Sales cycles involving new customers for managed services providers have shortened to two to four months from as much as 12, according to a recent study by the MSP Alliance.
The Managed Services State of Market study, which had 142 participants, also found most MSPs are at least breaking even and that 40 percent of them are dissatisfied with managed-services-related support programs from vendors.
The quicker sales cycle is an indication of increased awareness and acceptance of the managed services model among end users, according to Charles Weaver, president of the MSP Alliance, an association of managed services providers and vendors.
“It used to be six months or more,” Weaver said.
The results are in line with anecdotal evidence from MSP executives, who say they often approach prospective customers that have already heard about the managed services model. That is a change from two years ago when the model was still foreign to most end users.
Through the managed services model, providers offer customers remote services such as backup and recovery, systems monitoring, and software updates for monthly, quarterly or annual fees. Since the model doesn’t necessarily involve product sales, the customer pitch and sales cycle are different from those of traditional sales.
The MSP Alliance study, conducted in December and January, found that 84 percent of MSPs are either breaking even or making a profit, a statistic that Weaver said has remained relatively stable when taking into account that new channel companies are jumping into managed services all the time.
MSPs get an insurance boost. Read more here.
But not all is rosy in the managed services space. Forty percent of respondents said that no vendor has a good MSP program. That, Weaver said, indicates vendors need to put more effort into adding features to their technology and supporting partners on marketing the technology.
“The overwhelming message we are hearing from the MSPs is that they need their vendors to remain focused on creating great technology so the MSPs can remain focused on servicing their clients,” he said.
Study participants gave good marks to the mainstay managed services platform vendors, placing Kaseya, N-able, Zenith Infotech and Level Platforms at the top of the heap in terms of technology and support.
Missing from the list of favorites were big-name vendors such as Cisco, Dell and Hewlett-Packard. Last month, the executive in charge of distributor Ingram Micro’s Seismic managed services program said aside from Dell and Cisco, major vendors have done little to nothing to support the model.
“By and large, big vendors aren’t doing anything yet,” said Justin Crotty, vice president of services sales at the distributor.
Weaver said while vendors are investing in managed services, they need to better hone their focus. Rather than putting a lot of resources into training, which channel companies looking to make the transition to managed services can get from third parties, they should focus on staying competitive, he said. And that will be accomplished, he said, by concentrating on the technology and marketing.