Prepare for Battle

For the young software company, the internal services organization is often the only game in town. As such, it is far too easy to become complacent, and this can lead to a precarious situation when the competitive landscape changes.

Invariably, particularly for those companies that have some success in the marketplace, third party services firms will identify and attempt to exploit the business opportunity through training and recruiting experienced talent. Ironically, if the company has developed a robust and effective partner program, it is often these very same "partners" that become the primary sources of competition.

So what can be done? The key, as in all mitigation strategies, is to stay ahead of the competition curve. How clearly and meaningfully you can differentiate your offerings will determine how long you will continue to be perceived as the market leader in your domain. Identify which skill-sets are more likely to be viewed by the market as commodities and leave that lower-margin business for the competition. Focus on continuously building and strengthening expertise specific to your domain and product line. Do not wait until the competition has arrived. This is a core strategy for the long term health of the services business. Not only will it allow you to establish yourselves as the true experts and thought leaders, it will also allow you to minimize margin erosion due to competitive rate pressures. You will not win a rate bidding war if your services are considered largely similar to your competitors'. Again, differentiation is critical.

You will never prevent new players from entering what appears to be a burgeoning market. Be proactive in preparing for the inevitable and show the market that you are still the only game in town.