State of IT Services (re-published from BPP)
January 31,
2006
The following is a newly "declassified"
article, originally published on our Bravo Partners Portal
(BPP), with an intended audience of IT resellers/consultants.
Per Bravo policies, selected BPP articles may be sanitized and adapted
for republishing to general client base, after a minimum of 1-year
waiting period.
(Beginning of original article)
The
State of IT Services for Small Businesses |
by
Sam C. Chan
Nov 21, 2004
|
This
is a painfully candid look at the issues of IT industry for the
small-to-medium-size businesses (SMB) market, and an analysis on why
opportunities are wide open for the ready and able.
Historical
Background
In the entire history of humankind, there has
never been an era where technological advances occurred at a more rapid
pace than the past 30 years. Such rapid advances created the most
remarkable transformation of society and daily lives overall. At the
same time, it created unparalleled wide-spread confusion and struggle
for those who simply failed to keep up. The resultant chaos has major
implications on the humanity fronts, which is beyond the scope of our
discussions here. From the IT providers' perspective, the breakneck
pace has created 2 interesting and pertinent phenomena:
- Most things are not what they seem, and
conventional wisdom in purchasing, problem solving and many other
aspects often doesn't apply in this field! The way things work seems
counter-intuitive to the uninitiated. The general public (and even most
practitioners) simply haven't caught up to the newly revised version of
"normal, reasonable, and common sense" yet.
- Majority of the practitioners in the field are
inadequately trained and ill-prepared to advise others. Ironically,
they themselves are subject to point No. 1 above and are suffering and
trying to make sense of it all. It is fair to declare this: Within our
lifetime, we have just crossed the threshold where it is now humanly
impossible for any individual to keep up with all technological
changes--even at the bare essential awareness and comprehension level,
let alone mastery of them. Moreover, the complex nature of these IT
matters prevents them from quickly learning what they need, once they
recognize the need for certain areas of skills & expertise.
The
"Good Old Days"
With that situation in mind, let's examine the
landscape of goods distribution as well as service providers. For our
discussion purposes here, lets define 2 eras: Before Computers (B.C.)
and Automation/Digital (A.D.) In the B.C. era, things were slow and
stable. Profit was made based on: secret pacts, protected
territories and entitlements. Job security, buyers' collective
ignorance, and general lack of access were the norms. (Admittedly,
it's an over simplification, but I'm only making a
relative
point here.) In the A.D. era, things are volatile and
dynamic. Competition is brutally intense. Profit is made according to
efforts, merits and value-adding; and only by those with both
logistical prowess and agility. Entitlement and ignorance are now
notably missing. Let me illustrate:
In 1981, Computerland and The
Computer Store were the only two exclusive dealers for the
newly announced IBM-PC. They were sold for an average of $3000 per
transaction. Profit margin was around 30%. There was absolutely no
technical work required, beyond re-ordering using the provided SKU#.
Sellers were literally guaranteed a comfortable living. Fast-forward to
2005: Gone are the feed-off-fat-of-the-land days when many of my Kodak
friends were bragging about taking 2 afternoons off each week to play
golf. Nowadays, Staple and Walmart stack PCs on the stationery aisle
between paper clips and crayons. Profit margin is very
low single digit. These days, you don't deserve a profit just
for being in the business. In fact, you aren't even entitled to
survive!
The vanishing of healthy and legitimate profit
pressures the sellers to resort to underhanded methods of reclaiming
it. And, many of them have mastered it over a decade ago. Those small
outfits without the benefits of a giant organization to act as the
concerted deception machine, can only complain bitterly. Unless,
they're blessed with the wisdom and foresight to simply get out of the
widget sales business and move on. Or, stay in it as a loss-leader
to facilitate the service-oriented business. This
is in essence what I have been preaching, and rehashing over and over
again in the last 15 years. Judging from the diminishing level of
whining I heard from seminars & trade shows, more and more (but
not all) of the resellers out there are catching on.
The way I see it, we have a classic "high road ― low road" scenario. On one
hand, you can employ every deception trick and game known, as the likes
of Dell and Gateway had been doing. Hawk shamelessly to drum up volume.
Up-sell this, cross-promote that! Lure ya tis, and Gotcha tat! Declare
that leasing is a miraculous "cure" to obsolescence. Push what you want
to sell, and what they think they need. When in
doubt, cut hidden corners; prey on their vanity,
fear and ignorance. Whew... On the other
hand, you can resign yourself to the quiet corner (lonely island,
really) of being the trusted
advisor and expertise provider.
The Ubiquitous
Need for IT Services
Everyone needs an IT department. I do mean everyone,
from grandma Beulah, to John Doe Tools & Die, to
General Motor. The question is whether they can justify it. Virtually
all individuals and families simply put up with the problems. They
accept the inefficient, unpleasant but simplistic way, just to get
things done, without breaking the bank. If they're really lucky,
they'll settle for enlisting the "wiz kid" next door as their "expert."
The typical corporation of course employs an army of IT professionals
to keep things running smoothly and safely. The small shops
are the ones that are left under-served. They're
the ones that really have a lot to lose, if things go wrong. The owners
can't possibly take on IT as D.I.Y. projects. Their options are
exceedingly limited, however.
The average small business has a turn-over
of 2 to 3 IT providers within the last 5 years. According to my study:
The top 3 reasons being cited are:
- Dissatisfaction due to provider incompetence.
Inability to effectively solve problems (or even made worse) after
numerous attempts.
- The business has grown beyond the abilities of
the original provider.
- Former provider has since moved on to other
fields, or gone out-of-business entirely.
Problems
Faced By Freelancers
These freelancers typically could not afford the
training and research required, as they're too preoccupied with making
a living, thus trapped in a chicken-and-egg dilemma. With so many
different fields of knowledge and specialties, it's hard to gamble on
which direction to go. Understandably, the freelancer typically pick
the first thing he/she uses, and proclaim it's "much better" than the
rest, without any solid facts to back it up. Conversely, they bash all
things unfamiliar to them, or unsuccessful
in their doomed attempts. At best, they might have read an article or
two from magazines. Only that they don't realize magazine editors are
seldom technically qualified, let alone unbiased. While more technical
then the helpless user, they are not where professionals would turn to,
as their "findings" are often neither comprehensive nor accurate.
It is fair to say that the freelance
IT arena for small businesses (with a few notable exceptions) has
always been plagued by incompetence
of a fraudulent scale.
It's an open secret, and is far worse than the notorious
automotive repair industry. The only thing that's comparable is the
medical industry at the turn of the century (snake oil salesmen come to
mind...) before the establishment of formal training and emergence of
guilds.
Case in point: Both Windows NT and the Internet
(as we know it now) have been around for about 13 years, and yet very
few freelancers have any
meaningful concepts of ACL and NTFS, or any basic understanding of
TCP/IP beyond a few memorized procedures. They're basically somewhat
skilled end-users posing as practitioners. As such, their
performance is reduced to guesswork, excuses & blames via vague
proclamations, on-the-job training, delay and sidestepping tactics (constant
shifts to alternate approaches). All of these are glaring signs that
they're operating in the dark.
Another major appalling situation is their
complete lack of support infrastructure & apparatus.
These include an experimental network of servers, stations and routers,
in addition to the dedicated in-house
production-use systems; as well as service record keeping and
maintenance of a custom
knowledgebase. Amateur computer hobbyists,
professional programmers and web designers that double
as IT consultants all fall into this category. They simply are
completely ignorant of industry conventions and best practices. They
certainly lack an IT doctrine, or even systematic methodologies
& proactive strategies.
Incidentally, if the small business owners were to
seek help from the more knowledgeable and properly equipped "big
ticket" IT shops (or worse, accounting firms that pose as IT
providers), then they would face a whole new set of problems. The
larger shops are more focused on their own profitability than
suitability to your situation. They're typically not aware of (or even
purposely steering away from) any of the more sensible and cost
effective solutions for small businesses. Those are beneath their radar
because they typically represent very poor profitability. Not
surprisingly, needless complexity (to you), streamlining of learning
(for them) and lock-ins to product lines are more attractive to them.
Small business owners can ill-afford wastefulness
and require sensible, effective and proven solutions. Just like their
larger counterparts, they deserve access to comprehensive knowledge,
perspectives, visions and directions. In the absence of independent
knowledge and methodology, the freelancer often rely on free
"consultation" of the vendor to make purchase decision and pass on to
the client as "advice." This will certainly result in less then optimal
(or not-at-all-applicable) equipment or software. [Witness
the sales of mythical good/better/best "firewalls."]
Conclusions
and Tips
Several recent developments essentially caused the
equivalence of a "perfect planetary alignment" and we are now approaching a
tidal wave of demand for real consultants:
- very significant price drop of
"enterprise-class" software, just below the justification threshold
- desires/needs for such functionalities, from
peer pressure, and increasing tech awareness & appetite
- advent of inexpensive yet capable hardware
platform to run such software
- gradual shift to NT-based O.S., forcing the
issue of system administration
- on-going saga of security-related issues
- mainstreaming of the Internet
- the open source phenomenon
It should be apparent that the opportunities out
there to serve the SMB market is tremendous, if only one has the
prerequisite knowledge and skills. Timing is of essence. Jump-start your operations
by tapping into outside sources with relevant, comprehensive, and
readily-available skills. Learning from scratch on your own is not
cost-effective, and it'd likely be irrelevant, by the time you're ready.
The key is to not over-commit and not
over-promise. Limit your scope of services. Diligently learn and slowly
excel in it, then expand your offerings. Better to be an expert of some
small areas, then be an over-stretching and incompetent
jack-of-all-trades. Learn the proper
and dignifying way to disclose your limitations
to clients, and inform them how you are addressing (or compensating
for) them. This will earn you extra leeway, and you're well on your way
to building a solid trust. Work closely with a well-established IT
professional for briefings, strategic guidance, critiques and
occasional sub-contracting to takeover advanced tasks, so that your
clients are properly supported throughout.
It is imperative that you work supervised, not
alone, until such time you're truly ready to fly solo. The alternative
is an all-but-certain crash-and-burn!
Key Takeaway Points:
- rapid technological advancement, and
COMPLEXITY!
- humanly impossible to keep up, even for
practitioners
- good IT strategies/solutions seem
counter-intuitive to the uninitiated
- common sense hasn't yet caught up for the
masses
- fundamental shift in distribution
landscape & compensation schemes
- big corporations have proper IT attentiveness
- home users can tolerate problems and
suffer
- small businesses being left high and dry
- IT for SMB plagued by incompetence of a
fraudulent scale
- most practitioners are not trusted advisors, with systemic issues
- typical freelancers are grossly inadequate & transactional
- big IT outfits are ineffective, inefficient, and cost prohibitive
- vendors, by nature, are biased, and poor implementers
- SMBs sorely need
efficiency and effectiveness
- recent "perfect planetary alignment" (6-
to 10-year cycle) is notable
- approaching tidal waves of demand for
"real consultants"
- know your limits and don't over-promise
- partner seamlessly with a true
professional
- timing is of essence, must jump-start
yourself,
or it's irrelevant when you're ready
|
Sam C. Chan, a native of Hong Kong, has
been in the IT industry for 26 years, 24 of them running his own
businesses in Rochester, New York, USA, where he's currently based.
He's been an out-spoken critic on a diverse range of topics from
ergonomics to business practices and social injustices. He can be
reached at:
http://bravotech.us/contact
(End of original article) SEE ALSO
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