For a lot of technology companies, 2009 is feeling a lot like 2001. Acquiring customers is increasingly difficult and all areas of the business are looking to cut costs and streamline operations.
So how can technology businesses continue to drive revenues as customers cancel projects and postpone investments?
At Convergys, we recently co-authored a white paper with the Service and Support Professionals Association (SSPA) examining this very subject.
It found that 80% of SSPA members have been asked to amend their 2009 budgets due to the slowdown. But with years of process refinement many believe that now there is little left to cut.
According to PricewaterhouseCoopers, 74 per cent of CFOs admitted their companies often cut what is easy to measure rather than what is most necessary.
The source of vendor’s revenues today looks very different from a decade ago, where product and licence sales made up the bulk of revenues. Today it is service and support that is vital to revenue growth.
Figures from the SSPA show software firms’ services revenues rising from 33 per cent in 1999 to 57 per cent in 2008. Similarly hardware firms’ services revenues are also up from 22 per cent to 37 per cent.
In 2001, customer support’s main purpose was to fix problems – an important role but not one that expands customer use of products or services.
However, in 2009 support is focused on finding ways for customers to consume products more quickly but ensuring they understand all the features, integration options etc. This provides customers with greater value from their products and also faster product consumption, meaning a shorter time until repurchase.
But with the continued pressure from the board to maintain a lean balance sheet, executives are understandably reluctant to invest in their service functions and will instead concentrate on keep costs as low as possible across all areas of the business. Although, it is this investment that will be the key factor in surviving the difficult economic climate.
One cost effective way to continue to deliver quality service is to develop strategic relationships with outsourcing partners.
Although once associated with low quality and low costs, service providers are now considered by many as a source of strategic, long-term relationships that deliver ROI, flexibility and value added consultancy.
These providers are experts in support and can bring experience and expertise to a business, providing there’s a shared business goal and agreed results.
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