Analyzing Managed Services: Plan Now for Next Generation of Services29 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 firstname.lastname@example.org