IT Services Marketing

NASSCOM’s brave opinion

In a news comment, Ganesh Natarajan of NASSCOM, India’s premier software association claims that India’s IT market remains safe inspite of US and world recession trends. While I can understand that the India IT pool can become the world’s supply depot (quite like how China is a world manufacturing hub), I am wondering at the optimism of the NASSCOM head’s statement. “Retail” and “Estate” businesses are feeling the heat. Did the gentleman read about Tata shutting down their Pune truck plant for 6 days? Or about the recessions in the Middle East and some pockets in the Far East?

If IT is to align with business (and surely, it cannot exist on its own?) how will it survive if businesses themselves are at stake? To consider IT to be insulated against market fluctuations is being a tad removed from reality.

Wake up!

STOP! Don’t go into a shell

It is no news that the weaknesses in the economy are becoming more prevalent than the strengths, giving out the message loud and clear: It’s time to tighten your seat belts.

But don’t let this time pull you into your comfort shell.

Conventional wisdom may suggest being conservative during down economic periods. But with increased pressure on the IT services marketing sector to expand their role beyond sales support and contribute to revenue generation, opportunity development and market growth, it is time to buck this conventional wisdom.

Instead of hiding in the shell, invest your time in new marketing strategies tailored for the slow economic times. With marketing being an investment that stimulates sales, here is how to be unconventional and take a new route in marketing your IT services during tough economic times:

1. Client needs a diagnosis rather than a deal: In tough economic times, anything that can help people reduce hours needed to do a job, increase productivity or save money is what sells. So as a marketer of your IT services, diagnose the pain points of your client and suggest ways to save him time, money and labor with your technology services.

2. Value add: We can never stress enough on value added services. And especially during tough economic times, everybody prefers more in a package. Help your clients develop a competitive edge or optimize a process or generate revenue with your IT services.

3. Personalize the proposal: The client needs assurance that both of you share the same level of interest in meeting his business objectives. Take the first step by personally discussing the proposal with him. While mailing or email may be a convenient way, it may cause your proposal to be lost in a stack of brochures or junk mails. You can’t afford to lose any time or opportunity in this slow economy, so go ahead and set up an appointment to walk your client through your proposal.

As a result, you will be able to support to your key business objectives and find new opportunities.

Learning from the movies

Star Wars. The Dollar Series. High School Musical. Indiana Jones.

What can services companies take away from these success stories? It is far easier to market successive versions of a successful formula. How can you apply this in your IT Services business? Some leading marketing gurus in the business gave in some insights:

1. Productize your services: it then becomes easier to sell the same concept in different versions.

2. Build a story matrix: since services tend to be horizontal, use industry verticals to showcase success in each engagement across clients

3. Offer previews: as in movies, clients can also be teased to read more. How?

In these days of a tottering economy, it is necessary to think about why a client should choose your services, other than the fact that you have an existing relationship with them.

ALL THE BEST.

The sky is falling…or is it?

Let us agree that the times ahead are going to be uncertain. How can you use this environment to actually GROW your market share? Sounds contradictory? Read on.

1. Give your clients a break: while you would be keen to hunt for prospective business in your client organization to pump up your billing, remember they are under stress to spend less. If you can really show them that your team can do more for less, you are signaling your willingness to share risks.

Support this message by showcasing to them how your team created some cool apps to lower their time-to-market or cost of ownership or increase customer delight for another.

Offer them a low-cost trial. They may not buy your license or integration support (where you will make money), but will surely recall your efforts for the right opportunity the next time. The returns for a small investment in patience are tremendous.

2. Compete on value: because there is considerable parity in the IT services offerings between you and competition. How can you bundle a few extra value-additions to your services while holding your price? Is your QA team sharp enough to guarantee a lower bug-rate? Can you produce high-quality UI in the application development at low or no cost? Such “bundling” could win you the deal quickly and easily.

3. Do it right, first time and every time: as now, more than ever, clients are spending hard-approved dollars on IT (already branded a black-hole). Ensure your delivery team is on the ball, and works harder to do a “lot of little things right.”

Use your marketing effort to signal this attentiveness to the client base. Try personalized emails, a PDF report card, or a simple web-hosted checklist. Your customers will appreciate the attention you offer.

Technorati Profile

Is India’s position jeopardized in the outsourcing game?

Until recently, the results of a Google search on tech outsourcing destinations would have comprised of India, India and only India.

But that may not be the case anymore. According to a report “How technology sectors grow: Benchmarking IT industry competitiveness 2008” by the Economist Intelligence Unit such countries as China, Vietnam, Philippines, Russia, Poland and other in Eastern Europe can give India a run for its money. “Large Indian firms such as Tata Consultancy Services (TCS) and Infosys are themselves beginning to outsource low-cost development to China and the Philippines.”

Reason: Frugal engineering is giving way to Innovation and R&D.

This gives us another reason to stress on value-added services rather than just cost cutting and labor arbitrage. Forrester’s Mr Radjou advises in this report that Indian firms must be competitive not only on price, “but they need to provide some value-added to what they offer in terms of IT services.”

Currently inundated with such challenges as global economic uncertainty, rupee instability and wage inflation, Indian IT industry needs to move towards knowledge driven, value-added services that will attract other nation’s to buy their wide-ranging services. The clients have to be convinced that India can provide more than just cheap services. As highlighted in our Soup-to-nuts [Part 2] post, clients are interested in creating a business edge, optimizing a process, or working around some critical strategic path to achieve a financial or market-driven goal.

But in a country that believes in making the most with minimum resources and is known as a the seat of sweatshop labor with long hours and low pay, how can the back-office industry find ways to invest in innovation, raise productivity and pay for the wage binge?

Consultants provide solutions and not parts and services

Against the backdrop of a slow worldwide economy, where every business is plummeting due to its sensitivity to the current economic trends, IT consulting may seem somewhat of an oddity.

Until recently, cost cutting was the number one driver of the IT consulting wave. But a recent market analysis and survey of 15 IT consulting companies by the Everest Research Institute and Bernstein Research has emphasized that today’s consulting market is characterized by lessened economic sensitivity and supported by a diverse set of demand drivers that vary substantially by the industry vertical. The study ‘Reading the Alphabet Soup: SI, PI, ERP, etc. – The Changing Drivers of IT Consulting,’ claims: “The IT consulting market, estimated at US$104 billion, has shifted its value proposition to meet growing needs of vertical industry buyers seeking solutions for business changes, regulatory issues, access to new technologies, and heightened needs for specialized talent.”

Now that’s what we call a success formula. The main idea behind a client seeking a consultant is to get solutions. Consultants are paid to look at the larger picture to improve the overall business of their clients and not just supply parts and services. IT consultants should justify their qualifications and designation by finding creative solutions and carving a niche for themselves by their specialized talent. This research also provides an answer to our previous post ‘Is IT now just a dollar game?’

Just like the financial market created a bubble of low interest and mortgage rates and easy credit availability, have we also created a bubble of cost-cutting consultants? Isn’t it time that the industry hires IT consultants to do more than just cut costs?

IT staff:IT users — A Futile Formula

Continuing our post on Fixed Bid versus Time and Money, we found an interesting report by Research and Markets. As per their brief press release, the report covers some hard facts on staffing ratios.

The number of IT staff needed to support the end users depends on a number of factors including geographic location of the primary support, skills set of the employees, service levels and the like. The new report by Research and Markets “The Hard Truth: Staffing Ratios Mean Absolutely Nothing” addresses the same issue. It highlights the following key issues:

• How to read staffing ratios.

• What staffing ratios fail to reveal.

• Factors that influence required staffing levels.

• Why staffing ratios receive undue emphasis in the first place.

• Recommendations for applying ratios with care.

• Building strong business cases, with real numbers, in support of staffing changes.

With numerous factors for consideration, a standard staffing ratio determined for a fixed bid may save some the client a buck or two. But the vendor would also cut corners to justify the fixed bid instead of a Time & Material billing system. An acceptable level of server support staff is an important element of IT budgeting but cutting costs cannot be the sole base of effective IT and personnel management.

For an industry that is as vast and diverse as IT, how can we pin down a standard IT staff:IT users ratio to justify either of the two billing systems?

India warchest doing the rounds

In the last fortnight, HCL and TCS have been in the news buying out multi-million dollar companies: Axxon and Citi’s BPO arm respectively, paying aggresive premiums. While media buzz on such acquisitions focus on Indian companies coming of age and all that good stuff, some interesting points arise beyond such myopia:

1. Acquired clients need assurance: Most clients have spent equal–if not more–time in building and nurturing a relationship with the vendor. When such a vendor is acquired, these clients’ time and investments are now at stake. A good M&A practice will transparently sell the acquisition to such clients, and offer to pilot quick new projects to prove quality of service. Letting them read about the M&A in the newspaper is the worst form of PR to start with.

2. Setting and managing expectations: while standard PR releases about such M&As are rolled out (this is for your own good, strength of two companies, etc etc), such garbage typically finds no traction with clients. A good marketing strategy would be to hold “townhall” (no, not those kinds) sessions with clients, essay the right dialogues, and set the right expectations. After all, these B2B customer bases are not large that they cannot be individually met.

When FedEx (big blue box) acquired Kinkos (hip town cat), customers and employees of Kinkos felt a sharp change in quality of service and corporate attitude. It is still being felt across stores today five years after the M&A. Not a good sign at all.

Thoughts?

FB or T&M? How about end-results?

Whether it is IT consulting–app implementation, maintenance, etc or Software Development Services, clients and service providers are often at logger-heads about the engagement methodology. The client has a rough idea of sorts, expecting the scope to change, and yet keep her costs down. The vendor is sure the scope will change, and does not want to be tied down to a fixed bid (the FB in the title), preferring a Time & Materials billing system.

If an engagement starts without agreement on the basic methodology of costs, no amount of project management is going to ensure success.

For an industry that is over 20 years old, how come we have never figured out a way to build a clean, results-oriented costing system?

Thoughts?

Is IT now just a dollar game?

Rampant in the news is Satyam laying off under 10% of its work-force, and the rupee falling to its lowest in two years against the dollar. While the former is pushing the company stock down, the latter news is giving the services market reasons to smile.

Let us stop for a minute to think what the IT services business is all about. Contrary to the fact that IT should free up people, bring down inefficiencies, and enable closer customer intimacy, the services market is a stark fallout: the business grows only by throwing more “bodies” into the game, inefficiencies and project failures abound, while customer intimacy remains a far cry.

Enterprise IT cost = Revenue for the service provider
This equation is loaded in favor of the provider: there is scope-creep, budget over-run, and loss of initial business focus…all leading to question what exactly IT services today is?

Just a dollar game? Arbitrage of “bodies” against “dollars?”