Breaking the entry barrier of enterprise information technology & consulting sector

By: Ravi Kumar, Director, CRM Consulting at Cubastion Consulting

IT consulting and service industry earned $516 bn in 2010, with a compound annual growth rate (CARG) of 3.9% from 2006 to 2010. Integration and development were the most lucrative segments in the industry catering 49.3% of its total value. Total revenue of $254.2 bn was earned from these two sectors. Enterprise information technology and consulting sector is dominated by large players. For instance, corporations such as IBM, Inforte, Infosys, Wipro Technologies and other such have been playing a mainstream role in enterprise CRM consulting service sector. In this backdrop, entry of small enterprises or startups is quite difficult in the market dominated by established enterprises. Moreover, an aggressive competition among the major players to dominate the market brings in new complicacies for small startups.

The CRM industry is one of the best-known sectors of enterprise Information Technology and Consulting domain. Being one of the integrated applications for business processes and customer service solutions CRMs are sensitive to any enterprise. This is the reason of enterprises to prefer large and established organizations to the new players in the CRM service and solution market. This creates a high entry barrier to the market for young companies. Especially, the CRM development market has grown to be quite competitive with large players dominating half of the market. In this backdrop, young enterprises can only hope to create a space in the market by providing tailored solutions to existent CRM programs. A constant impact can only be created in CRM sector by offering innovative features as services that utilizes the core unexplored capabilities of enterprise CRM applications and thereby making them more productive. Honestly speaking, the enterprise service sector is yet to explore the possibilities, which the existing CRM applications could offer. Budding enterprises should explore various integration opportunities, unexplored features, such as enhancement services that would help to modify existent CRM programs turning them to be more efficient in handling operational processes as well as serving better the real cause; The customer. If done consistently, this could be an ideal way to be established in the enterprise service market. Although, the process is gradual, a number of CRM consultants are able to make a remarkable and long-lasting impact.

The primary reason for entry barriers to new companies in enterprise IT solution and consulting market is the larger reach of industry leaders and an already established network of sales and clients. Large IT service providers have an already established structure of marketing and sales. In addition, pioneering corporations in the domain, being matured with business growth, invest massively in Research and Development, which is difficult for new players. A number of factors contribute to constrained entry of new companies in the IT market. Brand name, Sales and distribution rates, Cost of technology installation are some primary barriers to the industry. Large organizations in the CRM industry such as Tata Technologies, IBM, Inforte, Infosys, Wipro Technologies have an established brand name.

This makes them stronger contenders in the market as they have broad spectrum of technology expertise under one roof. Thus relying on them for wholesome outsourcing offers security and reliability to the businesses. Moreover, business enterprises maintain a standard in their internal business tools and technology to match with their competitors, leveraging large IT service providers. On the other hand, it is advantageous for these giants to encompass the range of IT services with its comprehensive set of solutions. As they have number of services to offer, enterprise can get the whole package of business solutions and services from the same vendor. Such scenario creates larger obstacles for young companies to gain foothold in the market. This leaves a narrow way for startups and small ventures for market entry: Innovation and offering a range of specialized services. Lately, software and applications along with CRM solutions have become more commoditized. Innovative integration of existent solutions arising out of focused technology approach, providing better amenities and ease of usage to client enterprises brings in better prospective for young service providers.

IT applications and software form the core of business enterprises. They comprises of massive and sensitive business data that needs to be pipelined round the clock for process operations. Any change in application or technology service provider could disrupt the normal flow of process operations, which could bring large risk factors to enterprises. As enterprises have adopted technology solutions and tools from existent service providers, to implement any change or process modifications costs a lot in terms of opportunity, time & of course money. The decision to transfer technology and services from former provider to a recent one has be to taken much cautiously, equating both side of the equation considering many crucial factors such as capabilities, time, resource, investment and strategy. Under such circumstances, many enterprises prefer to carry on with the existent system even if new tools could provide more features. Unless such services provide sufficient ROI, enterprises are reluctant to move to new providers.

To gain better grip in enterprise IT and consulting sector, neophyte service providers will have to enhance their services with innovative features. Focus on innovations, efficient project operations, consumer orientation can enable new companies to leap ahead along the line of large players. The ability to create techno functional skill-sets, attract and retain talent with a focus on exploring capabilities of existing CRM software could assist these ventures to create a space for themselves. The ability to cluster features from conventional programs and improve specific facets of such tools can create large difference in results from customers prospective. Evolution is an ingrained feature of every market and enterprise IT consulting sector is dynamic. New trends and traits will emerge creating new prospective in this market. Young ventures should be agile to hone such opportunities implementing services that are more imperative for business enterprises.