Vendors Launch Professional Services Association

IKON among founding members

As IKON makes the transition from hardware-oriented to solutions sales, it is not alone. The digital copier mega-dealer recently joined more than 15 vendors as a founding member of an organization made up of companies making similar transitions. The Technology Professional Services Association (TPSA) is the brainchild of renowned consultant and author Thomas Lah, whose Web site lists his focus as “building professional services when it is not the core competency of a company.” Other founding members of the organization include BEA, Computer Associates, Hitachi Data Systems, Hyperion, Sterling Commerce, and Sun Microsystems.

“We’re not talking about systems integrators or classic outsourcing businesses,” Lah, the executive director of TPSA, told DIR. “We believe there is a fundamental difference between these pure play services businesses and professional services that are wrapped around the delivery of technology. It’s a different financial model and a different skill set. This needs to be acknowledged. It makes no sense for vendors to benchmark themselves against Accenture or EDS.”

According to Lah, in recent years, vendors have been forced to expand their professional services offerings. “Historically, many of these companies could get away with being laser-focused on their products,” he said. “Gone are the good ole’ days when you could come in, drop off a product, set up a maintenance contract, and everybody is happy. Vendors are no longer operating in a vacuum. Customers want their technology plugged into the other pieces of their infrastructure. Since everybody else is offering to do this, you can’t remain competitive without a professional services organization.”

Not that there aren’t any gains to be had for vendors who ramp up their professional services practices. “If you do it right, you create a different level of relationship with your customers,” said Lah. “For the past three years, we’ve been hearing the drumbeat calling for businesses to become more than vendors, to become trusted advisors—to discuss more than bells and whistles, to promise ROI. Successful professional services are a sure way to reach this level.”

Michael Kohlsdorf, senior VP of IKON Enterprise Services, is looking forward to the benchmarking studies and metrics TPSA has promised to produce. “There are a lot of unrealistic numbers floating around,” Kohlsdorf told DIR. “People think you can create a professional services organization with gross margins of 40-50% right out of the shoot. That’s just not the case. I’m looking for TPSA to provide us with some greater granularity into what a successful business model looks like and what its specific components are.”

Lah pointed out that one key aspect to managing professional services is simply knowing how many people to employ. “Everybody has the same goal, which is to deliver reliable support on a global scale,” he said. “The challenge is doing this in a financially efficient manner.”

Lah believes that a community sharing its knowledge is the best way to overcome many challenges. “Our goal is to draw information from all our members, put together task forces and publish studies and white papers detailing proven practices,” he said. “It’s more efficient to undertake these projects leveraging collective experiences than for a company to do it on its own.”

We mentioned to Lah that one challenge especially apparent in the document imaging industry is the delicate balance vendors must maintain between their professional services organizations and their reseller channels. “That is one of the top 10 issues we will focus on,” Lah told DIR. “No matter how big or small your professional services, you have to figure out how to play nicely with your partners. A lot of companies have misfired and scared their partners by launching seemingly aggressive initiatives without much warning.”

More Than A Passing Trend
According to Lah, the recent expansion of their professional services by vendors is due to more than just the lure of increased revenue. “In 2001, we saw a real slowdown in spending—both on IT staffs and products,” he said. “With their reduced staffs, customers don’t want to buy component parts and have to put them together. They’ve started looking toward vendors for solutions, which has forced vendors to increase their professional services. At the same time, as these customers are less willing to spend money on hardware and software, vendors have begun to look toward professional services for increased revenue and margins.”

Lah doesn’t see vendors’ interest in professional services diminishing any time soon. “Everybody has jumped in the water now, but how many are going to swim?” he asked. “As markets start to shake out, good professional services are going to be a differentiator. That’s why companies are motivated to spend time and money to be involved with TPSA. They want to see data and benchmarks and learn best practices that will help them succeed.”

For more information:
http://www.tpsaonline.com; http://www.ikon.com