Conducting technology market research for new techs, products

Find out how channel partners approach researching the market potential of techs or products they're considering adding as a business offering.

As a not-for-profit professional trade association for the global IT industry, CompTIA doesn't leave anything to chance when it comes to helping its VAR members decide whether to move into a new practice area, technology line or individual product. The association uses a variety of methods to conduct research, but, first and foremost, it starts off with an outline, or a "mini business plan," for how to tackle the market, said Tim Herbert, vice president for research for the Downers Grove, Ill., organization.

"You don't want to simply start by looking up data points via Google without having an understanding of what you're looking for," Hebert said. "You don't want to get hung up on 'The market is X billion dollars,' without having a context for why that's important and what you're trying to accomplish."

With an outline of how a particular technology or product might fit into a VAR's business line in hand, the VAR must then understand the potential market for that product or technology, before deciding to add it as a business offering.  After all, it's a decision that will require a big investment of mony, time and manpower. So it's important to know where to garner the most reliable and meaningful market intelligence to determine the potential of something new. And while technology market research firms do figure into the equation for VARs and MSPs, they're not the only source of information about the potential of a prospective technology or product.  

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"As part of launching a new product or service, we will research the market potential, growth rates, competitive landscape, barriers to entry and any relevant legislation or restrictions,'' said Terry Walby, managing director for IPsoft Ltd., a London-based MSP. Additionally, he said, "we will consult directly with industry experts and seek the counsel of a number of our clients and partners in shaping the final proposition and positioning."

In fact, much of IPsoft's product roadmap is defined by its customers, especially based on work performed and "areas we identify where we feel value can be added through our services," Walby said. "Some solutions are developed or added at the direct request of our clients or prospective clients."

In addition to client input, IPsoft relies on research from a number of technology market research firms, including Gartner, Forrester, IDC and Ovum, he said. "We find it valuable to have independent, unbiased opinion on the market, key trends and futures. These organizations are able to have a dialogue with clients in a different way than either ourselves or other vendors, and so the insight they provide gives a different perspective." He declined to disclose the amount IPsoft spends on contractual agreements.

But IPsoft relies on other sources, as well. Walby said the company subscribes to many industry blogs and publications, which are good sources of news, trends and market information. He cautions, however, that while there is a lot of free information in the public domain, it should be viewed with a critical eye. "There is ... a lot of unqualified opinion, and it can be difficult to discern fact from noise and/or marketing spin from vendors looking to promote their solutions."

At Ingram Micro North America, the world's largest technology distributor, new technology areas tend to come about based on feedback from the IT solution providers that Ingram Micro sells to, said Kirk Robinson, senior vice president for Commercial Markets & Global Accounts. He attributed this to that fact that the solution providers are "front and center with the end user." Solution providers are always probing around the business problems their own customers need to solve, he said.

There is ... a lot of unqualified opinion, and it can be difficult to discern fact from noise and/or marketing spin from vendors looking to promote their solutions.

Terry Walby, IPsoft Ltd.

In tandem with that, because their customers are looking to new technologies to solve their business problems, solution providers turn to vendors to determine the type of support they'll be able to get from them and from distributors when moving into new technology or vertical market. "From our side, we've invested in deployable field engineers around certain solutions and technologies our customers can take advantage of: all things wrapped around data center, like virtualization and infrastructure," Robinson said. "So if a [solution provider] says, 'I don't have competencies in this but my customer is looking for it,' they're going to look for vendors and distributors who have the resources and they don't have to invest right out of the gate."

Technology market research and advice come from multiple sources, Robinson said, but in three primary areas: vendors, distributors and a community of peers. Ingram Micro relies heavily on VentureTech Network (VTN), a group of about 370 VARs in North America that it sponsors. "There is a lot of relying on each other and helping each other out; it's very open." The company also sponsors other peer groups, such as the SMB Alliance and Public Sector Elite (PSE).

Ingram also works closely with its manufacturers to decide on new lines of business, he added. "It's very similar for the VARs as it is for us: We look at it and say, 'Where's the money, where's the business need, and is the juice worth the squeeze?' It's got to start from a need."

Once that is determined, a solution provider has to turn to those sources to help it figure out how much it will cost to be a player in that area and what vendors to partner with and how distributors will support it. "They can't be everything to every end user, so they might say, 'I'm going to build out a storage practice and I'm going to have to spend X amount on engineers and X amount on [certification]' and project what type of profit it might generate."

CompTIA's Herbert said that there are two broad categories of information solution providers want to capture as part of their market assessment: market sizing and demand.

To gather market sizing info, a great place to start because of the depth of information -- and the fact that it's free -- is the U.S. Economic Census, which is published every five years by the Census Bureau under the Department of Commerce. It can help determine potential customers by state down to metro area, Herbert said. The Census Bureau also publishes an information and communication technology survey annually, which provides some details on how different sectors are investing in tech products, he said.

Like Robinson, Herbert said CompTIA recommends that their members join industry trade associations, since many publish useful market stats. 

Other go-to places include IDC for specific dollar volumes "and to fill in some of the nuances," Herbert said, as well as Hoover's database of businesses in the U.S. CompTIA also conducts in-house research through surveys.

Herbert declined to disclose what CompTIA spends annually on research, but said the biggest chunk is on research firms to find participants for its surveys. "In my experience, it's better to make the investment in quality sampling to ensure you get quality data,'' he said. There are some low-cost or free alternatives to fielding a survey, such as posting a survey to Twitter or a Facebook page or a blog. However, "You don't have much control over who responds … So when I see research reports and surveys published I go to the methodology section." If there is none, he says he won't use them, since he'd have doubts about the quality of the data.

But a survey is just a piece of the puzzle. Herbert said CompTIA would never advise any of its members to make a new product decision based solely on a research report. "I would hope [a report] helps open their eyes to an opportunity they further investigate. … I hope it spurs them to think about the market and do their due diligence to determine if they should enter a new market."

This was first published in April 2013

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