The biggest crash

The Biggest Crash – from Andrew Beaumont, The MCSA Group Sales Manager – April 2013

abeaumont

Ask a Head of IT, in any sort of a business, what their worst nightmare is and the answer is almost invariably ‘a system crash’. There are different sizes of crash. Small to big. Small ones generally don’t hurt too much. Big ones can be nasty. Possibly the biggest is when your IT supplier crashes into administration. Watching a crash from a distance is bad enough. Being in the passenger seat is a lot worse.

The recent demise of 2e2, described on their website as ‘an agile, customer-focused provider of end-to-end next generation IT services’, turned this nightmare into a reality for the company’s many clients. Agility, it transpired, did not extend into jumping out of crippling levels of debt.
No one can feel good about this, least of all the clients affected or the staff who lost their jobs. But what are the lessons? What can we learn about the risks of choosing a service partner and how can they be reduced?

The truth is, this isn’t the first time an IT services company has failed and it won’t be the last. Gartner Inc., a leading information technology research and advisory company, recently reported that ‘Up to 20 per cent of the top 100 IT services providers will vanish by 2014′.  Perhaps we need to  factor this into our decision making? What is clear is that the time and a resource commitment involved with a service contract mean that the implications of making a poor choice can be more far reaching and dangerous than when buying a solution.

We have become very familiar with the following advice: get big, get niche or get out. Over the last 10 years or so, it’s a mantra that has been thrown around liberally at every opportunity, by both channel and industry insiders, as well as commentators, referring to the fact that within a constantly changing IT market, suppliers need to establish added value that is clear and tangible for their clients. Only those that do so will survive in the future.

IT is an ever evolving world. Change can come rapidly and competition is fierce. Product and solutions are quickly replicated and subsequently commoditised. As the channel shrinks, revenue gets more difficult to come by in the traditional way.  Classic resellers are being forced to diversify or die and services is the new game in town.

One approach, pursued by many, has involved the development of a service portfolio with a multi layered application aimed at binding existing clients closer and making it less likely that customers’ heads can be turned by the multitude of competitor offerings. However as the battle intensifies, the line between what is genuine capability and ‘I know a man who can’, is easily blurred. And if the ‘man who can’ is fairly fundamental to the client’s requirements, yet only loosely acquainted with the provider, there can be trouble ahead.   Strategy is key. Developing a service portfolio based on a ‘we can until we can’t’ approach, is not a recipe for success. Yet, in an ultra-competitive market, there are some that will want to give the impression that they are capable of delivering complicated services, with no experience or pedigree to support this position.

It takes a lot more than a change in marketing strategy to become a services company, but the masquerade is not difficult. In the early stages of the dance it can be difficult for customers to see the full face of their partner. Only when the chips are down and you need them to do a great job does the mask come off. The result can sometimes be disappointing.  The problem is that a mask can be so convincing that the customer doesn’t even notice it in the first place.
Of course partnering up is a two way street and the buyer needs to play their part in ensuring a happy union.  Reminding oneself of the old adage that you get what you pay for would be a good place to start.  Due diligence, asking the tough questions and ensuring that the partner you choose is financially viable are fundamental aspects of the courtship. Reading the case studies and taking up references should be matter of course. It’s all about getting under the skin of who you are dealing with. So go ahead and give your prospective partner’s cheek a little pinch – just to be sure it’s real. It’s perfectly acceptable behaviour.  A minor ouch at this point could save a whole bunch of pain in the future.