Moving from Project to Service Strategies
This high-tech project systems integration company provided communication, radar, weather and security systems to the Oil & Gas market across the world. New entrants from the Far East were able to source the requested hardware at 60% less. Their labour costs were 75% less. In a typical multi-million contract, two-thirds of the project was hardware based and the balance was design, testing and installation. "Go to the mattresses" may have been the typical cinematic rallying cry, but what could this business do to respond to this fundamental market shift. Margins were always competitive, but they were now under serious threat.
With a structured approach to market and competitive analysis, more information was gathered. Strengths and weaknesses of the business were candidly discussed by the senior management team - the opportunity of "diamonds" and "flaws" were analysed. A new business opportunity was identified and rigorously tested.
The management team realised that its strength lay in offering clients an end-to-end communication service. Over a period of two years the business became less reliant on projects, margins improved. They gained entry into two new international markets and as a result became less reliant on the Oil & Gas sector.