State of OWN

IT Business

Summer months tend to be dead for us, and with the tougher economy out there I’m checking our KPI’s every day to see dip in either services or subscriptions. As bad as things seem, we going to have our strongest month on the books even for god knows what month in a row and with Shockey Monkey 2.0 and ExchangeDefender 4.0 online launching in August things are looking remarkably good indeed.

So why the paranoia? The bottom of the market is eroding. That’s about as politely as I can put it. The SPFs have long disappeared and riff-raff is on it’s way out as well. As I have written many times, with very very very few exceptions, being small is rarely a choice. It reflects in the service dropoffs and client quality of the bottom tiers as the service losses aren’t to a competitor of ours (Postini, MessageLabs) but back to the server or more commonly just null routing (as in company gone). And as the bottom client base disappears, so do the solution providers. We’re seeing a lot of people teaming up with other smaller IT shops but by far and large most people are out getting jobs.

That in a nutshell is my greatest going concern with OWN. We have worked very, very hard to leave SMB and count on our partners but not a day goes by that we do not get a former partner account call in direct and say that their consultant simply vanished. This forces our hand – if we cannot find a partner to refer to, we have to decline and lose a client to retail-based services organization. There is some talk here of providing direct support though I am not sure how we can figure out the numbers for level 1 staff around the clock and maintain our service levels where they are. So that’s a problem.

 photoSo far we haven’t figured it out. Smallbiz disappearance is something that I’ve written here at length, much to the dismay of many of the people that self-identified with the SPF term I coined a long time ago watching the MAPS resellers at TS2 events that called themselves consultants. But apparently the choice to focus on small business for a lot of the shops we work with has been a wrong one. When you are small you cannot reach a significant diversity in the verticals, and most of the time geographic bounds are insurmountable (though I know a lot of people that will fly around the country to service all the branches) so if you are bringing in $50 – $75K a year you’ve got a pretty good life, but when one or two out of ten clients go south and your cost of doing business skyrockets you are facing pressure on margins as well as account loss. So much for a lifestyle, eh? I had a guy call me last week and lay out his “lifestyle” business plan and his challenges… and I felt like crap because there was just nothing I could tell him. I have degrees in business and engineering, I’m programmed to seek diversity, grow and solve problems. What this guy saw as his competitive advantage is turning out to be an Achilles heel to a lot of partners who in a tough economy have to face reality, partner up with the others in the marketplace and take a good look at their business processes and reevaluate direction. From talking to a number of them, it seems looking at the EBS/SBS launch didn’t quite resonate with their clients and they figured they could make more money working for someone else.

As for us, we keep putting more money in talent, equipment and services and people are lining up around the building to sign up. Remarkable growth with ExchangeDefender which with 4.0 enhancements will pretty much decimate everything else on the market (thats just my unbiased opinion), the offsite backup business is growing insanely and with 5.5’s addition of continuous data protection available now and hardware independant restores expected around Thanksgiving, with the global demand for Exchange+SharePoint $10/10GB combo.. our biggest issue is finding a direct compromise and how to deal with the small business partner attrition. I wish it was as simple as if ($revenue > $level1_support_salary) count_de_money();

Advice? You know the #….

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