing now focus on more complex solutions built on a stable platform. As the basic pieces of IT architecture become commoditized, we will see the rise of what the whitepaper calls “artisan IT”—combining those parts into solutions tailored to industries or individual companies. This model may depend on vendor components for the pieces, but the final solution will be a unique creation from the solution provider.

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