Researching the IT Services Industry, Branding the Biggest Challenge

In case you missed it, here is the wrap up from our recent Technology Pulse Series on IT Services.

Series Summary: IT Services
This week marks the final installment of our Pulse series on IT Services. Before moving on to our next series on Operating Systems and Web Browsers, we've pulled together some of our key findings from the IT Services series research. You can also get a full rundown of the results by watching last week's webinar on the topic. Click here to watch a playback.

What We Learned:
IT Services provisions are increasingly becoming the standard across organizations and verticals to enhance internally deployed IT services. Although these services can be extremely varied within companies we chose to focus on 3 generic types: professional-consulting, annual subscription (most often maintenance and monitoring) and outsourcing services. Overall, we found that these IT services have become essential to the enterprise. This is illustrated by the fact that few IT professionals indicated that they intend to cut back on these services despite current economic conditions.

In terms of preferred vendors, IT professionals tend to be most interested in vendor companies for their services – with IBM, Cisco, Dell and HP all ranking highly. Still, branding for services presents a challenge to these and other IT service providers, as little differentiation is apparent across companies. Instead, most providers are seen as doing a satisfactory job of assisting clients, with few standouts in terms of service differentiators.

1. One third of organizations plan on increasing their spending on IT-related services over the next 1-2 years

Typically during a recession we expect to see cutbacks across the board in IT, but IT-related services have become so essential to organizational IT provisioning that spending activity is largely projected to increase over the next few years, not decline. This is likely because often these services are cost saving and time saving measures in and of themselves, enabling the shifting of internal resources to external partners.

2. Organizations might say they prefer vendor neutral and local vendors in theory, but in practice they tend to choose quite the opposite

When asked about their general preferences for IT Services, IT professionals tell us that they want vendors that are local, large in scale, and are vendor neutral (not experts in a preferred brand that they sell). In reality, however, when asked about which companies are their preferred vendors, their answers are extremely different.

• When asked to describe their preferences when selecting an IT-related services provider, 30% of IT professionals indicated they preferred a local vendor (as opposed to regional/national) that was vendor neutral (31%) and not vendor specific. They also preferred working with a large organization (26%) as opposed to a small shop.
  
• When we followed up and asked who are their favorite vendors across the three categories of IT services, they story was quite different. Instead those companies who often were their current vendors were seen as highly preferable vendors for services – many of whom were not vendor neutral.
  
• IBM, Cisco, Dell Oracle and HP again were chosen as preferable vendors over more vendor neutral companies such as Accenture, EDS or EMC. IBM was the top choice across the categories, followed by Cisco.

3. Branding is a Challenge for IT-Related Services

Branding is currently, and will remain a challenge for IT service companies in the future due to the lack of perceived differentiation among IT Professionals. Asked about uniqueness of 16 brands (based on a variety of brand attributes), the option “None” among these brands was actually ranked highest by IT professionals with 37% of respondents.

• The brand attributes that are the most elusive among current IT service providers are “understands my business” (20%) and “helps me run my business more efficiently and lowers costs” (20%). On the opposite end of the scale, attributes related to customer service and care are more common-place in the market.
  
• Few brands stand out among their peers for service, partnership and the ease of doing business. Among the most distinctive brands are Accenture for listening to its customers, Dell for the ease of doing business and EDS for understanding customer businesses.
  

Key Takeaway:

Enterprise IT departments, although tied to IT service provisions and intending to invest in these in the future, have to choose from among a very indistinctive sets of brands for services. To differentiate themselves IT service providers must look to where there is the largest gaps in the market for distinctiveness: the most elusive of attributes in the market are “understands my business” and “helps me run my business more efficiently and lower my costs.”

Market movers will create sales teams unique to business verticals and industry: having expertise in the problems with companies in particular industries allows sales forces to more efficiently and effectively meet the needs of clients rather than deploying a cookie-cutter approach across businesses and industries.