On Rad�s Radar

The IT Shop Partner Profile

By Peter Radizeski, RAD-INFO Inc.  |  December 09, 2015

Parks Associates’ (News - Alert) study on IT support spending for small business finds that small businesses (those will less than 250 employees) spend only $150 per month for IT services. That number seems low unless you do some math. A small IT shop has about 150 to 250 customers from talking with potential VoIP partners. At 150 accounts billing $120 per month, the revenue is $216,000. After expenses and hardware, it would be reasonable for a one-man shop.

The extrapolation on this is that if a small business only spends $150 per month on IT support, how much time can you spend trying to sell to small business just to get $150 more per month?

Also, if the IT shop only has up to 250 accounts, how much revenue is that for the vendor? A new service such as broadband or VoIP is going to attract about 15 percent of the client base in the first year. That is 20 to 40 accounts per year added on. For a $350 triple-play cable bundle or even a DSL/mobile bundle, the impact on the carrier revenue is small at $150,000 in MRR in a year, considering the support costs and education of both the partner and the customer.

To the IT shop, that will result in about $15,000 per year in commission. That might make it worthwhile as a 7 percent bump in revenue for the IT shop. It might unless he is already so busy just keeping his head (and business) above water that he doesn’t have time to add a new line of business, to learn the product, the sales process, and the paperwork.

He may not want to be involved in the telecom business where things often go wrong and he will be blamed. (He gets enough of that from the email server and the Windows computers he supports.) That is why telecom agents court IT guys – for the introductions for a share of that commission (although there isn’t much to share).

The findings that small businesses spend so little on IT support – and truthfully on telecom spend as well – spotlights why the duopoly try to automate the sale of small business services. To maximize profit, you have to decrease customer acquisition costs – and today that means automate.

Peter Radizeski is president of telecom consulting firm RAD-INFO INC

Edited by Kyle Piscioniere