Making a Winning Jump to Services: What You Need to Know

If you’re an IT focused channel partner considering making the jump to services, you have a lot to think about.

After all, if the delivery of services was easy and cheap, we’d all be doing it already, right? What’s the best way in? And how do service margins stack up versus the margins from traditional technology sales? What about business growth with services …is it about acquisitions or other considerations?

These are all great questions that deserve some exploration, so let’s take them one at a time.

Why isn’t everyone already selling services?

The short answer is that putting together a successful services offering is no cakewalk. It requires a mix of infrastructure, resources, and capabilities—as well as careful strategic planning and frequent improvements that help maintain a high value to customers. For most companies, piecing good offerings together just doesn’t make sense. Reselling services, on the other hand, can be a relatively easy ticket to new revenues and growth, which leads to the next question.

How do we start this journey?

The journey into services starts with some fundamental questions and a bit of business soul searching. As you might expect, most of the questions are about what your customers are using and what they ultimately need from you or other technology/service providers. The following types of questions start to scale the opportunity.

• Could the answers to how we enter the services market come from our existing customer base?
• What is it that our customers are asking for? Are we finding ourselves providing ad hoc support to customers in certain non-core areas because “it’s the right thing to do” as a supplier?
• What services do our customers buy that we are not currently providing?
• As a trusted IT supplier, are there services that we could provide?
• How could we provide the services our customers are interested in with minimal investment and maximum credibility?

Don’t be surprised if these types of questions spark more additional questions than crystal clear answers.

If you find yourself struggling or hesitating to move into services, or maybe you have started down the path and are now looking to improve your portfolio of offerings, then print-as-a-service could be a good answer for you. Why print you may ask? At Xerox we are seeing a shift in traditional print resellers who started their services journey with Managed Print Services (MPS) and are now moving into broader IT services – if this is an emerging competitive threat to your business, then perhaps print is a defensive strategy as well as a profit opportunity for you.

How do service margins stack up?

At this point, you’re probably waiting for the big catch to selling services …margins perhaps? It’s true that in the early phases of selling services, the margins probably won’t stack up as well as traditional technology sales. Just remember that services can bring long-term stability, but you do have to make an initial investment. And certainly margins will improve after any initial cost of sale or implementation has been absorbed.

Where does growth come from?

Okay, so if margins aren’t the catch, what about growth. Sure services may help you smooth out the troughs associated with a pure technology business — but how can you drive growth? New customer acquisition remains an important part of the equation. But adding new services is just as important. The more services you offer, the greater the sway you have with customers and greater your revenue and profit potential.

Reality check

As an IT solution provider, you can view “print-as-a-service” as an opportunity or a threat. It’s an opportunity if you are prepared for the move into providing print as a service and mine the print spend in your customer base. If you choose not to engage customers on print, it’s important to ask who is or will be managing your customers’ requirements in this space — and what else will follow?

In my next post I’ll explore what to consider as you look for services partners.

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