Economy Continues Roller Coaster Ride in IT, are Managed Service Expectations too high?
CompTIA today released its IT Industry Business Confidence Index for Q3 see (press release) below. The index shows a 2.2 points decline to 54.5 on a 100 point scale in Q3 with a forecast of a 3.1 increase for the overall year. This continues a roller coaster of sales for the IT industry.
Though reports like this one are important, a breakdown of the state of the US IT economy would give a better insight over just reporting the global state of the economy. Things in the US seem to follow a similar outlook but may not be as clear.
The IT community as a whole seems to have a positive outlook on the state of economy; the unspoken sentiment is the economy is in a turnaround. This however may not necessarily be the fact. Many MSP’s and IT solution providers have stated that they are struggling in the current economy. Many of them have attended recent or past trainings, through many organizations, and continue to have trouble selling managed services to end clients.
A recurring statement seems to be coming up; “I just can’t seem to sell $3,000+ agreements like I’m told I should be able to sell.” It is my belief that these expectations that MSP’s have been given have essentially set many of them up to feel like they have failed. The reality is the most successful MSP’s are not expecting $3000+ agreements, but have built solutions that fit the need of any client. This could mean that they sell $250 agreements or whatever is required.
With the state of the economy it is important for MSP’s and IT solution providers to provide anything they can to keep sales consistent. In this, the old way of creating flat rate or all in packaged solutions becomes less necessary than in the past.
Some may say that scalability becomes a factor in breaking up the solution, but if you aren’t selling anything, then you have no ability to scale anyway. Scalability becomes a factor when you exceed the growth that you can handle and most MSP’s are not in this position. The continued need for break fix service to keep employees busy as well as provide new leads for managed service opportunities also becomes more apparent.
The reality is do what it takes to stay in business. Success will be driven by hard work, and there is no magic secret sauce that will make your business an instant success. Continue training and education, but do not rely too heavily on single methodologies or information based on what worked 5+ years ago. The industry is changing, do not be afraid to try new things, break up your packages and provide more services and solutions, more often,
DOWNERS GROVE, Ill., July 18, 2012 /PRNewswire-USNewswire/ – Renewed uncertainty about global economic conditions outweighed more positive sentiments about prospects for the information technology (IT) industry in the latest CompTIA IT Industry Business Confidence Index, the quarterly survey from the leading non-profit association for the IT industry.
The index slipped 2.2 points in Q3, falling to 54.5 on a 100-point scale. By comparison, the Q2 reading of 56.7 was the highest level in more than a year. The six-month outlook projects a modest increase of 3.1 points.
“The unfortunate pattern of the last several years is repeating itself in 2012,” said Tim Herbert, vice president, research CompTIA. “Momentum from improving economic fundamentals and positive sentiment fails to sustain itself, stalling at mid-year.”
The index is an aggregation of opinions on the U.S. economy, the IT industry and one’s company. All three components of the index fell in Q3.
“Any bullishness about the IT industry generally and companies individually was offset by renewed uncertainty about larger economic issues, such as unemployment, stalled earnings at some bellwether companies and softening demand in many overseas markets,” Herbert said.
The survey indicates a slight increase in concern among IT industry executives regarding their ability to maintain profit margins. Inevitably, economic malaise leads to greater price sensitivity and decision-making paralysis among many customer segments.
IT firms still expect to increase investments in many areas, though it’s likely that in the short-term the rate of growth will slow somewhat. In the Q2 survey, 37 percent of companies indicated they planned to increase expenditures on marketing and advertising. This number fell to 29 percent in Q3. A similar situation exists for spending increases associated with capital investments, new technology purchases, business travel and staffing.
On the hiring front, medium size firms (100 – 499 employees) are most likely to add new staff in the next six months. Overall, 32 percent of firms plan to increase staffing and 54 percent plan to remain at current levels.
The CompTIA IT Industry Business Confidence Index for Q3 is based on a July 2012 online survey of IT industry executives and professionals. A total of 445 IT companies participated.