Although flattening out, the product support services market is still in substantial growth mode in Australia, with Dataquest figures estimating a 7 per cent growth rate between 1997 and 2002, turning it into a $US2.2 billion market.
Blaming the Asian financial crisis for the slowdown, Dataquest's industry analyst Michele Caminos nonetheless expects hardware support services to pick up beyond 2002, with software support services sure to follow with the highest growth rate in the market segment. "This crisis has in fact been good for product support providers because companies are turning to external service providers so that they can focus on their own core competencies," claims Caminos.
However, in order for product support services to meet these forecasts, providers need to recognise that the end user ranks support services as the second-most serious issue facing them in the new millennium. Caminos suggests that to meet this expectation, service providers need to become business integrators, not just technology providers.
"Value-added resellers are expanding services to include desktops through to the enterprise, and by 2003 service providers will acquire a broad spectrum of skills through acquisitions and mergers. This is a move away from simple technology strategies to business strategies where the service provider devises total solutions."
VARs and other channel players can push into this market further by focusing on their traditional client base - small-to-medium enterprises. "This is an untapped market," enthuses Caminos. "SMEs have the same solution needs, you just have to provide a more cost-effective service."
Currently, big vendors are demonstrating these points - IBM's dominance at the top of Dataquest's top 10 product services providers reflects its understanding of customer demands, namely system availability and performance, security and Y2K issues. However, valued-added resellers and integrators are beginning to move into the sector, with manufacturers relying on them to reach more customers without having to extend their own core competencies. "Instead of having to contact five different vendors for different services, end users can contact one unbiased VAR/integrator," says Caminos.
Dataquest reports indicate that Internet transactions have also played a major role in ensuring VARs and integrators carve out a service niche in product support because vendors are having to rely upon them to address specific customer needs after the initial point of sale. "The best time to sell a service is at the initial point of sale," claims Caminos, adding that without any direct contact the customer will go to someone familiar with post-sale services.
Keys to the product support services marketInvest in your business, especially your people.
Sell the service right from the outset.
Train, train, train.
Communicate, communicate, communicate.
Manage your own inventory well. This reduces overheads and ensures that you can deliver the right part on time all the time.
Resolve problems the first time.
Be multi-skilled. One of your selling points is that end users can come to one provider for all their product service needs rather than numerous vendors.