Service Expansion Planning: From Assessment to Implementation

Introduction

Expanding service offerings can be a daunting undertaking. It requires meticulous planning, particularly with regard to the organization's current situation and its desired future trajectory. This paper provides a plan for integrating new services into a technology hosting organization. Attention is specifically paid to the steps the organization can follow to seamlessly add new services, outlining the appropriate transition path from its present state to its desired future state.

Service expansion can be achieved by following three broad steps: (1) evaluation of the current situation; (2) defining the desired future state; and (3) implementation. The following sections examine each step individually.

Evaluating the Current Situation

The first step is the most crucial. It involves the assessment of both the internal and external environment. The internal environment specifically relates to the strengths and weaknesses of the organization (Hill & Jones, 2010). Attention is paid to the organization's capabilities, current offerings, competitive advantage, financial strength, procedures, processes, structures, and other organization-specific factors. In this case, the organization caters to 50 major business applications, maintains fairly reliable computer and network equipment, operates with an extremely flat organizational structure, enjoys a rapidly growing customer base, holds strong relationships with suppliers, and possesses substantial competitive advantage in the hosting business. Nonetheless, significant weaknesses have emerged in the recent past, causing the organization to start losing business to competitors. Notable issues include slow response times, service degradation, poor communication with clients, incompetent support staff, regular outages, and rising costs. The lack of a fully developed marketing function also presents a major weakness. If not immediately addressed, these weaknesses could damage the reputation the organization has built over the last five years.

The external environment involves a number of elements, including customers, opportunities and trends, as well as competitors and threats (Hill & Jones, 2010). The organization operates in the technology hosting industry, serving a wide array of clients across diverse verticals and industries. Service reliability, consistency, quality, and affordability are the primary needs of clients in the hosting business. Clients expect seamless internet connectivity and timely service at an affordable cost. Service providers in this industry build their core competencies around these factors. Players with the aforementioned competencies are better positioned to capitalize on market opportunities. The technology services industry has grown tremendously in recent years, with organizations across various sectors — large and small — increasingly embracing cloud computing and related services. Demand for technology services is expected to grow even further in the near future, providing an important growth opportunity. Additional opportunities stem from virtual reality, big data, social networking, e-commerce, outsourcing, and foreign markets (Bughin, Chui, & Manyika, 2013).

A major threat, however, is competition. The organization operates in a highly competitive industry. Larger companies such as IBM, Microsoft, and Oracle, as well as thousands of small and medium-sized vendors such as MCC Technology and Rackspace, dominate the market. The threat of rivalry is strong, and the relative ease of entry into the industry further compounds this threat for existing businesses. With numerous options available, clients may switch to other providers in search of better quality, efficiency, and cost. Other threats relate to the broader macroeconomic environment — political, legal, economic, social, and environmental factors. For instance, unfavorable economic events such as recession may increase operating costs or reduce organizational spending on technology. Additionally, as the organization expands its operations globally, risks such as political instability and legal difficulties cannot be ignored.

Formulating the Desired Future State

Understanding both the internal and external environment enables the formulation of the desired future state — that is, the goals the organization wishes to achieve. From the situational evaluation, it is evident that the quality of services has been deteriorating, affecting financial performance. At the same time, the industry offers numerous opportunities for growth. Based on this premise, the future direction of the organization can be determined. The goal is to become the preferred provider of technology services and to increase the service portfolio within the next five years. This overarching goal can be broken down into the following specific objectives:

1. Increase capacity (staff as well as computer and network equipment) by 50%;
2. Increase hosted business applications from 50 to 70;
3. Increase the customer base by 40%;
4. Reduce costs by 20%;
5. Increase customer satisfaction by 40%.

Conclusion

Introducing new service offerings provides a technology hosting organization with a valuable opportunity for growth. If executed with due consideration and diligence, the service expansion process can help the organization overcome the challenges it is currently experiencing. A good starting point is to evaluate the current situation, focusing on both the internal and external environment. The organization then formulates its desired direction by clearly defining goals and specific objectives. Finally, the actual implementation occurs, with particular attention paid to effective communication of goals, the establishment of a dedicated implementation team, meaningful stakeholder engagement, and rigorous ongoing evaluation. Together, these steps form a coherent and practical pathway from the present state to a stronger, more competitive future.

References

Bughin, J., Chui, M., & Manyika, J. (2013). Ten IT-enabled business trends for the decade ahead. McKinsey & Company.

Hayes, J. (2014). The theory and practice of change management (4th ed.). Palgrave Macmillan.

Hill, C., & Jones, G. (2010). Strategic management: An integrated approach. Cengage Learning.