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How Service Providers Can Keep Revenue Ahead of Investments

11 Apr 2017 by Howard M Cohen

When you became an IT Service Provider (ITSP), you entered the knowledge business. You sell your familiarity along with the technologies your clients use, your ability to make them perform better and your ability to restore functionality when they encounter trouble. If you’ve ever asked customers what they look for in an ITSP, you likely heard them respond, “I want to deal with someone who knows what they’re talking about.”

It makes sense. Things change quickly in our industry. It’s all but impossible for most businesspeople to find time to keep up.

What you don’t know = opportunity.

What happens when a customer asks you about a technology you’re unfamiliar with?

You certainly have the option of admitting you don’t know about it, but that just encourages your customer to seek help elsewhere — usually from your competition. You also have the option of doing your best to learn about that technology as quickly as possible, but that’s often a recipe for disaster.

Stop to realize your customer’s question about a new area of technology you don’t offer yet is actually a potential opportunity to grow your practice.

You don’t have to be all things to all people.

Clients only obtain value when your knowledge becomes action — that is, when the technologies you’ve consulted on are deployed and integrated into their environments. More often than not, customer projects include technologies you’re not yet expert in delivering. You may have familiarity with them, and can definitely source more information quickly so you can advise your customer, but it may not be realistic to do all of the work yourself.

Many IT practices in the past portrayed themselves as being “jacks of all trades,” which suggested they might be “master of none.” Their desire was to be seen as doing all things IT for all people. What they failed to recognize was that customers measured them on everything they did, so if they performed poorly on one project, it loomed larger in their customers’ minds than all of the great projects they had previously performed.

Most of the core manufacturers in the IT industry, including Microsoft, Cisco, IBM and HP, have emphasized the need for their partners to specialize, to focus on being recognized as experts in specific competencies. Given that projects are usually comprised of a variety of technologies and specialties, this necessitated the strategy of proactive partnering.

New services: Before you invest, test.

Here’s where the request for the unknown becomes opportunity for the IT service provider.

As they declared their specialties, many ITSPs began to seek and evaluate capable partners to provide the services they themselves did not specialize in. They built strong, interdependent relationships with these partners. They entered into mutual, noncompete and non-interference agreements to enable proactive partnering. Just as a project required several disciplines, the solution consisted of several partners.

For example, let’s say a customer asks you to provide a Unified Communications (UC) strategy, something you don’t currently do. In fact, you’ve been thinking about adding UC to your services catalog but haven’t decided to make that investment yet. This becomes your own “try before you buy” opportunity. Engage a known UC partner. Vet it carefully and thoroughly. Partner to satisfy your customer’s requirement.

When the project is successfully completed, discuss it with other customers. Gauge their interest in having a similar UC project performed for them. If you can’t find a market for UC among your existing customer base, you may want to back-burner your UC plans.

If you do find interest within your existing customers, leverage your success with the first partnered project to win more. This gives you a clear business justification for making the investments in growing a UC practice within your company.

In the meantime, you can continue using your proven partner to complete UC projects for your own customers. Some will even allow your engineers to shadow theirs so they can learn how to better support UC environments. Your profitability on partnered projects may be somewhat lower than normal, but it will be much higher than if you simply said you couldn’t provide that service at all.

Now think about all the projects beyond UC that you could sell in all of the other technologies you don’t currently support.

The IT general contractor

Applied more broadly, you can always function as an IT General Contractor (GC) in the same model as the construction industry. Most construction GCs have no tradesmen on their payroll. Instead, they subcontract the carpenters, bricklayers, electricians, plumbers, and other trades and crafts required to construct buildings. They know and understand the requirements and how to effectively manage their projects. They also know the best tradesmen and the people they should avoid.

More excellent technologists are becoming independent contractors or members of small teams. To enable your knowledge leadership, seek out these “tradesmen.” Carefully vet them until you’re confident they work with the quality you require for your clients.

Many smaller practices are actively partnering with large national service providers such as Insight to help them provide the services they don’t yet provide themselves. Beyond expert project services, these also include consumable services, such as cloud servers, network monitoring and management, data and network security, and much more. 

Partner for success.

Insight will work with you to fill in the gaps on services not included in your catalog.

Learn more