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Clarifying product strategy

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From the point of view of IT services, we have recently clarified our product strategy and decided to stop working directly with certain vendors and to focus on others. What impact will that have on a) customers, b) employees and c) vendors?
Many IT services firms are considering similar moves given the current economic climate. Narrowing your product offerings will affect all the communities that you outlined and as a result narrowing decisions need to be made very carefully.

a) Customers: Reducing your vendor pool will reduce the breadth of business solutions that you can provide to existing customers. This in turn will potentially force you to limit the vertical markets you are hoping to serve or the market segments (company size, solution set) that you are addressing. Customers who have purchased a solution that you no longer plan to work with directly will definitely be left with a services gap and are likely to turn to competitors to fill it. Other customers may benefit from additional focus on the products they use within your consulting team. This benefit will be greater if the additional focus within your organization enables you to more rapidly deploy the technologies you support, since rapid implementation is becoming more and more important for all customers.

b) Employees: Employees who are trained on the vendors you are dropping will need to be re-trained and are likely to be very frustrated. As a result, you should pay close attention to retention issues surrounding these folks. Employees focused on vendors you are keeping should be unaffected for the most part.

c) Vendors: Clearly the vendors you are dropping will suffer, provided you were supporting a substantial customer base jointly. If you were not supporting a large joint customer base, they will actually benefit from reduced partner support costs that result from your decision. The other vendors you are dealing with will most likely be helped by the decision as they receive more and more focus from your company.

This was first published in September 2001

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