Just What Is Service?

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When Compaq Computer disclosed its latest financials last week, it came as little surprise that the brightest spot on its balance sheet was the section detailing its Global Services division.

While new systems integration projects were few and far between, Compaq Chairman and CEO Michael Capellas said the company benefited from its customers' interest in shoring up the infrastructure they already have. The group actually posted a fourth-quarter profit of $253 million on revenue of $2 billion.

HEATHER CLANCY can be reached via e-mail at hclancy@cmp.com.

As I write this, hours before IBM's scheduled fourth-quarter earnings call, I'd be willing to bet that the vendor's vaunted services organization will carry the day. Gosh, even Dell Computer is blowing the services horn these days,it claims an annual services run rate of between $2 billion and $3 billion and has set its long-term sights on the $10 billion mark.

It's no secret almost all of the major hardware vendors have IBM Global Services envy. It's one of the biggest motivators for the proposed merger of Hewlett-Packard and Compaq. But what are these vendors really talking about when they say they offer services? Break-fix and maintenance work? Custom systems integration? Network design? Software application development?

The word "service" has one of the broadest definitions in the English language, and it means something different to every single customer.

But all of us must start being a lot more careful about how we compare the various companies that describe themselves as services players. There are obviously different cost structures involved in providing maintenance than in designing e-business platforms. And even though some vendors may book all sorts of services revenue on their balance sheets, they may not actually do much of the work themselves. Such is the case with Dell, as CRN will explore in an upcoming news feature.

This year will be the proving ground for many vendor-run services organizations. Already, Microsoft has changed its top consulting manager and frozen hiring, and Lotus recently laid off some of its consultants.

It's time for solution providers to better define their own services propositions and trumpet their biggest competitive weapon,the ability to offer independent, multivendor solutions.

What's your services mix? Contact HEATHER CLANCY, Editor/Strategy at CRN, at hclancy@cmp.com.

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