From the desk of: Sam C. Chan

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.


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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:

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