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Analyzing Managed Services: Plan Now for Next Generation of Services

29 Aug, 2011 By: Ed Carroll imageSource

A strong message was delivered to  those who attended the ITEX event last March – the need to move beyond  equipment, and now beyond (or even alongside) managed print services (MPS), into managed services (MS).  There is a need  today for you to position your business with the necessary resources to manage  your customer’s IT network structure (servers and workstations) on a services  focused approach.  For those who have successfully  transitioned to MPS, you have experienced firsthand the challenges faced with transitioning to a “new” services focused business model.
When I talk about a services  focused business model, I am talking about providing value to your customers in  the form of improved business processes.   I am not talking about an aftermarket service contract for a piece of  equipment sold.  Yes that is a service, a  profitable one, but it is not really an improvement to a business process.  It is an extended warranty on the equipment  to maintain it in good working order.  
A service focused on improving a business process involves understanding the current business process, and  recommending a new improved business process that will simplify, improve efficiencies, increase utilization of resources, and possibly reduce cost. It is an outsource agreement for which you provide a service under the guidance of detailed SLA’s (service level agreements.)  It is a difficult and challenging sales process but it is one that this industry is rapidly moving towards, and many in the industry are already there.
If you are not consultative  selling, then you are still trying to sell products, or services packaged as a product, and are not focused on improving the way your customer’s conduct business. This could very well be a problem for your business in the near  future.  For the most part the products  we sell in the imaging channel are not growing, some are flat (printers) and  some are rapidly declining (copier based devices) and there does not appear to be any product that you could sustain revenue growth on for the years to come.  For those in the imaging channel who have developed your MPS business with the service focused model, you are positioned well to move beyond MPS and into MS.
What is managed services?
I am sure by now you have some form of understanding as to what it is.  After all it is being discussed in all the trade shows associated with products and services sold to IT.  It is written about  each month in one or more trade publications, such as imageSource.  It was a major  focus of ITEX 2011, and most recently, was the central theme of CompTia’s  Breakaway 2011 conference.   Yes, managed service for IT is the new hot  subject in our industry.  If you are  looking for what’s next, what’s trending, it is here – in providing managed  services.
What value will MS bring to your customers & business?
Well, nothing if you do nothing,  but rest assured that someone else will be providing that service, including to  your clients.  It is estimated there are  more than 18,000 IT services firms in the U.S., and the area they are focusing  on is MS.  So if your customers are  interested in outsourcing some of their IT functions, and you are not providing  this service, I am sure they can find someone who will.
With the number of competitors focused on MS, why would the customers outsource this area to you?  There are a number of reasons why. If you have successfully developed a business  around MPS, you have built a successful consultative sales practice by building  a business case for change. You have developed one of the skill sets necessary  for MS.  In a survey conducted by IPED  for MSP Partners in 2010, successful managed service providers rated sales  skills as the number one reason (56%) for their success in MS.  If you are successful with a service focused  MPS program then your organization has the resources in place to do  consultative selling.  They may not have the technical knowledge, which is as important, but the selling skills are in  place.  You have an existing MPS customer  base who is interested in managed services. 
Once again, looking at it from your successes in MPS, you found that the  IT departments are struggling to provide all the essential support required for their company. The company, most likely the IT Director, outsourced the printer support to you because it was not an effective use of resources in their organization and they were interested in improving manpower utilization. They  were restricted in the ability to hire more staff, so they were looking to move  the manpower to more strategic projects (virtualization, security, software upgrades, etc.); areas that would bring increased value to the  organization.
MPS provided an opportunity to relieve them of one area of responsibility to focus  on another area.  With MS the situation  is still the same.  While managing the  areas related to network devices (workstations, servicers, routers, load  balancer, storage, etc.) are more important to IT than printers, it still is  one that with the right tools and skills in place, could easily be outsourced.  IT is not providing all the expected services  for their organization, and with new ones being added (increased mobility, cloud computing), they are looking for options. MS provides this.
There are other reasons to consider MS as well, which are already within your organization that warrants  you to look to MS as a new revenue opportunity.   As you dig deeper you will find areas such as your company’s reputation as a reliable provider, field service capabilities, being a single source for  your customer’s in the product and services you provide, and the ability to bill recurring revenue contracts as reasons why your customers would consider you for MS and why you should consider offering it as well.
This is start in understanding  what is needed to offer managed services, but there is a long way to go before  you can flip the light switch on.  You will need to develop a business plan.  The  plan should identify the money you will need to invest.  You will need tools, tools like a remote  monitoring and management platform, a network operations center and a help desk resource.  There are companies who can provide these tools for you.  You will  need the necessary skills that are missing in your organization today. If you  don’t have them you will need to train or hire new resources.   All the areas mentioned are critical to the launch of a successful managed services program.  The time to start is now.  Build the plan, explore the tools available,  acquire the skills, and position your business for the next generation of  services.

BIO:  Ed Carroll is a principal of Strategy Development, Inc., a management  consulting firm engaged in sales leadership, MPS, managed services, operational  efficiency, service productivity & business planning for equipment  manufacturers and resellers (large & small) in the document & imaging  industry in No. America.  At 703.722.2973  or carroll@strategydevelopment.com

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