Solve these top 3 IT Operations challenges to scale your Service Provider Business
The question however is not how, but when. When is it time to shift the focus from incremental improvements, firefighting issues and simple cost cutting to business growth, transformation and innovation?
According to Gartner, “We need to get off our horse of just piloting, and get into the real stuff.”
The Underlying IT Problem
IT is the backbone of any modern business. Most companies spend a considerable sum of their IT budget in firefighting operations and infrastructure issues which blindside them to the potential for business growth. Instead of focusing on initiatives that drive business value, IT resources are caught up in a vicious cycle of break-fix-repair. The recent shift to AI, IoT and disruptive cloud-based technology has only exacerbated the problem.
The Obvious Solution
With the need to modernize IT growing more urgent, enterprises are no longer hesitant about turning to service providers to plug the gaps in their IT. SPs offer the benefit of skilled resources and 24x7x365 support leaving their enterprise clients free to focus on improving business outcomes and gross profit margins.
Today, managed IT service providers deliver hosting, server & network management services, application modernization and even IT help desk support. It is hard for enterprises to ignore the lure of SPs offering a ‘pay-as-you-go’ pricing model for managing, maintaining and optimizing their IT operations.
However, while companies are no longer shy about asking a service provider for help, service providers themselves are facing challenges. The rising market demand of managed services has translated directly to an increase in the number of SPs entering the market. While this may seem like good news for enterprises looking for the best services and competitive pricing, it is giving SPs a major headache.
A mature managed service market characterized by changing technology landscape and increasing price pressures is indirectly impacting the quality of services provided to clients. In a world that believes ‘you can do more with less,’ one must offer the right value-added services delivered in a cost-effective manner.
This is where many SPs are falling behind. They lack the full operational capabilities to back up their claims and this is directly impacting their business growth.
The three Key IT Operations Challenges for Service Providers
To counteract stilted business growth and declining ROI, SPs must first resolve these three major challenges holding them back from scaling their business:
1. Margins and Operational expenses – The primary questions plaguing most SPs today are – how to arrest falling profit margins, battle diminishing returns and scale their business while still thriving in a crowded market?
Solution – The answer lies in radically changing the business process and augmenting their own talent pool with functional resources who can stay ahead of the technology curve.
2. Client satisfaction and retention – A happy client means more business. But, in a mature managed services market, the challenge is to offer the right value-added services that will ensure client satisfaction, retention and even expansion.
Solution – SPs can build lasting relationships and repeat business by engaging functional experts who can help them successfully navigate the murky world of client objections and uncomfortable questions.
3. Service Quality – Most SPs position their service offerings as a sure-fire way of ensuring a recurring revenue stream for their clients. But a promise is only a promise till is it backed up by service delivery. So how does a SP turn its service quality challenge into a service differentiation?
Solution – Since service quality directly relates to client expectations, it is imperative that SPs ensure service reliability and delivery excellence by leveraging functional experts to back their service quality claims.
To become successful, SPs need to offer the right value tailored to their clients’ needs and then back it up with cost-effective delivery. For this they need to have the right mix of operational capability and technology. That is where functional sourcing makes a difference. It offers SPs a chance to simultaneously enhance their own capabilities and successfully scale their business without increasing overall costs. To know more about the benefits of Functional Sourcing for service providers, you can refer to our earlier blog TOP 5 BENEFITS OF ADDING FUNCTIONAL SOURCING TO THE PORTFOLIO OF SERVICE PROVIDERS.