Managed Services Gain Customer Acceptance

By Pedro Pereira  |  Posted 2008-02-19 Email Print this article Print
 
 
 
 
 
 
 

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Enough customers are planning to increase their spending on managed services to indicate that the model is taking hold.

 

A recent study of IT directors and managers by Ziff Davis Enterprise Research provides some encouraging signs about the acceptance of managed services in the marketplace.

According to the study, conducted online from Jan. 26 to Feb. 12, backup and disaster recovery services and hosted/outsourced infrastructure are among the most widely used services for which companies hire solution providers.

Fifty-one percent of respondents cited backup and recovery, while hosted/outsourced infrastructure was cited by an even 50 percent. A close third and fourth were software development and business application services, respectively.

In another positive sign for MSPs (managed services providers), 39 percent of participants said they plan to increase spending on managed services in the next six months, while 57 indicated they expect no changes in spending. Four percent said they plan to decrease spending.

Click here to read the full results of our exclusive research and find out exactly what CIOs think of solution providers.

These numbers show that managed services is reaching a level of maturity that some probably thought would never happen. It wasn’t too long ago that managed services was being dismissed in some quarters as nothing but hype. But those who grasped the benefits of delivering IT services remotely for recurring fees never had any doubt that this model has huge potential.

The survey results notwithstanding, MSPs can’t just sit back and watch the money rolling in. As successful providers of managed services well know, it simply doesn’t work that way.

Even though the appeal of the managed services model has a lot to do with its remote-delivery component, solution providers need to maintain constant contact with the customer. This is an imperative that has come up repeatedly in my conversations with MSPs and also at discussions during the Ziff Davis Enterprise Channel Summit last fall in Chicago and again at the second summit last month in Dallas.

It’s important to the long-term viability of the relationship with the customer for solution providers to present customers with periodic reports that itemize all the services, including software updates, maintenance work and error prevention, that the provider has delivered over the past month or quarter.

Work that happens remotely takes place out of the customer’s sight, so if everything is running smoothly, the customer may conclude the MSP is no longer needed. The periodic reports show that customer systems are running glitch-free because of the provider’s ongoing work.

In the Ziff Davis Enterprise survey, 50 percent of respondents said they sit down with their solution providers to evaluate the relationship once a year, while an astounding 31 percent said they only do so about every two years or less frequently. Eleven percent said they evaluate the relationship every six months; 5 percent said once a quarter; and 3 percent, more frequently than once a quarter.

An evaluation meeting once a year or every two years is fine if we are talking about contract renewals. But if this evaluation covers the types of items that should be covered in monthly or quarterly performance reports, the frequency of the evaluation is not enough, especially if managed services are involved.

In addition to frequent customer contact, MSPs also must constantly re-evaluate their offerings. If they start with one or two offerings, such as backup and recovery, in time they should consider adding more services so they can become more entrenched with the customers.

As managed services become more popular, certain offerings will undoubtedly become commoditized, so it’s important to come up with ways to remain relevant to the customer.

While the increasing popularity of managed services is unquestionably a good sign, for those delivering the services, it also means the work will only get tougher.

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He is at pedro.pereira@ziffdavisenterprise.com.


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