A Sound Structure

Editor's Note: Show Daily guest columnist Jim Dixon was one of four industry experts participating in Sunday's Solution Provider Business Strategy session, "Reality Business: A Makeover," hosted by T.C. Doyle, senior executive editor.

Time and again I am asked to look at a solution provider's business and make recommendations. Many times I see things that can be easily fixed. One thing not easily fixed, however, is an organization's structure. Here's why that matters.

When many resellers started their business, there wasn't such a thing as IT services as we know it. There was maintenance, most often called break/fix, but these services started with and ended with boxes. Therefore, businesses were built using a specific organizational structure.

However, today that structure is too wobbly for many companies. That's because the structure maximizes product sales and delivery.

By now, most business owners have discovered that this old business model has generated byproducts that don't fit today's times. This may include the organizational structure and even their employees--we all know that transaction-oriented, product-focused salespeople don't make the best consultative-oriented, annuity-minded service salespeople. Many companies are wrestling with the fact that services is simply a different business than what they grew up with. A services business has a different profit model and different organizational needs.

One common problem: Too many companies make the mistake of operating a services business just like they did a product business. That simply won't work for companies trying to grow a services practice. A better approach is to elevate the service vice presidents and give them P&L accountability for service revenue and gross margins.

Interestingly, our research into solution provider organizations reveals that most solution providers with a services practice don't have anything that approximates a services culture, in which individual service engineers take responsibility for keeping themselves fully engaged at all times. That's a very different mentality than what you find in product-sales companies.

So what's a solution provider owner to do? Start by examining your structure. Next, develop practices or a business based on your service capabilities. Also key is embracing a new company culture--one that revolves around consultative, long-term sales and one that puts responsibility for staying utilized on the shoulders of all employees, not just the top salespeople.

There are other things you can do as well. And many are important. But don't underestimate the importance of your organization's structure. If you take it for granted, it may take you to the cleaners.

Jim Dixon is president of Executive Consultants, Malvern, Pa., and is former CEO of CompuCom Systems.

Contact Jim at: [email protected]