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Managed Network Services: Entry to the Cloud

1 Jan, 2012 By: Mitch Morgan, Growth Achievement Partners imageSource


The Managed Services opportunity represents for many dealers, a “right place, right time” opportunity to expand their business. Several market factors have come together to make the timing a natural next-step for the industry. While many companies are optimistic about this “adjacent” opportunity, it does require planning and execution in order to be successful.

Since many of us sold our first network services contract in the early 90’, I have been more than a casual observer of the industry, and in particular, the opportunity that exists for dealers looking to expand their business model.

One of the most attractive aspects of the managed services (or managed services provider “MSP”) model is that it brings several “core competencies” into play. It represents an attractive annuity-based revenue stream, an opportunity to increase revenue with current customers, brings additional account control, and ties into a technology-based service offering that links to the direction of forward-looking dealers.

Further, many dealers choose to partner on the delivery of these services, lowering the cost of entry. Having said that, there are significant differences in this market opportunity that need to be factored into a successful strategic plan.

Cloud Opportunity

Just as the personal computer dominated the 80’s, networking was the key technology in the 90’s, and eCommerce and social media carried the day in the 2000’s, industry experts describe the current decade evolving as the era of Cloud Computing. Analysts tell us it is the number one priority for business technology, with astounding projected market growth statistics.

Make no mistake about it…the cloud revolution touches all technology companies, from the MFP to the server. Core equipment manufacturers are moving quickly to develop and communicate their strategies around this critical technology shift. There is significant interest; especially in the SMB market. For an industry that enjoys great customer relationships, yet is facing a decline in placements and aftermarket, the reasons to enter this space are compelling. Numerous dealers have implemented managed services, and many more are planning to do so in the near future.

It’s a Hybrid World

Experts agree that most companies will adopt hybrid models for cloud technology deployment. Some computing will be on-premise while other applications and services will be delivered through the cloud in the near term. The reality is, many small businesses don’t have a plan for implementation of this technology.

Of note, our clients that are most successful readily help their
customers’ build a plan for technology today, as well as an ongoing road map for the future. And, by the way, as customers implement technology through this “roadmap” these same clients are perfectly positioned to provide these services.

The most efficient model for managing networks is a centralized delivery model incorporating monitoring through a Network Operations Center (NOC) and providing Help Desk services centrally. This is a cloud service. The industry statistics indicate that a Help Desk professional with the right tools, technology, and automation can support approximately 500 devices (and users) with a centralized delivery model. That number is up from 300 devices a few years ago, and is slated to grow to 1,000 with the next round of technology. It is simply a better model of support.

So, if you have entered the market recently, why are customers not lining up at your door to buy these services? My business partner explains to me (frequently) that sometimes you have to let your customer catch up. You know what is best for them, but they haven’t arrived yet. It is our belief that service providers should offer a hybrid approach as well. Offering basic monitoring services, backed up by remote and on-site support (billed on the basis of usage) is still appealing to a large percentage of the small business market. You can capture them where they are and take them to where they need to go, when they are ready.

Sales Process

The sales process for the managed services market differs significantly from the traditional sales process for office equipment. For example, my partner and I had a conversation a few weeks ago with a dealer about to enter this market. He told us that his managed services sales rep did not need training, or a defined sales process, in order to be successful. He described that “If he can’t sell these services, I will find another sales rep.” I am confident that within six months this dealer principal will be looking to do just that.

Instead, our first recommendation is to utilize a “time-tested” sales process that is aligned with the new services and new direction that managed services represents. The sales process should be more about technology planning than finding “broken down networks run by broken down network administrators.”

In our case, clients sell Technology Roadmap Services to assist their customers in planning for a new paradigm in technology that cloud computing represents. Managed Services is a component of that new computing environment.

A repeatable sales process that incorporates all elements of client/prospect engagement (from top of the funnel activities through a defined sales process, followed by ongoing relationship management via a quarterly review process) has been the difference between success and failure for companies entering this market. Simply being a good salesperson is not enough. A successful repeatable methodology is critical, especially in a new market. The old rules don’t apply here.

Virtual CIO

Easily the most important role for entry into the managed services market is the right person in a role that we call virtual CIO (vCIO). This is an individual that develops the technology roadmap together with the customer, updates it on an ongoing basis, and leads (and supports) the customer into evolving cloud technologies. Many small and medium-size businesses (SMBs) can’t afford, or choose not to, hire a CIO. However, they are interested in having this expertise on a periodic basis to help them to apply technology to their business needs. Many dealerships do not find the success they’re looking for in this space because they do not have the right person in this role, if they have this role at all.

The vCIO should have a combination of experience, technical skills, and communication / facilitation skills to be successful. In many ways, this is what your customer is buying. Having a technology roadmap process, selecting the right individual for this role, and continually developing his or her skill set can be a significant difference maker in your success. We advise clients to be rigorous in the selection of this individual. Make sure he or she has the right “Knowledge, Skills, and Attitude” for the role. Invest in ongoing training and development. And finally, provide tools to support the vCIO activities.

Target Market

Small and medium sized businesses represent a large element of the growth in this market. The technology levels the playing field with the “big boys” and offers them the opportunity to quickly deploy technology that hasn’t previously been available to them. Our most successful clients maintain a consistent focus on accounts with 10 to 100 users, with 20 to 50 as the “sweet spot.”

Marketing and lead generation are very important elements. We strongly recommend implementing a plan around Top of Mind Awareness (TOMA) marketing campaigns, repositioning your company image as a technology oriented service provider, and ongoing prospecting activities. You need to be the name your customer or prospect thinks of in this area. The effort should be constant and ongoing.

When calling on these accounts, we advise to start (and stay) at the C-Level. Business owners and C-Level executives are becoming increasingly technology aware. They recognize what the technology can do in solving business problems and helping to achieve business goals.

Build, Buy, or Partner

One of the first choices many dealers make is the choice to build the capabilities, acquire a local service provider that has built the offering, or partner with a Master Managed Service Provider. This is an individual choice, and there is not one right answer. There are many factors to consider.

Having said this, when entering this space you should recognize that partnering with service providers will be a reality in your future. No single company has the technical capability, financial wherewithal, and scale to offer all the hosted services your customer will be seeking. In our opinion, you should develop a process for partner selection that includes a technology vision, ability to execute, channel orientation, profit margin opportunity, and demand for the offering.

Leadership

This managed services opportunity is significant enough, and different enough, that it requires the ongoing involvement of the leadership of your company. It starts with the dealer principal. It has been our observation that having the leadership team actively involved in this opportunity greatly increases the likelihood of success. A client recently put it best, “Don’t just be IN, be ALL IN.” The size of the opportunity and the importance to the future of your company requires it.

 




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