What does the current economic downturn mean to us as IT service providers? Businesses traditionally are much more careful in their spending during times of economic uncertainty, and I T projects are normally among the first batch off initiatives to be placed on hold, as clients and prospects tighten their belts to weather the storm. It's important for us to identify this reality and shape our deliverables, message and value proposition accordingly so that we can take advantage of these opportunities.
Did that last sentence confuse you? If it did, let me explain my position. If we, as IT service providers, shape our message, deliverables and pricing in such a way that we are seen as a cost‐saving solution to clients and prospects that can mitigate their business risks and increase their efficiencies and productivity; and therefore net profits, we have a really good shot at not only weathering economic downturns ourselves, but actually growing our businesses during these periods. Does this sound crazy? Let’s dive a bit deeper...
As a reactive IT service provider, we are most profitable when our clients are experiencing the most pain. If there is an outage or disaster event, we react to and remediate the problem, then bill our client our emergency response rate. Our clients are never prepared to pay for these reactive emergencies, so the negative impact to their cash flow and operations is very high. This is the reason many clients and prospects have a less than positive opinion of IT maintenance costs and reactive providers in general.
As a proactive managed IT service provider; however, our relationship with clients is the complete opposite, as we are most profitable when our clients are experiencing the least pain. The better we proactively manage and maintain their environments, the higher their efficiencies, productivity and profits. The more we integrate tools and technology, and utilize effective, standardized processes and procedures to remotely monitor and manage our client's environments, the higher our staff's utilization and realization becomes, increasing our net profits. So in this example, our business goals are in perfect alignment with our clients', as we are the most profitable when they are the most profitable.
So how can we shape our deliverables, message and value proposition to take advantage of the current economic recession, and counteract its impact on the spending behavior of business owners who tend to tighten their belts during periods of economic uncertainty, and seek cost‐cutting measures in order to "hunker down" until the storm blows over?
Well, in extreme conditions, these same business owners also look to staff reductions and outsourcing labor‐intensive business functions such as HR, Payroll and IT Services, which is an excellent opportunity for the well‐prepared managed IT service provider to capitalize upon.
With the proper messaging and an effective marketing and sales process, Managed Services Providers will be the most successful at winning business and realizing increased profits in 2009 and beyond than system builders, reactive break‐fix and professional services providers.
Download our white paper - Maximizing Service Delivery Profits During Economic Downturns for more on this timely subject (you'll need to log in with your MSP University credentials, or create a FREE Basic MSP University Membership account to download this and dozens of other valuable business transformation webinars, white papers, best practices guides, forms, tools and collateral).
Erick Simpson
MSP University
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