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Selling the sizzle

Selling the sizzle

In the face of tightening economic conditions and fiercer competition, vendors are trumpeting their communications efforts loudly.

IT industry analysts tend to take for granted the stream of press releases dispatched to them by vendors' marketing and communications teams. However, the volume and tone of those from services vendors has changed noticeably this year. They are less about account wins and new service offerings, and more about how they can deliver business value. This reflects the move by service vendors up the value chain from pure-play IT outsourcing to business process outsourcing, and the repositioning of these vendors as agents of business transformation. EDS, PwC and Perot Systems are examples of such vendors who have decided to build their marketing and communications efforts as part of this fundamental trend in the services market. Although the marketing and communications arena is nothing new for EDS, its activities in this area have grown significantly over the past year (although at this sensitive moment the company does not want to disclose any numbers), after the executive team made a strategic decision to change the firm's image. To this end, EDS began a global campaign in which it appeared alongside some of its top global clients, selected from a broad range of industries. The campaign described client achievements with a comment on what EDS does for the client, subtly conveying the idea that EDS is in the background of its clients' success.

To support an ambitious advertising campaign that targets trade and international business publications, EDS set up a website with links to further examples of client success, creating a vehicle through which visitors could engage in a dialogue with the company and discover more of its capabilities. Assuming the HP-EDS merger is consummated, it will be interesting to see whether the new EDS campaign continues in its current form, altered to fit HP's messaging, or whether a new HP services campaign emerges from the new entity.

Upping the marketing ante

PwC is another interesting example of a company boosting its marketing effort, with the recent launch of an unprecedentedly broad campaign (for PwC) in support of its new packaged offering in change management. The company is one of very few in the market that has decided to advertise its offering broadly in this area, while simultaneously backing it with a 60-page document in which it comprehensively puts its point of view. The campaign targets top executives, mainly through top business publications, and focuses on the strategic dimension of change management.

Perot Systems has not reached this stage yet, but it recently hired its first chief marketing officer - a big step forward for a vendor with a solid low-profile reputation. Its marketing effort is modest, at 0.5 per cent of revenue, but should double next year. Perot's goal is to reach an industry standard marketing budget of 2 to 4.5 per cent of revenue.

These examples confirm a trend research organisation IDC has been tracking. Last year, marketing investment from service providers reached 8.4 per cent of their revenue, which is more than the software industry (7.4 per cent) and much more than the hardware industry (2.5 per cent).

Three reasons can explain service providers' new interest in marketing and communications. First, the current recession makes it tougher for vendors to gain business, and more visibility can help. Second, Indian vendors quickly building brands and generating high growth rates are an inspiration to some established vendors like Perot Systems.

Third, the example of Accenture - a pioneer among service vendors in developing global mass-communication campaigns - is a significant motivator for some vendors we talked to. Accenture says its "We know what it takes to be a tiger" campaign has driven an increase of more than 40 per cent in unaided US brand awareness between 2004 and 2007. The company has also measured a 40 per cent-plus increase in associations of its brand with high-performance business in the US over the same period.

Pressure from global competition, coupled with the growing need for vendors to differentiate themselves, will turn brand image into a crucial asset for success as service vendors shift their focus higher up the value chain towards business transformation. As a result, IDC believes a growing number of service vendors will boost or continue boosting their marketing efforts in the years ahead.

And the content of press releases is sure to become more interesting.

Chris Morris is director of services, IDC Asia/Pacific. Email comments to cmorris@idc.com

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