In previous posts I mentioned the fantastic times the IT services industry is experiencing with the increasing investment in technology areas such as big data, cloud or enterprise mobility. Regardless of this momentum, IT services companies still need to address some of the biggest challenges of their business model such as the long term commitment of customers and the ability to generate recurrent revenue. Even though the new times have brought new and creative models for generating recurrent revenue, the simplest way to achieve that remains converting isolated projects into long term customers.
Even though winning long term customers is the cornerstone of a successful IT services business, most professional services firm struggle to achieve a continuous conversion of isolated projects into strategic and long term relationship that deliver continuous values to both parties. To this day, most IT services firms still rely on the notion of an account manager as the main mechanism to establish a long term relationship with a customer.
In this traditional model, an account manager is responsible for generating a continuous pipeline of service engagements based on the customer needs. The problem with this model is very simple: while account managers can be relatively effective in the tactical and operational aspects they rarely deliver any value at the strategic level. To give an example, in the traditional model, the account manager will get involved after the customer has identified a specific project and needs to explore different options to execute that solution. However, the account manager would rarely be seen as a strategic advisory that can guide the customer to arrive to the best solution to the challenges. Because of the simple fact that strategic collaborations are more likely to evolve into long term relationships, IT services organizations commonly fail to obtain a seat at the table where decisions are made and are often seen as an effective arm to deliver a predefined project.
While the account manager model still very valid and necessary, it is important to realize that in this fast changing technology world, IT services organizations have a unique opportunity to provide a lot of extra value to their customers. These days, organizations need all the help they can get positioning themselves to embrace the new technology waves. The new world is very different from the traditional IT world, excellent talent is scarce and the plethora of competitive technology stacks is overwhelming for any CIO. In that sense, most IT organizations are fighting the urge to be more mobile, deliver additional levels of intelligence big data technologies or embrace cloud delivery models because they are afraid of making rookie mistakes.
This new world offers a unique window of opportunities to the new generation of IT professional services providers. Plain and simple: the easiest way to generate recurrent revenue is to deliver additional value to your customers at the strategic level, helping them understand the new technological options and how they relate to their immediate business needs. We don’t need account managers as much as we need IT services firm that can go the extra mile to deliver strategic value for their customers even if not direct revenue stream is attached to the effort.