Selling services key to long-term survival

After years of dealing with the technology downturn by cutting costs, companies that provide technology services are beginning to look instead at ways to build their revenue.

Those revenuebuilding strategies will be in the forefront this month as at least 1,500 participants in the technology services industry come to Reno for the annual S-Business Education Summit and Expo sponsored by the Association for Services Management International.

The event will run Oct.

26-29 at the Reno Hilton.

John Schoenewald, chief executive officer of the association, said companies that decide to seek greater revenues from their technology services operations often need to invest heavily in training sales and marketing staffs.

"Sales people cannot sell service unless they're trained in ways to do it," Schoenewald said in an interview.

"Product people have difficulties selling services."

While many technology companies long have treated their service organizations as profit centers, Schoenewald said service operations are gaining higher importance.

That, he said, results from the growing realization that technology service can provide returns that are difficult to find in the highly competitive hardware side of the business.

Some studies have found that good after-sales service and parts organization can contribute as much as 25 percent of revenue and 40 to 50 percent of profits for a technology company.

And the profits of a strong service operation are long-lasting.

"Good service organizations generate customer loyalty.

Not just satisfaction, but loyalty," Schoenewald said.

Big technology companies such as IBM and General Electric have been among the leaders in building revenue streams from their service organization, but the services association CEO said smaller companies are getting the message, too.

About a third of the membership of Association for Services Management International comes from companies with more than $1 billion annual sales.

A third comes from companies with less than $100 million in annual sales, and a third comes from the middle group.

Keynoting the session will be Anne M.

Mulcahy, chairman and CEO of Xerox Corp.