The IT Skeptic - Comments for "How to tell whether your IT vendor is a product vendor or a consultant"

Products vs. Services

mbuzina — Thu, 02 Aug 2007 12:57:42 +0000

Thank you for a good explanation of why we had an internal discussion lasting approx. 4 hours (!!!) on the definition of service & products. So I am old fashioned ;-)

this is a crude test of those who are going to struggle

skeptic — Mon, 23 Jul 2007 21:10:00 +0000

Welcome Dwayne
See The Sheep from the Goats: ITIL vendors and Version 3 for what i'm testing for. I suggest that this is a crude test of those who are going to struggle to step up to the new demands of Version 3. As discussed in that article, at least one of the big vendors has already had a nasty mis-step where they didn't have what it takes to rise above box-dropper.

What are you testing for?

Dwayne — Mon, 23 Jul 2007 17:12:02 +0000

Technologies and services are not inherently bad, of course - any product or service can fail it not used properly, and effective process/practice is a key element in the success of both.

What are you testing for in your analysis, and what do you do differently in each case?

I view automation / technology as an amplifier. It will make process and practice weaknesses incredibly visible. The only positive is that so many organizations buy technology and let it whither on the shelf, where it never gets the chance to amplify their poor processes to any large degree.

margins

skeptic — Wed, 18 Jul 2007 21:31:47 +0000

are you refering to reseller/retailer margins on boxed product? I'm talking about manufacturer's margins. I forget many of the numbers now, but as I recall manufacturer's margin on direct sales can be 30% or even 60%. R&D, COS and overheads are each typically 10-30%.

My experience of services is gross margins of 10-20%.

Others who are still in the game: what's your numbers?

I can only think of services as products where they are pre-defi

skeptic — Wed, 18 Jul 2007 21:25:36 +0000

Good point. So let's say I'm using the traditional interpretation of products :-D

Personally I can only think of services as products where they are pre-defined. "implement service desk, 5 days, $178,000".

True consulting proposals are hand-crafted to the engagement and I still can't make myself call them "products". I can call them "product" in the generic sense that my product is services, I need to brand my product etc but I don't feel that I stock or catalog products. Guess I'm just old fashioned

Semantic clarification

Visitor — Wed, 18 Jul 2007 15:57:40 +0000

Just a minor semantic clarification. I'd ordinarily let it pass, but ITIL is (correctly) conforming to this convention, especially with the introduction of the Product Manager:

In general (commerce and marketing), a product can be either goods or services. "Product" may refer to a single item, a group of equivalent products, a grouping of goods or services, or an industrial classification for the goods or services.

Its not strictly followed in agriculture, manufacturing and retailing but, hey, this is the dawning of the age of services.

Comparative Margins....

Visitor — Wed, 18 Jul 2007 12:33:57 +0000

Actually, I've always found the margins in services to be much higher than products....

the test is that the website sells consulting

skeptic — Tue, 17 Jul 2007 05:20:34 +0000

I'm not sure what you disagree about the test. I think we are on the same page. Even if you call it "Solutions", the key is that an organisation sells IP and delivers business outcomes, not product ancilliary technicians.

The IT Skeptic has often been vocal about the People Process Technology mantra.

So to recap, the test is that the website sells consulting, not two equal things one of which is product.

Services vs. Solutions

Cary King — Tue, 17 Jul 2007 02:17:58 +0000

I respectfully disagree with you about this simplistic test.

We are specifically changing our website away from services to reading solutions.

We don't believe our clients buy services. We believe they want solutions to their problems.

We also do most of our solutions fixed-price and 100% guaranteed.

We do act as "influencers" when we sell the vendor products that are required for the solution to the client's business issues. Small commission to defray the costs of Proof of Concepts, etc.

ALL product vendors are in the product business - all the time - even their Professional Services divisions. Don't be fooled by vendor packaged "solutions." They serve as a low-price, minimal service to get the product working - not a bit of the real issues are touched. Vendors are very happy to say that the product "operation" was a success, even though the patient (you) died.

The way to tell if a firm is client oriented vs. product oriented is if they focus on the policy, process and people issues that account for 75% of the issues with IT Service and Asset Management.

I did a series of interviews of 60 former clients of mine last year (out of several hundred - Peregrine and CA). The cause of "failure" (didn't reach the goal, not necessarily outright failure) most often mentioned was underestimating the political and people change issues.