Here at ComCap our work extends across the digital retail landscape, we work with retailers, marketplaces, software providers, payments providers, and logistics companies. We also work with agencies and systems integrators. This last sector is one of the most dynamic areas of our M&A and financing practices as the landscape changes based on retailer needs, new platform launches, and the strategies of the giant holding companies.
As such, I was pleased to contribute to FitForCommerce’s recent report on the topic. Please see below for the link to the report and for my interview with FitForCommerce CEO, Bernardine Wu.
I hope you enjoy the article – I’ll be at Shoptalk in Las Vegas in March and have traveled to NYC, Boston, London, Paris, and Shanghai in the next month or so if you’d like to catch up.
Digital commerce services
Digital Commerce presents enormous opportunities, as well as challenges, for today’s retailers and brands. Whether strictly online or in omnichannel environments, consumers demand a higher level of service than ever before. An ever-evolving retail environment and the increasing pace of new innovations further exacerbate the problem. The good news is that retailers and brands are not alone in trying to meet these needs. There is a wide array of outside resources, particularly Systems Integrators (SIs), digital agencies, and other experts that can help build the creative and technological solutions required to meet, and exceed, customer expectations.
”Successful digital technology implementations are largely based on the right fit integration partners. These partners can make or break an enterprise initiative’s success or failure, and ultimately impact the growth and profitability of the company”. - Arthur McManus, SVP, Provider Program, FitForCommerce
Making Digital Service Partners work for you:
An interview with Bernadine Wu, Founder of FitForCommerce
Aron Bohlig, Founder of ComCap LLC, met with Bernadine Wu, Founder of FitForCommerce, to discuss what they learned generating the new report “Digital Services: A complete guide to the Systems Integrators and Digital Services Partners”.
Aron: Bernardine, thanks for taking the time today. Certainly, I was pleased to contribute to your Digital Commerce Services Report. I wanted to follow up with you to find out some of the learnings that FitForCommerce experienced while developing the report and the Provider Directory database.
Bernardine: We’ve been in the industry for over ten years and have interacted with all the parties that we’ve covered in the report. That said, once we sat down and worked to map out the provider landscape, we were surprised at how many choices and how many approaches to market exist among agencies and systems integrators.
Implications for retailers:
Who you select to implement or support a software implementation, it can make or break that software purchase and the project overall.
Almost 70% of platform projects end in a “breakup” because of a poor fit or poor support. You should very carefully evaluate new agency relationships – especially post-implementation support – before committing wholeheartedly to a particular provider.
Be sure to hold the agency accountable for your business objectives. For example, they should be focused on profitable revenue growth, not just on achieving the launch date milestones or a quality metric related to the number of bugs.
Many times, we talk to agencies that feel like they are “in the dark” about the real business objectives they are supporting. The project should be thought of as implementing technology to enable the business, not just a technology implementation. This does require deliberation on your part to define your strategy and KPIs – those that the agency should be achieving – and then agree on how you can jointly track and measure that success. Don’t be afraid to renegotiate your deal if you haven’t done this – but also be willing to offer some share of the upside to the agency if they help you hit your objectives. Provide them with a strong incentive to do so by having “skin in the game.”
Implications for private equity owners of retailers:
Every private equity firm should be evaluating all its agency relationships. Most retailers have multiple relationships, and an investor will typically benefit from having multiple portfolio companies. That means you have better data, and better leverage to make good decisions about your agency partners. Just as you would hold your hosting providers to SLAs and performance metrics, you should be holding your agency partners accountable to performance metrics. Doing so will both help execute on current projects and provide your other portfolio companies with a good basis for evaluating that agency for other projects.
Implications for systems integrators or agencies:
First off, get covered in the report! The landscape is getting more competitive as systems integrators are supporting multiple technologies and multiple other services in a project. Picking which platforms you support and which services you provide is an important strategic decision – being the tenth provider for a major platform will not be a differentiator.
Along those lines, you need to have a well-developed sales and marketing team – the days of winning business from a platform provider by buying a software sales rep dinner is over – you need to go directly to the brand or retailers to win the business. Ten years ago, systems integrators were “selling developers” – now you need a brand based on real differentiated processes, intellectual property, and portfolio successes.
Develop a clear and comprehensive go-to-market strategy that involves your sales processes. For example, participate in thought leadership opportunities that can then be used by sales as another touch-point with the brand or retailer.
Being seen as an expert in topics such as best practices for creating and executing an RFP can be the differentiator in selections where the services providers are similar in other critical selection criteria. Finally, add your company to the FitForCommerce Provider Directory where you can list your company information and solution capabilities.
Retain in-house or outsource?
However, determining what should be retained in-house and when to outsource other activities is not an easy decision. There are hundreds of services partners that support the retail industry, each with its own set of strengths and areas of focus. For retailers and brands, it starts with identifying internal competencies and resources available to determine what to keep in-house. Then they must effectively and efficiently surround their team with a partner that has the complementary expertise and resources
A Key Resource: The FitForCommerce Provider Directory
Looking for a new solution? The Provider Directory put together by FitForCommerce is a go-to resource used by retailers, brands, wholesalers and distributors to research and evaluate technology and service providers.
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