IT Providers and Lease Buyouts?
There are billions more dollars spent on IT services than print services, yet IT providers are not screaming about Lease Terms or Buyouts!
Does the industry selling business print equipment and services have an obsession with saving people money? If so, does that, in fact, describe a commodity business model?
What is amazing is that print equipment, supplies, and services represent less than 2% of nearly all organizations' comprehensive technology spend. And yet many in the print services industry are still selling based on price or reducing a prospect's equipment leasing and services expense. Or, the obsession with saving them from a competitor's outrageous services!
We hear things like 10% increases. OMG, or auto escalations! What a terrible thing. I think that all the print equipment dealers who have escalations are now grateful they have contracts that are based on the reality of price hikes and much better off than those obsessed with saving people money.
Do the print OEMs have fixed costs to dealers? What happens when supplies or parts have price hikes? Do dealers just eat the cost increase?
I fear the disaster coming to print providers who sell IT services with that mentality. Because successful IT services providers constantly evaluate and adjust the end-users pricing because IT services are highly fluid.
Authentic Upstream, IT service providers focus on accurate technology alignments; they don't focus on saving people money; they focus on protecting people's information and deploying technology infrastructures proficiently.
I continuously preach that IT services is about delivering products and services based on discipline, standardization, and mutually agreed outcomes between the MSP and the customer without deviating acceptable profits based on price.
Successful IT service providers have zero-tolerance regarding sacrificing profits.
Successful It services providers are not in business to beat a competitor; they are in business to solve their clients' problems.
IT service providers don't run around looking for leases to upgrade; they don't become consumed in buying out competitor contracts just to get a customer regardless of its profitability; they focus on the right customer who understands the value of security and compliance and is highly dependent on the performance of their technology infrastructure.
In addition, IT services providers assess (FEE-BASED) the prospect's technology and recommend solutions based on outcomes, not price or the prospect's current cost.
IT providers will occasionally find through correct assessments which are absolute dysfunction in a prospects' overall technology.
They will discover telephony dysfunction, ISP dysfunction, unaligned software licensing, backup, and continuity issues; the list is enormous, and those IT services providers who understand print can also add print equipment dysfunctions and disasters to the list of things they can fix.
If the customer is in a terrible lease scenario regarding print services, they can explain it to the customer, and when appropriate, they can help replace the equipment. Remember, you can always vendor manage a bad copier/print engagement until the right time to replace it.
Print services companies who have transitioned to IT services companies are positioned perfectly to disrupt print services through vendor management arrangements. Provided they are not obsessed with buying out the prospects copier lease to get the deal by close-out - Friday!
This vendor management concept will eliminate premature buyouts. So, eventually, when the print is added to the overall IT contract, the profit will increase tremendously. I will discuss this concept more throughout the year.
In Closing:
Please don't attempt to deliver IT or any broader services based on saving people money from current technology agreements or leases. Instead, honestly evaluate the appropriate cost needed to ensure you and the customers achieve the correct outcomes.
Stay tuned to The End of The Day With Ray! for more on this subject.
Ray Stasieczko, Host of The End Of The Day With Ray!
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