Scott Nursten, Managing Director of s2s argues that the predicted economic downturn could be good news for those IT businesses that can think creatively and demonstrate agility, true service and expertise.
Following its recent acquisition, s2s is now a subsidiary of Bailey Teswaine and part of the NG Bailey Group. s2s is a provider of secure technology platforms to the business community.
Nursten says, “The forthcoming predicted economic downturn can be good news for customers as it will shake up an IT industry that has grown fat and needs to sharpen up its act. In a challenging economic climate not every organisation will feel the pain. Whilst a large proportion of the tin-shifters and service-shirkers may indeed go to the wall; those organisations that can demonstrate true service, agility and expertise to deliver customer value will actually succeed and flourish as the recession bites, argues Scott Nursten, Managing Director, s2s.
There has been a significant change in mindset since the last serious economic downturn in the UK. Rather than dwelling on the negatives, today, savvy directors and managers now view a looming market slump as a significant opportunity to assess the quality of service they are getting from their suppliers. A turbulent financial climate is, by default, a chance to improve business performance through economic fat-trimming. In the IT marketplace, there will be a very clear shift towards strong performers grasping the opportunity to shine, gaining significant market share on the back of others’ failure, and offering their lucky customers much more bang for their buck.
Business customers are in an incredibly strong position in this market place, with many already leaping on the opportunity to change their behaviour and attitude towards IT service providers. New RFPs and ITTs make it abundantly clear that budgets are not shrinking, indeed in some cases they are growing, but there are no more loose wallets. Customers realise that they can now demand more from their IT suppliers and indeed the market demands that they must. They recognise that to sustain business during a downturn they need to be agile, to have highly available IT systems and feel ever greater pressure to ensure excellent customer service to their own end users.
To achieve these objectives businesses should be bold and not be afraid to place greater demands on IT service providers. Customers should demand not only strong balance sheets and compliance to necessary industry or regulatory standards, but also committed, permanent staff with proven skills. In a tight, competitive climate, they should not be willing to be fobbed off with an ever-changing cast of uncommitted contractors.
Furthermore, customers need organisations that can demonstrate strong processes for delivering sustained high quality service and they want it to be delivered to ever-shorter deadlines. Indeed, recent requests have included a 30 day contract win-to-start timeline, a demand that would be impossible for the majority of IT service organisations to fill effectively and without reliance on unwanted contract staff.
This far more measured spend will have a dramatic and immediate impact on the IT services marketplace. There is simply no way that the vast majority of organisations will be able to demonstrate the required staffing levels, service quality, agility or financial strength. The dead wood will be shaken loose and the market will emerge stronger than ever through “corporate selection”.
And this is no bad thing for an industry that has far more than its fair share of organisations that have relied on high volume, low margin boom-time business. Those companies that have ignored customer service and failed to even attempt to retain unhappy customers, simply do not have the business strength to sustain a downturn or meet the growing customer demand for added value.
It may well already be too late for many IT service providers to make adequate changes to their business model and structure. Organisations cannot overnight transform processes, achieve ITIL compliance or deliver the value added services such as compliance management and audit or off-site logging that are already becoming prerequisites. Those organisations that previously attempted to charge through the nose for these added value services are in for a rude awakening: customers should now expect this level of service as standard.
Customers should also be prepared to undertake ever greater due diligence to verify service claims. Far too many have been bitten in the past by IT services companies that failed to live up to their promises; by organisations that overcharged for every single call out and delivered the minimum possible highly reactive service. They should demand highly transparent pricing and service delivery, including proactive maintenance and support – and they should be prepared to undertake extensive up front reviews to ensure the right contract. Those providers that have ensured these systems are in place with their customers build credibility, reliability and intimacy and will reap the benefits of repeat business in a more relaxed and trusting environment.
Never before has the UK market seen such a prolonged period of exceptional growth. A downturn was, therefore, inevitable. And switched-on companies have been gearing up for this situation for some time. With an increasingly demanding customer base, any organisation that has relied on contractors to scale up and down in response to business volume is going to struggle. Organisations now want proof of an IT company’s ability to deliver consistent services repeatedly, using a skilled, dedicated work force.
And this too will be good news for the UK market as a whole in the long term. For far too long IT services companies have themselves been held to ransom by over-confident and over-paid contractors demonstrating no loyalty or commitment to a business. They have been fleeced by recruitment companies happily boasting their skills poaching credentials. The whole model is ridiculous and promotes highly clandestine activities, such as the growing number of UK IT organisations with non-English speaking foreign staff on the payroll simply to meet accreditation targets – such as Cisco skills quotas.
Buying in skills is often a false economy that is far too prevalent in a buoyant market and can seriously diminish best practice. It is expensive and makes it extremely hard to gain committed staff that fit into the corporate culture. It is far better to develop and grow skills in house creating engaged, dedicated staff that are happy to stay with an organisation that offers a clear career path. The improvement in service quality and consistency has a very measurable impact on overall customer satisfaction.
As the downturn begins to bite, those organisations that have not geared up to achieve a strong balance sheet and create an agile business model with strong service processes are facing a very uncertain future. And this is great news for the customer. In a boom time there are far too many organisations skimming along the top, making money from high volume, low margin, low quality business models.
In the good times even the bad performers get business and they drive the overall quality and prices down. It will take an economic downturn to help determine who the real performers in the market are as demand for real services becomes higher and customers openly place greater value on those services.
This change in attitude is long overdue. For those organisations that have the skills, agility and processes in place to deliver excellent services within a highly efficient operation, an economic downturn will drive out competition, boost revenues and support significant growth, whilst offering customers a whole new level of service quality.