Rather than having service offerings that are stand-alone, services should be offered as extended warranty options available at checkout.During its Lotusphere trade show in January, IBM said it will be making significant investments in its technology and services to address the needs of the small and midsize business market. IBM is very direct in stating its intentions to dominate the SMB space for technology within five years. I asked IBM executives whether this signaled a new war with channel partners over who owns the customer and, specifically, who owns the delivery of services to the SMB customer.
Executives were clear they do not intend to compete with the channel but offered few specifics on how they plan to prevent this. Since the SMB space is a highly fragmented one with many small companies, the dynamics of addressing them would seem to lie with established suppliers. But having an IBM wandering around trying to find itself could mean a lot of turmoil and conflict before the new turf is sorted out. With that in mind, let me suggest an approach.
Just to review, SMBs operate under a different technology dynamic—one that is much more peripheral to operations than in an enterprise. By this I mean that an enterprise can afford to develop an overreaching strategy for IT, while an SMB probably doesn’t have the time or resources to do so. SMBs operate using very much of a just-in-time approach to IT. That is, if you need something right now to get the job done, then get it. That is why large warehouse operations such as CDW fare so well in the SMB space.
The service component is more or less a haphazard affair, where service is often associated with getting things fixed. IT personnel, if any, are jacks-of-all-trades and are generally expected to deliver Tier 1 support and, in most cases, at least attempt Tier 2 or 3 as well.
Keeping in mind that SMBs are fragmented at best, with service needs generally addressed only when things begin to go terribly wrong, it’s clear that services must be packaged with the technology that SMBs consume in the first place. What this means in practice is that rather than having service offerings that are stand-alone, services should be offered as extended warranty options that are available at checkout.
Of course, warranty services are offered today. What would be new here is offering value-added services as an adjunct to the warranty. For example, data backup and recovery could be offered as a feature for a storage device, or remote management of computing resources could be offered as a server reliability enhancement. In the case of software, it would be important to make sure the software is loaded and configured on any device the customer bought. Support for the software would just be a warranty upgrade for the device, which leads us back to the discussion with which we began this column.
Since the concept of service for SMBs is very much a POS (point of sale) notion, the logical owner of this process is the channel partner. Vendors, which want a part of the SMB services market, must work with the channel to seamlessly offer warranty support in the context of these POS services.
In the case of IBM, by packaging service offerings in a way that the channel can easily deliver them as an adjunct to IBM’s own service offerings, the vendor can both capture a portion of the SMB service market and contribute to the success of its channel partners.
Mike Jude is an analyst with Nemertes Research. He can be reached at mike.jude@nemertes.com.
