2005 Support Demand Research Series

We know that support and maintenance revenue has sustained many IT vendors during the recent economic downturn. Support and maintenance contributes 20%-60% to IT vendor revenue. Though the economy is showing signs of recovery, changes in support demand, customer expectations, and particularly margin pressures on support and maintenance threaten your support organizations. The Service & Support Professionals Association (SSPA) and Tech Strategy Partners (TSP) partnered to research and understand how enterprise’s and consumer’s demand for and expectations from maintenance contracts is changing; and recommend courses of action for the vendor community.

For example, findings from our Enterprise Reports show that customer pressure on maintenance pricing is on the rise. CIOs are likely to get more sophisticated and focused on maintenance pricing. According to the research, 5%-12% of your EPS is potentially at risk.

In their desire for cheaper, simpler, and more accountable support and maintenance, customers are pushing for greater web-based support and stricter SLAs. As many as 81% of customers would use the web to initiate case requests, twice the current industry standard. They also want to link vendor SLAs to their performance and commitments to business users.

The nature of support is evolving, technical support today focuses largely on fixing bugs while customers want technical support to make it easier for them to operate their IT landscape and reduce the total cost of support and maintenance, which accounts for 48% of a CIO’s budget.

In the short term, to defend maintenance margins, vendors must learn to communicate the value of technical support to customers, something they have not had to do in the past. This requires a competent voice to articulate the value, especially to the CIO, as well as those responsible for finance and procurement functions. Vendors must also continue to drive productivity improvements, potentially through a combination of automation and offshore outsourcing.

The 2005 Support Demand Research Series is divided into Enterprise and Consumer reports. The initial Enterprise Report is titled: Support and Maintenance Margin Pressure to Increase in 2005. It is available today. Other Enterprise Reports include: Moving Enterprise Support Toward Total Web Delivery, and Drive to Reduce TCO Creates New Opportunities for Service Organizations. Consumer Reports include: Can Consumer Technology Companies Afford Good Support in 2005?, Achieving Greater Consumer Adoption of Self-Service, and Accelerating Consumer Acceptance of Your Offshoring Strategy.

To purchase these reports, contact John South or 858-674-5491.

How do you handle price increases to your support maintenance?
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