IT service providers face difficult choices in the current global financial crisis as they are forced to decide whether to wait for clarity about when the situation will improve or to act now without knowing what the outcome might be, according to Gartner, Inc.
"The penalty for making the wrong choice will be severe, resulting in the loss of business and viability, and prudent service providers must view the current period as one that will likely be prolonged, rendering inaction inadvisable," said Christine Adams, managing vice president at Gartner.
"IT services can be sold in good times and bad; selling in bad times requires both agility and ability to sell wherever opportunity can be identified," Ms Adams said. "Successful service providers will be those who manage to capture the available budget of buyers by not resting on their laurels."
Based on its research and observations in prior downward economic cycles, Gartner has developed 10 recommendations to help service providers improve sales prospects in the short term while providing some breathing space to see how things evolve.
1. Propose Pricing Options That Share Risk and Reward - Shared risk and reward strategies mitigate financial worries, removing a significant barrier to purchase when credit is tight. Furthermore, they are a valuable differentiator in a competitive market and do not necessitate price cutting.
2. Express Value in Terms of Financial Statement Impact - Tight credit and jittery investors make the ability to quantify value in terms of financial statement impact even more important than usual.
3. Focus on Responsible Cost Optimisation, Regardless of What You are Selling - Selling to a client's or prospect's economic buyers (be they the CIO, CFO or business unit head) and reassuring them that you understand and share their mission is key when finances are tight. The central premise of the message must always be responsible cost optimisation that protects the long-term health of the business.
4. Understand Your Client's Risk Environment, Risk Tolerance and Risk Management Approach - Risk is likely to be the single most influential factor driving demand for IT services during the next few years, creating new opportunities for services that are explicitly directed to risk management and decision support.
5. Move Rapidly to Understand Governments' Objectives and Plans to Intervene in the Economy - National and regional governments are already reacting to the global economic crisis by intervening in financial markets, and calls for unified global action are likely to result in significant new policymaking. This will create opportunities for service providers that help companies interpret and respond to these developments.
6. Make It Really Easy for Clients to Renew or Reuse Your Services - Gartner research indicates that the market's response to uncertainty is to return to, or rely more heavily on, tested and trusted relationships, providing of course that the economics of the relationship remain competitive. Preserving existing clients is often more cost-effective than winning new ones.
7. Accelerate Migration to Utility Pricing Whenever It Makes Sense for Your Business and Clients - Economic and purchase risks are significantly reduced when clients can pay for use as business scales up and down. Shifting spending from fixed to variable costs will be on the buyer's agenda. This can be addressed by a staffing approach, but utility pricing is also a feature of alternative delivery models, such as software-as-a-service (SaaS).
8. Reduce Implementation Pain and Engagement Risk - In uncertain times, any engagement that is perceived as difficult or risky will be much harder to sell, even if there are demonstrable economic and business benefits. Clients need tangible assurance that they will get what they contracted for, with no surprises.
9. Stay Abreast of Innovation and Process Improvement Trends - As long as there is technology innovation, there will be service opportunity, and process improvement will always be in demand. The trick is to understand how demand will manifest itself and be there waiting.
10. Make the Market - Gartner's market share data indicates that the service companies that survived and thrived during the dot.com bust were those that made their own opportunities. To make a new market, providers must have a clear and well-articulated understanding of market needs and new initiatives to reach and serve clients.
Additional information is available in the Gartner report "Dataquest Insight: Ten Ways to Position and Sell IT services in Uncertain Times." The report is available on Gartner's website at http://www.gartner.com/....
"The penalty for making the wrong choice will be severe, resulting in the loss of business and viability, and prudent service providers must view the current period as one that will likely be prolonged, rendering inaction inadvisable," said Christine Adams, managing vice president at Gartner.
"IT services can be sold in good times and bad; selling in bad times requires both agility and ability to sell wherever opportunity can be identified," Ms Adams said. "Successful service providers will be those who manage to capture the available budget of buyers by not resting on their laurels."
Based on its research and observations in prior downward economic cycles, Gartner has developed 10 recommendations to help service providers improve sales prospects in the short term while providing some breathing space to see how things evolve.
1. Propose Pricing Options That Share Risk and Reward - Shared risk and reward strategies mitigate financial worries, removing a significant barrier to purchase when credit is tight. Furthermore, they are a valuable differentiator in a competitive market and do not necessitate price cutting.
2. Express Value in Terms of Financial Statement Impact - Tight credit and jittery investors make the ability to quantify value in terms of financial statement impact even more important than usual.
3. Focus on Responsible Cost Optimisation, Regardless of What You are Selling - Selling to a client's or prospect's economic buyers (be they the CIO, CFO or business unit head) and reassuring them that you understand and share their mission is key when finances are tight. The central premise of the message must always be responsible cost optimisation that protects the long-term health of the business.
4. Understand Your Client's Risk Environment, Risk Tolerance and Risk Management Approach - Risk is likely to be the single most influential factor driving demand for IT services during the next few years, creating new opportunities for services that are explicitly directed to risk management and decision support.
5. Move Rapidly to Understand Governments' Objectives and Plans to Intervene in the Economy - National and regional governments are already reacting to the global economic crisis by intervening in financial markets, and calls for unified global action are likely to result in significant new policymaking. This will create opportunities for service providers that help companies interpret and respond to these developments.
6. Make It Really Easy for Clients to Renew or Reuse Your Services - Gartner research indicates that the market's response to uncertainty is to return to, or rely more heavily on, tested and trusted relationships, providing of course that the economics of the relationship remain competitive. Preserving existing clients is often more cost-effective than winning new ones.
7. Accelerate Migration to Utility Pricing Whenever It Makes Sense for Your Business and Clients - Economic and purchase risks are significantly reduced when clients can pay for use as business scales up and down. Shifting spending from fixed to variable costs will be on the buyer's agenda. This can be addressed by a staffing approach, but utility pricing is also a feature of alternative delivery models, such as software-as-a-service (SaaS).
8. Reduce Implementation Pain and Engagement Risk - In uncertain times, any engagement that is perceived as difficult or risky will be much harder to sell, even if there are demonstrable economic and business benefits. Clients need tangible assurance that they will get what they contracted for, with no surprises.
9. Stay Abreast of Innovation and Process Improvement Trends - As long as there is technology innovation, there will be service opportunity, and process improvement will always be in demand. The trick is to understand how demand will manifest itself and be there waiting.
10. Make the Market - Gartner's market share data indicates that the service companies that survived and thrived during the dot.com bust were those that made their own opportunities. To make a new market, providers must have a clear and well-articulated understanding of market needs and new initiatives to reach and serve clients.
Additional information is available in the Gartner report "Dataquest Insight: Ten Ways to Position and Sell IT services in Uncertain Times." The report is available on Gartner's website at http://www.gartner.com/....
