[Reading time: 52 seconds]

The Deloitte Technology Fast 50 Awards ranks the country’s 50 fastest-growing technology companies based on revenue growth over a four-year period.

The 2023 winners have recently been announced. Congrats to everyone on the list.

 

But…

Fast growth can be risky.

Last year’s winner struggled a few months after receiving the award, and was eventually taken over by one of its biggest customer.

But it’s not just risky for the company itself.

 

What do I mean?

I have seen what the client sees.

And in my experience, if one of your key IT service providers is growing fast, this is seldom good news for you.

Because significant growth brings significant risks.

For example:

  • Focus: As the provider expands, the senior management team’s focus shifts to completing mergers & acquisitions, acquiring new clients, and entering new markets. This means less focus on serving existing clients.
  • Quality: Fast growth can lead to a decline in service quality as they add more clients and more services.
  • Skill: This decline in quality arises because fast growth requires fast hiring. In a tight labour market, many of the new hires will be less experienced. And the more experienced staff will become less accessible because they are fixing their colleagues’ errors, and are spread across a broader client base.
  • Turnover: The service provider’s turnover may grow fast. But their staff turnover will too, because skilled people who enjoy working in a 5-25 person company seldom enjoy working in a 500-2500 person company.

 

So what?

Your service provider may love fast growth, and it may be pursuing this growth at all costs.

But as a client, fast growth at all costs can be costly to you.

 

How do you manage the risks?

Over the last 10 years, I’ve helped many firms address these risks, and I would suggest you start with these steps:

  • Proactively monitor and record service levels, using both quantitative and qualitative data. Ask your staff to share their experiences, to ensure you are getting a full picture.
  • Monitor behaviours that hide the underlying issue (e.g. tickets being closed without an appropriate solution being provided; the same issue arising over and over again, without the root cause being identified or addressed; staff members not bothering to submits tickets in the first place because they know they won’t get resolved anyway; staff accepting that they should make a cup of tea while they wait for their laptop to log in each morning).
  • Be the squeaky wheel: Escalate issues as soon and as frequently as possible.
  • Be the dog with a bone: Refuse to be pawned off by weak responses or one-off improvements in service.

 

And most importantly: Be ready to leave.

Service providers know you will threaten to leave, but you probably won’t because you don’t want the hassle of finding an alternative provider.

This is why IT service providers can get away with abysmal service for much longer than many other types of organisations. They know their clients are sticky and the monthly recurring revenue will keep rolling in.

This is also why the Private Equity firms that are funding a lot of this growth love IT service providers.

 

Be ready to prove them wrong.

And remember, if most of your IT ‘stuff’ is in the cloud…

You won’t need to change your vehicle:

You just need a better driver.

 

PS If you need help improving your driver or finding a new one, I can help.