Managed service IT is here in a big way. Some even say the market is already saturated.
The managed service provider community is incestuous as it is. As July gets underway, the MSPAlliance is competing with a growing relationship between MSP University and CompTIA. This is combining many MSPs, VARs and potential clients into one big pot. As the MSPAlliance's MSPWorld Conference and Expo in L.A. in October looms, it will be interesting to see what trends develop.
"I think managed services in general is a growing trend and will be profitable as it evolves and gets more competitive," said Mike Ritsema, president and proprietor of i3 Business Solutions. "Certainly competitors are cropping up everywhere because the opportunities are so vast."
Under the Umbrella
The high growth and potential saturation leads to one understanding what one needs to get out of a managed services opportunity. Managed services encompass a lot of things. In fact you could say the term itself is both vague and transcendental in the world of technology, as it encompasses everything from hosted applications, to network administration and support, to virtual helpdesks and back-up and disaster recovery services.
Indeed that's a lot of IT ground to cover. It's actually too much to cover if you're a small- or medium-sized business looking to grow through technology expansion, or a tech service provider looking to broaden your portfolio of products.
Here is list of questions to ask yourself when considering a managed services platform:
From an SMB vantage:
- Do you want a partial or all-inclusive IT management and support at a fixed monthly cost?
- Do you want guaranteed or at least extremely reliable response times for helpdesk services?
- Do you want money back guarantee on Service Level Agreements you set up with your chosen vendor?
- Do you want to hire a trained technical staff without having to put a highly-trained technical staff on your own payroll?
- What are your technology needs?
From an IT service provider vantage:
- Would you like to focus on growing your client base instead of putting money into developing new technologies?
- Would you like to at least appear larger and more scalable in practice than you actually are by retaining a third-party service provider or channel partner?
- What are your technology needs?
Posted by Jabulani Leffall on July 07, 20100 comments
Even in the best of economic times, companies fight hard for new customers. Cold calling, slicing margins razor-thin to create attractive introductory deals, agonizing over SEO strategy to make sure your company is visible to every potential client — none of it is fun, but all of it is necessary. Or is it? What would you say to the idea that untapped revenue sources are sitting right under your nose?
That's exactly what Brett Jaffe will tell you. As CEO of IT4, an MSP just north of Boston, Jaffe has spent the last 18 months repositioning his company, moving it from straight managed services to providing services beyond IT.Although expanding his customer base is always a goal, Jaffe has been successful expanding the number of services his company offers existing clients.
"It's a hundred times easier to get an existing client to spend more money with you than to bring on a new client," explains Jaffe. "Of course, there's a limit to how much they'll spend with you; but the goal isn't to get them to spend more than they can afford. The goal is to take money they're already spending on other services and see if you can do a better job providing them."
Looking for ways to transition his offerings from IT-only, Jaffe's decided to get into the business side of things. For IT4, the most popular new services have been marketing, graphic design, and even administrative work. In Jaffe's experience, business-related services not only increase potential revenue from each client, but also increase customer loyalty in a market that's otherwise becoming increasingly commoditized.
"I'm not saying IT spending is going away, but do you want to make a small percentage on selling hardware and get the projects when you can, or do you want to generate some kind of value-based revenue with your clients so you have an ongoing relationship, regardless of what's going on in the industry?"
How do you go about launching new services? First, assemble your resources. Jaffe treats each category of service almost as its own division, even if there are only one or two people handling those services. "We're looking to provide as many different services as possible — as long as we can do it properly," he says. "We won't take on anything that isn't within our field of expertise."
Credibility is also an issue. "You can't use the same resources to do multiple things. If you have an engineer, you can't take that person and make them an Internet consultant or an advertising consultant because then you start losing credibility. No, it's better to bring on additional staff in different business areas. The social media guys are social media guys. The client doesn't ask them, 'Hey, while you're here, can you also fix the server?'"
Next is to help your customers stop thinking of you as just IT. Some companies will find it easier to break out of this type-casting than others. "I don't feel we've been type-cast as IT-only. It was really more a matter of customers not being aware we offered other services." Jaffe was able to leverage IT4's success providing technical services. "If you're doing a good job with IT, you've been doing it for them a long time, you've built the relationship, they're going to trust your judgment when it comes to other parts of the business."
When those pieces are in place, you're ready for a pilot program that you can eventually showcase to other customers. To test the waters, IT4 started with a customer in the insurance vertical that needed help with its internet marketing and social media strategies. IT4's internet marketing team redesigned key landing pages with one thing in mind: capture customer information. They also added live chat to the site so the insurance company's sales reps can initiate chat with site visitors.
The result is that potential clients find it easy to interact with the company, and made the company can easily reach out to potential customers. "They have top listings everywhere. They're blogging every day. The site is generating almost 500 new potential customers a month, of which they're closing about 30 percent," says Jaffe. "This was a company that was spending a lot of money on marketing and advertising. With us, they weren't spending any more, they're just spending it differently and more effectively."
Jaffe likes providing these new services. "With the social media and internet marketing work we've done, there's an absolute, direct return on investment. When you're driving revenue to the company, all of a sudden they want to spend more money with you."
Posted by Christa Ayer on June 24, 20100 comments