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ON-SITE SERVICE: TODAY’S SALES MULTIPLIER
On-site service has always been core to solution providers’ value proposition and revenue mix. But today, more than ever, new market trends, end-user needs, emerging business models, and innovative on-demand service delivery models are combining to create innovation-driven opportunity.
This white paper explores the tangible ways solution providers can leverage on-demand service in order to expand their businesses, enter new markets, lower costs, and better serve and satisfy customers.
FOR SOLUTION PROVIDERS, THE STARS ALIGN AROUND ON-SITE SERVICE
Recently, Vertical Systems Reseller conducted an exclusive study titled What Do End Users Want? Importantly, the study indicates that end users are seeking a “broader set of skills from one provider — or at least one that can seamlessly coordinate the work of multiple providers.” Among the required skills: on-site service.
Of note, the study also states that there is a significant opportunity for solution providers to expand upon their competencies by delivering the high-margin services end users need around such major IT initiatives as implementations and rollouts. Another recent report, this one published by CRN, offers additional and compelling evidence that many solution providers are transitioning from a traditional, hardware-driven mindset to “one that focuses…on solutions and related services.” The reason for this shift is simple: a growing opportunity to profoundly transform their profitability proposition.
In the Canadian marketplace, this opportunity brings with it challenges. The good news is that companies (particularly smaller ones) increasingly are looking to VARs for complete solutions, including products, integration, installation, training, service and on-going support. Yet, according to Robert Cohen, President & Business Editor, Integrated mar.com Corporation, “Many VARs in Canada are too small to provide clients with this full array of services — particularly on-site or on-demand services in areas outside their geographic locations or their core staff competencies. VARs who can’t scale their services to meet client needs across all geographies and skill sets are inviting their competitors to do so.” In Cohen’s view, VARs need this on-demand ability to access IT service professionals — or risk leaving opportunity on the table.
WIth regard to the magnitude of the opportunity, the CRN report which is based on extensive market research, points to such key markets as VoIP, mobile technology, security, storage, printing and imaging, and custom systems that have services–to-product revenue ratios ranging from $2:1 to as high as $5:1. According to CRN, solution providers should follow the money — right to service.
As impressive as these service-to-product revenue ratios may be, another imperative is at play: margin pressure on hardware. As hardware prices continue to drop, margin pressure is growing for many solution providers. Peter Cannone, CEO of OnForce, the online marketplace for on-site technology services, observes, “With operating margins under increasing pressure, solution providers can increase both sales and margins by scaling their service capabilities.” David Owen, a founder and head of business development for New York-based solution provider Sinu, supports Cannone’s contention. “We’ve made on-site service central to what we do,” Owen relates. “The ability to deploy technicians fast — technicians who are proficient and professional — is essential to our customer relationships, to our revenue model, and to our entire business model.”
There’s yet another “star” that’s fast come into alignment: the continuing growth of home workers. Companies are now employing tens, hundreds, and thousands of home-based workers, whose systems and technology are every bit as mission-critical as those of officebased workers. As a result, being able to provide on-site service across distributed locations is mandatory for solution providers working with these companies. “After all,” Cannone states, “you can’t swap a hard drive over the phone.”
LONG-STANDING BARRIERS
While on-site service is increasingly viewed as critical to reseller success, the means to this end — to delivering quality service profitably — has proven challenging.
Tiffani Bova, Gartner Research Director, IT Channels, Programs and Alliances, states that one of the most common barriers she has observed is simply the resistance many solution providers have to changing their business models as market and customer demands change. In Bova’s view, by looking at their current book of business, solution providers should be able to determine which pieces of their services business are ‘unprofitable’ (today) and how/if they might be able to continue providing those services to their customers using alternative delivery models profitably.
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