How to Achieve 60% Margins in IT Services12 Feb, 2014 By: Michael Amiri, Continuum
We’re well into 2014 and many office equipment dealers are executing their managed IT services goals while others are still undecided. The changing landscape in the SMB world has provided both a challenge and an opportunity, at the same time. Moving forward, IT services offers the biggest potential in the OE industry because it’s more scalable than equipment sales and it generates much higher margins. In fact, you have the potential to earn a 60% profit margin selling managed IT services. Here’s how.
The Potential in Managed IT Services
For office equipment dealers, the potential in offering managed IT services is characterized by two trends: The need to diversify product lines and the increasing need for IT services. SMBs are challenged by increasingly complex IT demands and office equipment dealers are perfectly suited to fill the void by providing IT consulting and support. By leveraging a dealer’s current customer base, IT services are an ideal segue into additional services and revenue. OE dealers have the opportunity to deliver greater value to their clients by helping them implement, utilize and support their IT infrastructure.
Additionally, managed IT services contracts are sold in monthly recurring payments, which is a dealer’s comfort zone. Outsourcing with a trusted IT partner can accelerate a dealer’s launch into IT support with minimal human capital and investment. This allows dealers to maximize their margins with an outsourced model versus doing it themselves. There is certainly potential in managed IT services for OE suppliers, but how do you effectively move into managed IT services?
A New Business Model for Managed IT Services
Breaking into managed IT services can be a seamless task with the right guidance. Fortunately, there are a number of resources you can use to help make the transition. Growth Achievement Partners (GAP) has been helping dealers in the OE industry adopt new processes and technologies for the last decade. Continuum has recently partnered with GAP to develop a breakthrough business model, specifically designed to help OE dealers make a successful leap into managed IT services.
This model is built on a number of core principles, including:
- The shift to managed IT services. Many IT services providers have shifted from a break/fix service offering and are adopting a managed IT services on a proactive, fixed fee basis.
- The managed IT services delivery approaches. There are two distinct managed IT services delivery approaches: Delivering through in-house resources or leveraging third-party outsourcing partners (a.k.a. Leveraged Managed IT Services Approach).
- Technical Resource Requirements. Leveraged Managed IT Services helps to eliminate many of the technical barriers to entry.
- Organization Requirements. How the Leveraged Managed IT Services approach can minimalize upfront staffing and expertise concerns.
- Managed IT Services Offerings. Service offerings come in many flavors and vary by service level and service type. Dealers can capitalize on immense opportunities in offering a diverse set of IT services/support under a monthly contract.
- Cloud Computing. The evolution of Cloud Services is drastically changing the manner in which IT is delivered and supported. SMBs are looking for trusted advisors to navigate how Cloud Services may provide them with cost savings and IT efficiencies.
- Acquisition Opportunities. Dealers can fast-forward their entry into this space through strategic acquisitions of IT support companies that return immediate customer contracts and IT talent. This business model will assist with valuations and integration.
We’re proud to have the opportunity to share our ideas and present the principles of our Managed IT Services business model at the ITEX conference in Las Vegas on March 12th.
How Is This Model Different?
Although there are a few choices to consider when choosing a business model, the Continuum/GAP Managed IT Services Business Model is unique for a number of reasons. GAP and Continuum bring an unprecedented combined expertise with this business model for success in managed IT services, which has been built by analyzing real data across millions of instances of real-world IT experiences. Additionally, this model was crafted exclusively for the OE channel and provides a Chart of Accounts that guides your sales team towards a seamless transition of immediate success in IT.
Continuum has developed deep operational expertise as a leading provider of managed IT services solutions. Continuum’s IT service delivery is an integrated platform of remote monitoring software and world-class NOC services used by managed services providers (MSPs) to monitor and manage 500,000+ devices worldwide. This scale enables our partners to drive operational efficiencies and maximize margins that are not obtainable with stand-alone software tools and internal resources.
The combination of deep expertise and real data make this business model the ideal blueprint for dealers’ success with their managed IT offerings.