Are You Capitalizing On Managed Services?

What do you think of when you hear the term MSP (managed service provider)? It’s common to think of large companies such as Rackspace.com, Salesforce.com, or Earthlink — companies that provide large-scale services via the Internet. In actuality, an MSP is a company — not necessarily large — that manages information technology services for other companies on-site or via the Web. Even though the perception of an MSP tends to be geared toward large companies, there are managed service opportunities for small and midsize VARs as well.

Network Security Is An Emerging Market For Managed Services
IT budgets and staffs are shrinking. Gartner Group predicts that by 2010, IT staffs will shrink by 15%. As IT consolidation occurs, managed services will increase in popularity — even with small companies. To illustrate this point, how many small companies have the expertise to provide effective network security solutions in-house? Not many. But, every small business connected to the Internet is exposed to security threats such as viruses and malware.

The actual cost to manage desktop PCs is one of the best-kept secrets in the business world, and it’s probably more than you may think. A 2005 Gartner Group study revealed the average cost of an unmanaged business computer is about $5,468 per year. A typically-managed computer costs companies an average of $4,650 per year. A well-managed computer lowers the total cost of ownership to $3,279 per year. MSPs can help businesses to keep their computers in the well-managed state, lowering the total cost of ownership by about $2,200 per year.

So how do you break into this market? Many of you are already there. For example, have you ever used a remote control application such as Anyplace Control or VNC to solve a support issue for a customer? If so, you are delivering managed services to a customer via the Web — you are an MSP.

To help VARs take the MSP model to the next level, companies such as Secure Resolutions are recruiting VARs to sell and support their remotely managed network security solutions. Customers get a hands-off security solution, and VARs earn recurring monthly fees for remote support. VARs have the added luxury of not having to offer 24/7 support for this solution. Most of these vendors handle support issues directly with the customer.

Everdream is another company that provides desktop management suites delivered via a single Internet connection (see Channel News on page 12). These products are defined as SaaS (software as a service). These on-demand services are sold on a per-seat basis and are delivered remotely through MSPs via the Internet.

Managed Services Require A Different Sales Model
If you’re thinking about getting into the hot managed services market, you may have to retool your sales model to be successful. CRM (customer relationship management) is a critical factor in selling and maintaining managed service accounts. Selling managed services based on cost savings alone most likely will not provide the long-term revenue results you are looking for. Instead, the success of a managed services solution requires attention to customer relationships.

Customers often suffer from memory loss when it comes to justifying why they are paying recurring monthly fees. If you are an MSP providing security services, you can give your customers monthly reports on topics such as thwarted attacks and viruses that were kept out of their networks. Perhaps you could include the reports with your invoice for those services. Regardless of how you do it, you have to remind your customers of the business benefits you are providing with your managed services solution. If you want to get and keep MSP accounts, don’t forget to cultivate those customer relationships.