Thursday, November 6, 2008

Sales plus services - the effective businessmodel

Last month I wrote a post IT is less than half technology. I want to give this idea another perspective.

The thing is that it is really good for business if you can do both the sales and service part of any given need. This will of course get emphasized on economically gloomy 2009.
The best example of what I mean iscar sales. You need both the sales (to get the growth on good times) and the service (to have a steady cashflow on bad times). If you do only sales you get a really volatile business and probably end up spending the money made on good times and going bankrupt on bad times. If you do only the service you get really slow growth.

What this means for IT? The same as for all the other businesses. You better do both - sales and service.

So if you are currently offering only service - implementing ERP-s, developing software, consulting or doing hardware maintenance - you should get yourself a product to sell. For example concentrate your service on one certain product or vendor and start selling also the product(s) themself. Negotiate with the vendor in order to get a good margin from the sales.

If you are only selling products or producing and selling them then.... well you better have some cash reserves for 2009 and 2010..... you should also create a service business round your product. The software industry has of course recognized this model years ago and sells you broken software at first.... and then a service contract to get their broken software fixed.

Having this in mind I would dare to make a prediction that mobile telephone producers who don't have any serious services developed, and this includes all of them except Apple, run into serious problems when the market growth stops. By now they have delayd the decay by puting all kinds of useless features to the devices, but there is an end to this. So services or becoming Chinese is their future.

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