2009: A Bad Year To Be A Cost Center
I don’t know about you, but it feels like 2001 all over again. The 2001 tech crash was a huge wakeup call to those of us in high tech who thought the Internet boom would last forever…or at least until the next round of options vested. The current economic crisis is casting the same pall over Silicon Valley, where most large tech companies rely on the financial services (FS) sector for a chunk of revenue. Even companies that don’t sell to FS sell to other industries that DO sell to FS. We’re all going to feel this one, maybe now, maybe mid next year.
With most companies gearing up for their 2009 budget process I suspect we will soon find out if support budgets are remaining the same for 2009 or falling. In general, I think we are much better positioned for this recession than the last one. Why?
- Support ‘cost centers’ are a thing of the past. Tech support, professional services and field service operations are no longer seen as ‘a cost of doing business,’ they are increasingly viewed as the primary revenue engine of technology companies. With no services you have no business value. Without business value you have no customers.
- Customer experience matters. Many large companies have created a Chief Customer Office or similar role, and the customer experience is now a boardroom topic. Support’s role in maintaining a strong experience is recognized today more than in the past.
- Short term savings have long term impacts. We tried every conceivable way to cut support costs 5-7 years ago, and customers voted with their feet. Maybe I’m naive, but I think C level execs today understand the link between customer satisfaction and customer loyalty, and I’m hopeful they won’t make knee-jerk cost cutting moves that drive away customers.
- You get what you pay for. Low-bid outsourcing deals were seen as the savior of struggling tech companies in 2001. It didn’t work. The customer experience with these contracts was so terrible that many companies were called on the carpet publicly by customer advocate groups and the media. If you do decide that offshore is right for you, read our SSPA committee report on talent management in India.
- Make self-service work. The dismal results for self-service success should be corrected. Fast. With belt tightening going on, support operations need to be sure customers are using and being successful with self-service. The current trend towards more reliance on the phone channel must stop. If you have one thing you can invest in, improve the number and quality of your self-service options.
- Push communities. If you have a vision for an engaged, collaborative customer community, you better get started. A successful community initiative will help with self-service by enabling peer-to-peer support, but people are receiving so many invites to join communities that is harder to capture mind share. If you are the last one to the Web 2.0 Party there won’t be anyone left except lurkers.