Services for the midmarket – opening the door to a new channel revenue stream
11 April 2013 | 0
Business Process Outsourcing (BPO) has long been a buzzword of large enterprise management. For over 20 years, multinational companies have turned to large specialist providers to manage a whole host of business functions, driving flexibility and cost reduction in virtually any department.
Currently, the outsourcing market is booming. According to the ISG Global TPI Index, 2011 was a record-breaking year with 870 contracts awarded across the outsourcing market worldwide, well above the average for the past five years.
But look closely at this expansion, and you’ll notice an interesting but subtle shift taking place. The TPI Index also highlights that small to mid-size contracts have more than tripled and are playing an important role in the outsourcing market, which is expected to grow overall by three to 4% in this year.
One of the main reasons that seems to explain the move to smaller deals is the increased adoption of outsourcing by small and medium businesses (SMBs). This signifies a broader acceptance of the benefits of outsourcing, which could lead to a significant increase in smaller, specialised agreements in this market.
A few years ago there was a gap in the market for a standardised managed print services (MPS) offering, which could be scaled to meet the requirements of different sized businesses, especially SMBs. The MPS which emerged as a result can not only save millions for large corporations, but also allows smaller companies with a less complex print infrastructure to reap the benefits of MPS.
Midmarket companies are seeing the returns garnered from enterprise BPO and want a piece of the action too.
For the channel vendors supporting these midmarket companies from a hardware perspective, the opportunity to capitalise has never been greater. As midmarket companies themselves, channel vendors have the local knowledge needed to deliver a bespoke service; success in which hangs largely on the level of global infrastructure they have behind them.
Plus, while it has taken the top-end of the market 20 years to get to grips with BPO, midmarket companies already know what to expect. After the first few take the plunge I expect the flood gates to open and if channel vendors are to take advantage they must move equally fast. IT services providers are already moving into the managed print space, bringing with them a services package more complete than many midmarket channel vendors currently offer.
Thus, moving into services is fast-becoming a crucial step they now need to take to ring-fence their customers. They need to identify where the opportunities to add value lie and build on their existing success by strengthening customer trust to win additional spend. This trust factor is where a channel vendor’s supplier can step in to make its services proposition viable.
Channel programmes should be built with the resources that partners need to sell services to the midmarket today. Offering hardware combined with the hassle-free support of print services, for example, makes for an attractive midmarket package.
Forward-thinking channel vendors are already servicing customers’ print infrastructures via their own services platforms, which can be built on existing partner print service toolkits and have been seen to deliver customer savings of up to 30% . Customers benefit from reduced costs on consumables, service and cost-per-page, optimised hardware fleets resulting in lower energy usage and environmental footprint, and freed-up IT resources.
Beyond managed print
It is clear therefore that the take-up of outsourcing is not just the domain of large organisations. SMBs are seeing a growth in supplier expertise which drives innovation and brings new standardised BPO offerings to market. In a time when organisations are continuously scrutinising the bottom line, these standardised solutions will increasingly prove a popular choice for executives and managers seeking a quick return on investment whilst supporting the business with dependable service delivery.
When SMBs come to choose this type of solution, it is imperative of course that they work with providers that are experts in their field. In the next few years the market will provide an even greater range of business-IT services beyond print, including assessment services, asset management such as PC refresh, data centre and infrastructure management, proactive on-site support and even cloud-based services such as email-all of which can be supported through the right channel programme. Fail to find the right expertise in these areas, however, and it will not drive the results that might be expected.
‘Innovation’, at least as far as the midmarket is concerned, depends heavily on developing from hardware and into services. Offering great hardware remains critical but is only a fraction of the opportunity now standing before these organisations. If this opportunity continues on its current growth path, then I believe BPO will very soon become a midmarket buzzword too.
David Mooney is channel business manager with Xerox Ireland