Software

Eight ways IT consultants can succeed in a turbulent economy

Committing to client satisfaction, marketing creatively, and guarding expenses are among the best methods any IT consultant can employ to succeed. Find out what else Erik Eckel recommends you should do -- as well as what not to do -- to succeed in this economic climate.

 While growth opportunities exist for independent consultants, recessionary environments require that IT professionals carefully plan investments, resources, and initiatives. Intuit's financial software application sales, for example, are performing well despite the economic downturn. But it doesn't necessarily make sense for an IT consultancy to dedicate its entire focus to becoming a QuickBooks shop just because that segment is showing some life. Instead, it may make more sense to add those skills as an additional, complementary competency. Nor should IT consultants make rash decisions concerning other aspects of their business.

Here are actions IT consultants can implement to survive downturns and better manage financial storms.

#1: Focus on the client

When the economy sours, client satisfaction becomes paramount. Forging long-term relationships with clients, in which their specific needs and objectives come first, will help you stand a much better chance of prospering.

Even when PC and server shipments drop, businesses and charities still upgrade and replace older equipment and add new systems and software. By earning clients' trust, you become a business partner during good times and bad.

When listening to clients' needs, truly listen. If a client suggests he needs to update a CRM platform, refine a database, or smooth e-mail communications, don't interpret that as the client saying he needs three new 64-bit servers loaded with quad-core CPUs to power the corresponding back end. Instead, the client is saying he has a problem that needs fixing. Remember that it may be possible to leverage existing equipment and systems, tweak network or firewall settings, or maybe just upgrade software applications, as opposed to replacing the entire infrastructure.

#2: Market your business at all times

People can't hire you if they don't know what you do. While it sounds simple, it's amazing how often businesses miss opportunities to promote themselves.

For example, do you ever use a restaurant's pen to sign the credit card receipt for dinner? Why do the pens waiters and waitresses hand you so often promote an insurance office or bank instead of their own establishment?

To brand yourself, always carry business cards and put professional logos on your vehicles. Visit local EmbroidMe and SIGNARAMA franchises for help promoting your business, whether you need signs, decals, briefcases and attaches, clothing, or more.

#3: Treat yourself as a client

Ask yourself what advice you'd give your organization if you were hired to help solve its problems. Really... you should try it.

Would you recommend continuing to run Exchange, SQL Server, your test software environments, Remote Web Workplace, Outlook Web Access, file and print services, your company's Web site, your organization's SharePoint site, and Intranet, fax services, and more on your aging Pentium-powered server with 1 GB RAM? Or would you tell the client there's nothing you can do to help until they upgrade their dangerously obsolete equipment?

#4: Leverage your investments

Be reasonable with expenses and ensure any investment has a direct tie to fueling existing business, generating new revenue, or reducing operating costs.

If you don't know the exact return a significant new hardware, software, or systems investment will provide, sit down with trusted employees and/or advisors to review the expense. The toughest recession since the 1930s is no time to overextend the company's finances, but it's also no reason to forego carefully considered investments that can better position your organization for growth and success.

#5: Maintain your skills

Sure, maintaining your skills is easier said than done, but it's critical to your success.

New technologies -- including new Linux distributions and Microsoft server and desktop operating system platforms -- will prove critical to the success of your consulting and contracting organization. Many clients will request information on such new releases, and these new systems could be the best fit for solving a variety of clients' issues. Thus, it's essential that you become familiar with the features and capabilities of new technologies. It's also important that you learn the limitations, bugs, and workarounds inherent in all new systems.

There are a variety of sources to help maintain your knowledge, but you should start by researching vendor options.

Microsoft offers partners the Microsoft Action Pack Subscription (MAPS) program, which provides registered partners with internal-use, full-version software. Consultants can load new operating systems and applications on test machines to obtain first-hand experience installing, configuring, and troubleshooting important new products. In addition, Microsoft includes sales and marketing materials and tools in MAPS.

Training providers can prove helpful, too. If your personality is better matched to learning new material in a structured classroom environment, check out technology training classes in your area. You're likely to find local colleges, technical schools, and other training providers who offer targeted instruction. New Horizons and ITT Technical Institute are two options.

Computer-based training is another option. Several respected companies, including CBT Nuggets, PrepLogic, and SkillSoft, offer products to help you train at your own pace.

#6: Keep your regular rates

Deflation is more often associated with an economic depression, as opposed to a recession. IT consultants have very real costs associated with their businesses (computers, fleet leases, Internet connectivity, mobile phones, accounting services, electricity, office rent, etc.). Don't panic and lower rates. If your organization doesn't cover its costs of conducting business, it cannot survive tough economies. Committing to client satisfaction, marketing creatively, and guarding expenses are among the best methods any organization can employ to succeed.

#7: Strengthen vendor relationships

You shouldn't underestimate the importance of strong vendor relationships, particularly those providing general IT support and services. Consultants receive a serious competitive advantage when they can customize systems, fulfill orders quickly, and receive attractive pricing or discounted support services.

Vendors are much more likely to negotiate discounts and package deals during periods of recession, too. Strong long-term vendor relationships are just as important as long-term client relationships. Without flexible vendor relationships (which are built over time), you'll find options for assisting their clients limited.

That's not to say you should just start taking vendors to lunch. Instead, you should take time to contact sales representatives and vendor account executives to learn what's new in the pipeline, what promotions and pricing strategies are becoming more important for the vendor, and what trends the vendor is noticing and/or tracking. By knowing a vendor's needs and by becoming more familiar with important vendors' products, services, and challenges, you can learn how a vendor's products or services (and any unique benefits and advantages) might best address and solve clients' needs.

#8: Choose niches carefully

IT consultants often target a specific niche, such as physicians' offices, manufacturing firms, or energy companies. Software developers may not have a choice; the platform they develop may be so specialized that's their only real outlet.

But if you have a choice, you should consider expanding your market focus to include multiple vertical industries. By targeting clients across a variety of industries, you can better insulate yourselffrom the effects of economic recession. Many Windows consultants, for example, are finding their services remain in demand. That's a common factor, after all; dentists, physicians, manufacturing firms, and restaurants all are among those segments largely using Windows.

While not all consultants can target multiple industries, those who can should -- now more so than ever.

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About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

6 comments
PMPsicle
PMPsicle

I have a problem with two of your items, plus two additional items. The first additional item is to know your market. Different markets act in different ways. Unless you really know your market (however you wish to define it), you can't make the necessary decisions. This leads directly to the issues I have with the listed ways. The first issue is with the Keep Your Regular Rates. Generally, the recommendation is correct. The reality is that most small business people undervalue, and underprice their product/service. There is a point at which your total profit (unit sales x (sales price - unit cost) ) is maximized. As sales price goes up, the unit sales will go down - BUT NOT AS FAST UNTIL YOU EXCEED THAT POINT. In a recession that point is typically BUT NOT ALWAYS reduced. You need to know your market. You also need to know if you are in a false market situation (for example where 3rd parties are heavily involved). In that case you will automatically get noise that the rates are falling. This may or may not be true. The 3rd party may be trying to reduce your rates to make up their reduction in quantity. The second issue I have is with Choose Niches Carefully. While I definitely agree with the title, I'm not sure the advice is appropriate. Remember that a niche is really only a way to describe a group of customers. It's a way for you to understand a group of customers and identify how to connect with them. In a recession you need to connect closer to your clients. Selecting a vertical niche (e.g. doctors) is a technique to connect. Selecting a horizontal niche (e.g. accounting packages) doesn't allow you to connect to the client in the same way. (Key: know your market -- there are exceptions). In addition, one of the negatives your market MAY be experiencing is the tendency of niche-buying. That is where your client wants to hire someone exactly like themselves. Horizontal niches are suicide in such a market. However, I'm wondering if Mr. Eckel simply didn't explain his opinion clearly enough. The other missing way is to constantly innovate. Look for other niches where your skills could solve a problem they are experiencing. This is one essential characteristic of entrepreneurship. Look for ways you can provide a innovative solution to a new niche. So the net advice I would suggest is to add additional vertical niches but avoid the horizontal niches suggested in the article. Of course, your mileage may vary ... know your market first! Glen Ford, PMP http://www.trainingnow.ca

Erik Eckel
Erik Eckel

Thanks for the comments. I appreciate your taking time to write and share your thoughts. While pricing pressures increase during recessions, significant deflation is typically more a symptom of a depression, not a recession. That said, every locale is different. I meant to say that consultants should avoid knee-jerk reactions and resist reducing rates whenever possible. In my city, competitors continue charging the same rates as in the past. As for niche markets, my fear is that, should a consultant have focused on a too narrowly focused niche (such as realty or new auto dealerships), they may well find themselves in trouble. Whereas, if a consultant brushed up on QuickBooks or other common point of sale system skills, they may well find demand for their services rising (Intuit sales are showing strength). That's what I meant when I wrote "by targeting clients across a variety of industries, you can better insulate yourself from the effects of economic recession." In the article, I mentioned Windows skills will be more in demand than, say, Sage Intergy skills (that target only physician offices). My Intuit example, above, is another example (multiple retail verticles, such as book stores, art galleries, boutiques, plumbing shops, nonprofit gift stores, etc. all use that platform). The broader the need for your "niche" skills, obviously, the better you'll do.

PMPsicle
PMPsicle

I understand ... that's why I commented with the know your market advice. For example, up here, we're in a niche-buying binge. (Someone suggested that too many people are afraid of making a mistake and being fired.) You know and I know that QB is common across all industries. (For that matter all accounting packages are.). Each business will have variations but they're really pretty minor. But if I go to the market up here with QB, I'll fail. Why? Because the clients want me to have 10+ years in their industry. (Plus only be 1 year out of University and have an accounting designation but that's another matter ... able to jump over tall buildings in a single bound would be nice as well... flying is out though, too capable so you're obviously too expensive). So, in this market, I'm much better off picking two or three niches (say, Doctors, bankruptcy trustees and art galleries) and then specialize in QB, Accpac and whatever other accounting package is on the horizon. The key is to know the market (and niche) well enough that you can pick niches that react to economies in reverse (e.g. When trustees are busy, art galleries are down. When art is selling, trustees are down.). Of course, when looking at software it's a little harder to find two opposing reactions. (Your pricing comments are right on BTW.) Glen Ford, PMP http://www.trainingnow.ca

Sterling chip Camden
Sterling chip Camden

Especially "constantly innovate." Think of ways to add value that your clients (and your competitors) haven't thought of yet.

sidekick
sidekick

When I worked as a consultant, the company was thinking about paying anyone in the company who would paint the logo on their car. No takers. This was in the Boston area, and I wasn't about to give up honking at other drivers or opening my window, extending my arm, and "communicating", which might hurt the company image if I have their logo all over my car. BTW, I'm not gennerally an angry or aggressive driver. I just wish people would use those turn signals.

Erik Eckel
Erik Eckel

I just bought a new car Saturday. Leased it actually (as that makes more sense for the business). I haven't had a chance to add the vinyl lettering to the vehicle's windows, yet. In the interim, I am noticing some joys of anonymity. That said, I'll be adding the logos soon enough. They pay for themselves many times over, in my experience.

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