All Service Providers are Equal, but Some are More Equal than Others | Sherpas in Blue Shirts

With apologies to George Orwell and his novel “Animal Farm,” I think Napoleon the Pig’s famous quote (“All animals are created equal, but some animals are more equal than others”) has important applicability and insight for the services industry.

The industry is changing very quickly. Customers are open and eager for transformation and to apply disruptive technologies. Service providers are eager to bring them to the customers. Seems like a match made in heaven.  

But here’s the problem: all providers’ presentations look identical. They all include phrases like “extreme automation,” “cloud” and “elastic service.” In fact, if you delete the logo and the background color of the presentations, they are indecipherable from one another. For the customer, it looks like all providers are equal. And the customers are equally cynical about them.

From the customer’s perspective, the problem is how to pierce the veil and determine which providers really can do the work. There are a variety of ways to determine this, but one of the prominent ways is to look at the price. If the provider pitches robotics, repeatable process automation (RPA), or cloud services, it should translate to lower pricing. But this is not the case. Usually we find that the offer price and terms don’t align with the presentation slides.

For example, if the customer is moving to a consumption-based frame or elastic vehicle, it expects a low price and no long-term entanglement. But we consistently see is providers coming in with a five-year contract, a modest reduction in price and COLA (cost of living adjustment). All of these terms fly in the face of the promise of cloud, elastic services and extreme automation. AWS, for example, dropped its price by 60 percent last year.

As an industry observer, providers often ask me how they can change their messaging to be more compelling. My answer is, “You can’t. Any clever graphic or catchy saying will be quickly adopted by your competitors.” Instead of changing the way the presentation looks, providers need to make sure their pricing mechanism and contractual structure aligns with the promise of the offering.

Customers can tell service providers apart by looking for the provider whose entire model is consistent with the promise. Otherwise, the promise is just rhetoric and all providers are equal.

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