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Operational Renovation Part III

I recently discussed some of the changes Smart Dolphins has implemented during our Operational Renovation. There is more!

We Charge Fixed Monthly Fees

A vital part of our renovation was to change our arrangements with our customers to a fixed, “all-inclusive” monthly billing, opposed to charging a fee that was simply based on the amount of work that we did, i.e. hourly.

In an hourly-rate arrangement, an IT business makes more money the more work they have to do.

hammerIn a fixed-price arrangement, the IT company makes more money the LESS work they have to do. This fact is critical to the economics of being proactive. It takes a major investment to become effectively proactive as you invest in tools and process. A business can only make a major investment if there is an ability to get a return on that investment. For an IT company billing hourly, these investments in proactivity are actually going to hurt their own business as it reduces their billable hours. The economics dictate that these companies will only be able to invest in the proactive changes that their customers demand of them, which, given the general lack of understanding here, is very little.

 We Do More; We Charge More

One of the biggest problems with our industry is not charging enough to have the resources to do what needs to be done, proactively, to produce great results. Most people get in the IT Support business and look at market rates and practices and then build their own IT business operations on this. The problem is the market is based on a minimal level of service (firefighting). IT Companies are great at selling firefighting, but very few are charging enough to actually get effective sprinkler systems in place.

Put simply, with this renovation we could see clearly that we needed to DO MORE. It is difficult to do more in business without charging more.

We care too much about our customers not to charge them enough.

In my opinion, paying a low, hourly rate is one of the biggest mistake that small businesses make with respect to their IT Support vendor (at least for companies who value technology). The irony is this is what many businesses seek and many don’t know there is an alternative.

Sales and Marketing

Consider for a moment, the challenge ahead of Smart Dolphins at the outset of this Operational Renovation. We’re in a broken industry with little understanding of the flaws. The industry charges low, hourly rates, offers very little in the way of effective proactive service and generally lives in chaos. Most businesses are unaware of this and think their current IT Support situation is “fine”. To top it off, most business folks dislike changing IT Support vendors – the work is very intimate and misunderstood and they often have a personal relationship with their “IT guy”.

With our renovation, we needed to set out to change the status quo and this required an intense focus on sales and marketing. We needed to show business leaders a new definition for “fine” with respect to IT. There is a different approach. We believe, a better approach.

The take-away? I encourage others to look hard at their own industry. Don’t assume that your industry has it figured out. I see an abundance of similar flaws/opportunities in the business world. It is easy to assume that we all have it  “right”. Hardly. Time to start your own operational renovation and change your industry! Let me know if I can help!

Posted in : Blog, Business Babble
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