Professional services from IT vendors

Vendors do not understand which service elements customers really value

The second assumption is that they understand their customers' needs. Again, they may understand their needs from a product point of view, but in practice they have little indication of what the customer perceives of as a valuable service. For instance, by not previously pinning a price on the services offered vendors have effectively rendered the services value-less to the client. To begin charging for these services at this stage runs the risk of alienating customers.

At the same time, however, more complex systems integration is a valuable service and is for the most part recognised as such. If the customer lacks the in-house skills, the vendor may have an opportunity to offer this service. Even then, customers may be concerned that the vendor's knowledge of other vendors' products is limited and may call upon a third party to render the service. In this respect also then, rather than 'vendor neutrality' being the issue, multi-vendor product knowledge, and the ability to demonstrate that knowledge are the essential requisites.

Equipment vendors looking to add value to their business by ramping up their services offerings face a dilemma. Either they begin to price services they have previously not charged for or they build up their consulting capabilities to offer vendor neutral higher value services.

The first option risks alienating equipment customers and damaging the vendors core business. The vendor also risks failing in its objective of driving up overall profit margins because there is a limit on the prices a vendor can charge for such services.

The second option is thus the route many vendors take to drive up margins. Whilst there are on the surface compelling reasons why vendors feel they can successfully develop, market and sell a range of services, there are significant hurdles for them to clear before they can claim success.