Consolidation within the IT sector has started and as cloud delivered services become widely accepted and deliver real benefit, it’s likely there will be more providers that fail to adapt.
As part of our on-boarding process, we carry out standard credit checks against customers. This is common practice, however ensuring that your service provider doesn’t go out of business is something that’s hard to validate – in many cases a business that appears successful might not be, and the flash image doesn’t always mean flash books.
As a customer, you can take precautionary steps to protect yourself should the worst happen to your IT service provider. Your priority is to ensure continuation of your business should the service provider fail; a key to this is maintaining ownership and control of your data. Virtually every IT company in New Zealand can now resell Azure and Office365 services through the Microsoft Cloud Solution Provider (CSP) programme, the good news is that should the Microsoft reseller fail or not work out for you, you should be able to transition the service to another provider without impacting your users or your IT services. The one proviso to this is that you require the correct administrative permissions to your Azure/Office365 tenancy.
Some easy steps to consider before signing up with any IT provider:
Office365 Global Administrator role
Each Office365 tenancy has what is called a “Global Administrator” role. You should ensure that you have an account with Global Administrator permissions within your tenant and that you understand who else has access – this is the key to your Office365 kingdom, some service providers hold these and will not share them with you. It’s your data, make sure you are in control of it.
Leased Equipment
If you have leased/rented PCs/Laptops and/or networking gear from your IT provider, make sure you understand who owns the equipment and what happens in case of IT provider failure.
Domain Admin Accounts
If you have your own Active Directory in Azure or on-premises – ensure you have access to the domain administrator or computer administrator passwords. Keep these safe.
Internet and Phone
Most IT providers resell network services from larger Telco’s, if this is the case, find out and keep a note of the underlying providers – if your provider fails, the quickest way for you to get back online will be to buy directly from the underlying carrier.
Price and Profit
Don’t buy solely on price, IT is not cheap, Cloud is not necessarily going to give you direct savings, your IT provider is no good if they are not profitable. As such, the cheapest option may not always be the best.
Recurring Revenue Business Model
A business with a well-established recurring revenue business model should be able to demonstrate a good level of liquidity provided the business has a low level of churn. A good measure of this is the creditor days metric – this estimates the average number of days it takes a business to settle its debts with trade suppliers, if this figure is unacceptably high it indicates either unethical business practices or liquidity problems – both should be avoided! The challenge might be getting this figure from your supplier – If they don’t want to share this, then I’d argue they must have something to hide.
Colin Williams
