Making the jump to a services-led model

Carving out a strategy that reduces dependence on product revenue remains a daunting prospect for resellers across the region. Those who go in search of such glory must be prepared to shift their entire go-to-market model.

  • E-Mail
By  Andrew Seymour Published  August 9, 2007

If you are a reseller harbouring aspirations to become a services-led company, or rather a so-called ‘solutions provider', then you need to start with an assessment of how closely your business reflects market trends. This is a model that is as much about balance as it is execution.

Of the US$7 billion Gulf IT market figure, the portion blown on services equates to around US$1.6 billion - or 24% - according to analysts IDC.

Do you currently derive a quarter of your revenues from services and have a business plan for expanding that percentage in line with market patterns to boot? If the answer is no, then it is likely that somebody else is snaffling that repeatable, higher-margin business at your expense.

Statistics bear out the sentiment that the Middle East remains a largely transactional environment. Resellers striving to move to a services-oriented model are often unprepared for the change in mentality and approach that it commands. It is all too common to see resellers lead with the product sale in the faint hope that they can attach some services at the last minute.

The shift to a model inclusive of services requires the reseller to view a deal in a singular fashion and not look upon it as several disparate elements. Only by perceiving it in this context can a reseller begin to understand the bigger picture, rather than merely pining for the sale of some extra services once hardware negotiations have concluded.

Products still remain an integral piece of the jigsaw, but in a services-inclusive environment they no longer dominate the conversation. The end-goal during this initial stage of proceedings is to scrutinise what the customer wants to achieve because that is the only way for resellers to truly size up the wider role they potentially have to play in the overall project. From the start, the customer will want guidance in selecting the systems and processes it needs to enhance its IT infrastructure, which is where a reseller with a decent services proposition will see the opportunities suddenly unfold. With a model that encompasses a meaningful proportion of services, the sales emphasis is fundamentally different and encourages the reseller to make a firm point of positioning its consultancy capabilities.

Make no mistake about it, consultancy is the magic word for resellers possessing services aspirations because it represents the primary opportunity for them to sink their teeth into a project at the earliest available instance.

This transitional process can be demanding. Resellers that once hired sales staff on the back of their ability to move boxes will need to recruit individuals with experience of what a solution sale entails and an understanding that the product is just one facet of the project instead.

With a workforce better tuned into this trend, and customer engagement inevitably occurring at an earlier stage in the sales cycle, resellers should find themselves in a stronger position to dictate their profit margins.

They will be ideally placed to determine how valuable the project is to the end-user. Engaging with the customer at an earlier stage is likely to foster a much tighter relationship that lends itself to the provision of more after-sales services in the future. Unlike a standard product sale - where the chapter pretty much closes once the product has been delivered - a services driven model can open up long term support and asset management opportunities.

Multiple barriers confront resellers wanting to incorporate more services into their businesses, but on the whole the rewards can be much greater. Not only does this model reduce exposure to sharp downturns in standalone product margins, but it makes the reseller much more valuable to the customer than when it acts as nothing more than a procurement vehicle.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code