Dumping Product Sales for Managed Services

By Jessica Davis  |  Print this article Print

Only about 10 percent of the channel that says it does managed services actually are full-fledged managed services providers. The rest are just dipping their toes in. That's according to Jim Hare, now vice president of sales for eGestalt, who says MSPs should stop selling products.

Are you calling yourself a managed services provider but still making most of your money from other revenue streams?  Jim Hare, vice president of sales at eGestalt, says that only about 10 percent of the channel who say they do managed services actually have a full fledged managed services business. The others are dipping toes in here or there, but still make most of their money they way they always have.

Hare should know. He's been working with MSPs for years now and was the man behind the Silverback cookbook for managed services. Of course that was back in the day before Dell acquired the then-popular managed services platform provider.  Today Hare has created a similar cookbook for eGestalt, a provider of secure cloud based compliance services that MSPs can offer as part of their overall managed services and  cloud computing offerings.

That's an easier sale today to existing MSPs who have already made the business model transition and are purely services businesses. Back at Silverback, that wasn't the case.

The Silverback cookbook " was a little more in the weeds detail of even what a managed service was and how it was different than selling a Cisco router," Hare told Channel Insider. And as far as helping VARs make the sale to customers who were accustomed to a different way of doing business, Hare offered small steps.

"We'd say, OK, you are a Cisco VAR. Do you sell Cisco's maintenance Smartnet?"

From there Hare took them down the path.

"We created the concept of SmarterNet, a small uplift of their standard maintenance package. It offered a service without using the term 'managed services' which nobody understood anyway. And it allowed us to attach a managed service to a standard sales process without a lot of pain and suffering," he said Pitched as proactive maintenance, predicting issues and fixing them before they became problems, the approach proved successful for Silverback.

After getting VARs to dip their toes in for a while, Hare would go in and tell them they had to stop selling products altogether. "If someone calls and wants to order Cisco routers, you have to say 'no.'

"You end up providing so much in free services and support calls," when you sell products, he said. The MSP revenues may end up lower, but the profits will be higher, Hare said.

While the Silverback managed services cookbook served as a great framework, Hare said that it was really the custom support that Silverback provided, and that eGestalt now provides, that helps partners succeed in selling services solutions. eGestalt is initially targeting an underserved vertical with big compliance and security concerns – healthcare.

eGestalt co-founder and president Anupam Sahai told Channel Insider that there are more than 600,000 small medical offices with these technology needs.

To help partners gain a foothold in these customers, eGestalt is taking partners through the sales process and dissecting each sales call, examining customer objections, and providing tactics for return visits, said Hare, repeating the approach that worked so well at Silverback. 

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com