I have written here and elsewhere about the desirability of services as a high-margin alternative to product sales for VARs that are seeking to increase revenues in the face of product commoditization. I have also gotten some pushback.
One criticism, in particular, is that I totally disregard the cost of delivering service. Several correspondents have noted that, especially with support services, there is a span-of-control dynamic. There are only so many accounts that service technicians can address. It is very much a case of the revenue stream being gated by the number of people you can have providing service.
I concede the point but would also suggest that if scaling is a problem in your services business, it is probably an indication you have not looked into remote managed services. That is, you have not looked at the automation available to provide support remotely. Remotely managed services are, of course, nothing new.
Vendors have been doing remote diagnostics on their products for years. EMC, for example, wrote a requirement for the customer to accept such services in its warranty language. The virtue of such service delivery is that it radically reduces cost. What is new is that, now, VARs can creditably deploy remote services independently of vendors.
Once the technology is in place, it is possible to remotely monitor customer infrastructure, do fault isolation and diagnosis, and even manage configurations and system dynamics. And, most important, it is possible to do this for many more customers per service technician than simple phone-enabled service dispatch schemes.
The nice thing about remote service delivery, aside from its ability to scale more efficiently than simply adding people, is that such services are increasingly being accepted by enterprise IT. In terms of support process diagrams, it is not uncommon to see task boxes that point to service providers. As budget pressures continue to force IT to divest itself of salaried technicians, having remote small and midsize businesses backstop internal support personnel is a great comfort and a legitimate way to keep costs down.
And building remote services is getting far less complex than it used to be. MSP platform providers such as N-able, Citrix, ServiceNow and SilverBack (now part of Dell) can essentially tailor these capabilities to the VAR quickly and cost-effectively.
The key is to design support offerings that are mapped effectively to the support process within the customer’s IT operations shop and can be built on remote service tools. For example, remote storage services that monitor storage array utilization and loading and proactively adjust loads are a necessary background function that IT operations shops should be doing but often don’t for lack of time. However, IT operations would enthusiastically embrace this if pitched in the right context.
So, my critics are correct when they say service businesses don’t scale well—but only in the context of a technology-free approach. Service will increasingly be automated, and for VARs that are just now building robust managed services, the application of the right remote managed services technology will ensure maximum revenue over time with a very scalable services capability.
Mike Jude is an analyst at Ptak Noel Associates and a co-founder of Nova Amber, a business process virtualization consulting company. He can be reached at mjude@ptaknoelassociates.com.