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Technology Drives Recurring Revenues

9 Jul, 2007 By: Alicia Ellis imageSource

Technology Drives Recurring Revenues

Everyone’s doing it. Department stores like Target are now offering
groceries, cable television providers like Comcast are turning to phone and
internet service, and convenience stores/pharmacies like Walgreens are offering
printing/copying services. It’s a natural progression to want to increase
profits by fulfilling customer needs through the use of vertical markets.
Utilizing an established customer base, companies can branch out with new
products and services that satisfy a need and increases profits.

Over the years the copier industry has moved from the machine to consumables
and into networking and document management. We’ve trained our salespeople on
selling beyond the box and selling technology is a natural progression on the
way to becoming a total solutions provider.

The speed and efficiency of the Internet have led to the development of
companies that specialize in managing and offering software and services via the
web. Data backup and recovery, software applications like Customer Relationship
Management, call center monitoring and helpdesk solutions are no longer reserved
for large corporations and technology savvy IT resellers. Depending on your
dealership’s size, IT department and sales staff, dealers can reach out to
customers with a variety of managed services and software that will help clients
to better run their businesses and bring in a steady stream of recurring

5 Most Important Factors

In a recent survey conducted by the Computing Technology Industry
Association (CompTIA) of 322 current users of managed technology services, the
five most important factors that customers considered when choosing a managed
services provider were:

  1. Unique services and offerings
  2. Having an existing relationship with the service
  3. The service provider’s reputation
  4. Availability of 24/7 support
  5. Recommendation from others

Basically, reselling managed services revolves around remotely taking over
the management of one or more aspects of a customer’s networked assets including
applications, services and equipment. You already do this as a solutions
provider when you manage a client’s printer fleet, remotely checking copiers,
printers and more for counts, consumable needs and provide troubleshooting.

Managed Services takes management to the next level with asset tracking, help
desk service, backup & recovery services, and software & hardware sales and
service. And, while it may sound like too much to handle, more and more software
manufacturers, distributors, and managed service providers (MSPs) are making it
easy for resellers to learn about and sell to businesses of all sizes.

The findings, presented at the recent CompTIA Managed Services Summit,
revealed that 52 percent of customers said a lack of knowledge about available
services was the biggest factor in preventing them from using more managed

According to Jeff Kaplan, Managing Director of analyst firm THINKstrategies,
customers' expectations for IT services have shifted from remediation to
prevention. "Customers are looking to proactive management that can ensure the
ongoing availability of the technology rather than reducing its downtime."

"Managed services are a great area for copier/printer dealers to expand on
their current service model and to lock-in a customer by becoming a strategic
supplier," said Kaplan. "Customers are not ready to buy from companies they’ve
never heard of before and the trust factor gives copier dealers a leg up on the
competition." Depending on the level of service you want to provide, there are
any number of options available to the dealer who wants to pursue managed

After researching new growth areas, The Utility Company, traditionally a
managed services provider (MSP) to the IT community, began offering a program
specifically dedicated to copier/printer dealers.

"Beyond Managed Services 2.0 provides dealers and resellers the ability to
offer their customers managed services, including help desks, remote monitoring
of network and desktops, hosted communications services, hardware/software
bundled in a utility model and on-site service," said The Utility Company
president and co-founder Mark Scott. "Through its franchise program, The Utility
Company offers an alternative to the do-it- yourself model of cobbling together
managed services and takes away a lot of the fear that dealers have about
operating these types of businesses."

"The average business spends $360 per user per month on technology and the
SMB and mid-market represents $400," said Scott. "Of all the pieces that make up
technology, copiers and printers only represent 12 percent of the pie."

According to Scott, copier/printer dealers could be selling 75 to 80 percent
of the pie which includes website/internet; telecom; business applications; and
IT with network, desktop, security and storage. "Copier/Printer dealers have the
best salespeople, great values and a focus on customer service," said Scott.
"With managed services, they can bring a high value proposition to their
customer by servicing a majority of their IT needs."

"In terms of return on investment, The Utility Company’s typical franchise
fee of $30,000 includes delivery of 80 to 90 percent of services remotely, said
Scott whose company has more than 2,000 territories with more than 2,500 small
businesses each outlined. "Dealers can see a net profit of about 20 percent in
recurring revenue business."

Peter Sandiford, CEO of Level Platforms, a leading provider of managed
services software for solution providers servicing small to mid-sized
businesses, agrees saying that instead of monitoring and managing a print fleet,
Level Platforms remote monitoring software enables dealers to manage everything
connected on a customer’s network including printers, copiers, servers,
desktops, routers, switches and applications.

"With this technology, dealers can manage, monitor and suggest additions and
improvements to help a company’s network and related assets to run smoother,"
said Sandiford whose company’s survey of 200 customers revealed an estimated
four hours per month per customer was saved on service time with the use of
their solution. "And, we typically charge an estimated $25 per month per
customer to the dealer who can then charge accordingly or incorporate the cost
into a service package to their customers. "The number of possibilities is
limited only to the dealer’s imagination."

By the looks of it, dealers are catching onto managed services. This is
evidenced by IT distributor Tech Data’s recent foray into the managed services
arena and Ingram Micro’s new managed services offering that compliments its
October 2006 introduction of the Seismic Platform and Virtual Services Warehouse
that revolved around Level Platforms technology.

The latest introduction from Ingram Micro expands the reach of managed
services to incorporate Seismic Managed Network Operations Center (NOC), Managed
Help Desk, E-mail and Web Defense Services, and Professional Services Automation
(PSA) Software. These new Seismic service and support offerings can be sold
separately or bundled as  part of a complete managed services solution to help
solution providers and MSPs partners lower operating costs while increasing
service and support capabilities.

Tech Data’s newest offering for the SMB market draws from N-able
Technologies’ ability to offer security monitoring and threat assessment; print
management; IP telephony; e-mail management and archiving; unified
communications; and remote data replication and disaster recovery applications
through Tech Data to the dealer market. Managed services resellers will be
supported through Tech Data's TDOnCall suite of technical services. TDOnCall
offers resellers an array of services designed to help build their business by
increasing margins, streamlining operations and enhancing service levels.

"As managed services continues to evolve, resellers are realizing the revenue
and demand potential for these solutions among their SMB customers, and business
partners are creating their own products and services to address the market,"
said Bob O'Malley, Tech Data's senior vice president, U.S. Marketing. "Resellers
adopting a managed services practice benefit from recurring revenue streams,
gain better insight into an end user's operation and strengthen customer

According to Tech Data, managed services is a completely new business model
for most resellers. Many must adjust their go-to-market strategies to develop a
solutions-centric approach with pricing that reflects the exceptional value-add
they provide end users.

"Tech Data and our managed services partners like N-able will develop
programs and resources to support resellers interested in transitioning their
business to a managed services mode," said Jennifer Burke, Tech Data’s Director
of Product Marketing & Peripherals. "There are double digit growth opportunities
for dealers who understand the tremendous value that managed services offers."

Software as a Service

Software-as-a-service (SaaS) allows dealers to sell software packages
remotely to their existing customers on a per user basis and attain revenue on a
recurring basis throughout the life of the contract. Users pay a monthly or
annual service fee for as long as they maintain the service. This service fee
typically includes maintenance, support, training and upgrades and is inclusive
of all hardware, networking, storage, database, administration and other costs
associated with SaaS delivery.

McKinsey & Company is a management consulting firm advising leading companies
on issues of strategy, organization, technology, and operations, suggests that
the best SaaS applications revolve around non-mission critical software
including Customer Relationship Management (CRM), Human Resources Management,
Security & Antivirus Protection and, within three to four years, Storage and
Storage Management software.

According to Bill Loss, CEO of WebApps, a leading software developer with
more than 100 applications available to the SaaS industry, "Twenty five percent
of software purchased today is consumed as SaaS and IDC reports that worldwide
spending for SaaS by 2009 will exceed $10.7 billion with 30 percent of new
software delivered via a SaaS model in 2010."

"Utilizing WebApps, dealers are able to private label our applications and
sell them as if they were their own," said Loss. "Dealers are able to choose the
level of service they want to provide either through a software license sale
with the dealer managing the applications and WebApps providing updates or under
a pay-as-you-go model where a dealer’s customers gain access to desired
applications developed and managed by WebApps. All necessary software, hardware,
and connectivity are provided by WebApps in addition to 2nd tier support which
is great for copier/printer dealers. This allows the dealer to remain focused on
gaining new customers and providing direct customer support."

"With little effort, dealers can see $3 to $5 per user per month on a
contract," said Loss. "In other words, if you get a two-year contract for a
company with 100 users, that’s $12,000 a year or $500 a month for two years
coming in. And that’s just for one company."

Would you let another salesperson come into your business and take over your
customers? Would you trust a tech with little experience to work on your
copiers? I don’t think so. So why would you let some IT company that doesn’t
know your clients or their needs offer your customers managed services that you
could, instead? This is definitely worth looking into for your company, your
clients, and your future.

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