MSPs: Its All About Business Model, ValueBy Lawrence Walsh | Posted 2008-09-24 Email Print
Managed services has been about the technology to deliver remote management and maintenance. Today, services providers are becoming more focused on how to run their business well and deliver value to their customers. Their message: Forget the techie bells and whistles, focus on sales and marketing.
The pendulum in the managed services market is shifting from a fascination with the tools that deliver services to a recognition that the business model and the value delivered to the customer is the key to success.
At last week’s ConnectWise partner conference in Orlando, Fla., CEO Arnie Bellini went to great lengths to emphasize the importance of sales strategies, business models, value propositions and outbound marketing to the more than 700 MSPs in attendance. At next month’s managed services conferences hosted by CompTIA in Orlando and N-Able in Dallas, the focus is squarely set on the business model and metrics of managed services.
"Everyone’s got the tools for delivering managed services. Now it’s about the execution piece," says Curtis Hicks, president of Center for Computer Resources, a managed services provider in Oak Park, Mich. "We all need better tools to help run the business."
These days, when solution providers adopt managed services, they thought (or were told) that remote monitoring and management tools and service reporting tools would enable them to remotely service their customers, thereby decreasing operating costs and increasing margins. MSPs have discovered that managed services brings them closer to their customers, and often times results in them becoming "virtual CIOs" to clients.
Managed services generates copious amounts of intelligence about end users’ IT activities and needs. MSPs can use that intelligence to anticipate IT needs, such as increasing available bandwidth or replacing a server before it fails, to recommending applications and value-add services to help customers run their businesses better. Many MSPs say being able to act on the intelligence they gather is a real boon for expanding their sales footprint in existing clients.
"Companies like ConnectWise and Ingram Micro have listened to the MSPs about giving us information to run our businesses. The technology isn’t going to change our business. We need help understanding the market and understanding the business model to bring value to our customers," says Jesse Kegley, managing partner at Emerge, an MSP in Erlanger, Ky.
The shifting attention away from the technology to business management comes at the time when the definition of managed services is expanding to everything from infrastructure management and remote maintenance to the inclusion of software as a service and higher-level professional services. According to a recent Channel Insider survey, 70 percent of managed services providers report a sharp increase following the introduction of a managed service. Similar spikes happen for on-site services (57 percent), value-add services (61 percent) and professional services/virtual CIOs (64 percent).
"It’s all about the business skills and sales and marketing," says Michael Cooch, CEO of Everon, a Boston-based managed services provider. "The technology will fall to the background. When that happens, you’re going to have to follow through on delivering value to the business."