Offer Managed Services For Core Needs

While the buzz continues about managed services and the slow but steady addition of those services to VAR offerings, some experts in the space say this is the year those services will hit their stride. Senior VP of Professional Services and Business Optimization for Autotask, Len DiCostanzo, expects one 2009 managed services trend to be a continuation of a trend that started this year. "IT services providers will continue to move toward a 'keep the lights on' approach with their clients," says DiCostanzo, who defines that as taking a preventive approach rather than following the traditional break-fix model. DiCostanzo adds that this approach will resonate with clients ranging in size from major corporations to SMBs. "We'll see clients taking the basic steps to ensure IT is managed well so their networks are supporting business operations." Additionally, DiCostanzo expects more managed services providers (MSPs) to offer an a la carte menu for services and solutions that can be implemented as needed.

In agreement is Doug Wilson, CEO of HoundDog Technology. "In 2008, we saw many IT services providers starting to focus on the key managed services elements, such as infrastructure monitoring, troubleshooting, and management, and we'd expect this trend to continue." After vendors initially offered disjointed solutions for each step of managed services, Wilson says that many IT solutions providers are demanding a more rational, doable solution from vendors. "We think this trend is going to accelerate in 2009, with MSPs looking for manageable core functionality solutions rather than having to implement several separate point solutions."

Lastly, DiCostanzo says he thinks more solutions providers will move toward a fixed-cost approach as IT services providers and MSPs become more comfortable with their capabilities to control the SMB environment. He says that MSPs are gaining confidence in their pricing model as they discover reliable solutions that minimize customer issues and incidents. "Now, with ample time to benchmark their capabilities against customer needs, this is a good time to finally provide that fixed-cost approach while still being able to make a profit."

New Technology, Verticals Won't Play Big Role 
DiCostanzo and Wilson agree that managed services has expanded to encompass nearly every vertical and technology. Wilson suggests more solutions providers will explore virtualization offerings, especially given the current push to reduce energy and storage costs. "I think virtualization is going to pick up steam as companies use techniques like this to optimize their systems and improve ROI," he says. The opportunity for MSPs with virtualization is the need for constant monitoring and management of virtual systems. "It is particularly important for clients to have a good handle on how their virtual systems are performing and be able to understand and anticipate when they might need additional capacity," says Wilson.

Another possible growth opportunity for MSPs is online backup. "The emergence of easy, affordable solutions in this area will be a driver for adoption," says Wilson, adding that MSPs will need to continue efforts to reassure SMBs and midtier customers that, although the data backup system is no longer on premises, they can have confidence it is working effectively and reliably.

DiCostanzo says while managed services is already resonating in most primary verticals, MSPs can still build their service businesses. "IT services providers must know what kinds of businesses within each vertical value their IT services and see them as a competitive differentiator." Wilson agrees. "Rather than a particular vertical being ripe for growth, it will be the nature of the business that determines the level of interest in managed services," he says.

Brace For Trickle Down Impact During Slow Growth
VARs and MSPs alike should expect to feel some impact as clients weather the economic storm. But at the same time, they should realize a faltering economy can provide an opportunity. "The key is to embrace the 'keep the lights on' opportunity and communicate to your clients that you can help them keep business moving forward, save them money, and do more with less," says DiCostanzo. While businesses are going to dole out cash in smaller chunks, Wilson says the cost-benefit assessment of retaining in-house IT capabilities will be reevaluated. "I think this economy brings into sharp focus the need for IT support companies that offer a blended model," says Wilson. "We think that the road to IT support success includes break-fix support, prepaid block hours of support, and managed services support." Regardless of expectations for steadiness in the MSP market, both executives warn that MSPs still need to guard their own businesses. "Reduce your overhead, and find ways to maximize your resources," says DiCostanzo. "Take a hard look at your business while things are OK, and make the tough decisions now versus reacting to the market later.  Also, make sure the client value proposition is airtight. Your clients need to see the value in all you do and understand how it ties back to their business."