Bundling Managed Services: A Proven Method For Adding Value And Gaining More Profitable Customers By Sherry Triebert, Logix Resource Group

So you've been charged with creating a managed service offering for your company? If you are like most VARs, you may be feeling overwhelmed and worried about costs. You don't have the resources or funds you'll need to develop or expand your help desk functionality, train your sales people and develop new materials to include this new service offering in your sales brochures and Web site.

Why is it so challenging for the channel to offer managed services?
One of the primary barriers to channel organizations offering managed services has been the limitations of current software offerings and the enormous expenses required to purchase and deploy existing pre-packaged software solutions.

Many service providers have become frustrated with the cumbersome and inflexible nature of many of the enabling technologies which have emerged in the management space. In some cases, managed service solutions rely on agent technology to gather network or system activity data that corporate customers find intrusive or burdensome. In other cases, pre-packaged reporting templates can disappoint corporate customers and managed service providers alike because they fail to meet their individual needs. Overall, reporting options are simply lacking, and tracking systems for SLA Management doesn't exist.

Cost becomes a factor when you consider that most network management systems are typically sold as a licensed software solution and are not all-inclusive. Because of this, service providers are learning that upfront capital requirements, additional software purchases and recurring licensing fees make licensed software solutions very expensive. And due to the software's complexity, resellers find it is time-consuming and costly to keep employees trained. Should a trained employee leave, you lose a significant investment in the solution.

With this traditional solution, you will find that you are now managing the management system rather than your customers' network, and the expensive, complex packaged network management software eventually becomes shelfware that isn't generating a new revenue stream, as expected.

So how does a reseller successfully create new, recurring revenue streams via managed services without adding new operating costs? Use software-as-a-service (SaaS) for bundled managed services. This model allows you to enjoy the benefits of the software without the difficulties and costs of deploying software, training users and managing updates, backups, etc. Hosted network management solutions enable resellers to develop new, recurring revenue services that can be delivered standalone or bundled with hardware and carrier products. Typically, these solutions can be branded for increased customer retention, and unlike expensive software suites or carrier services, you will have a no-risk opportunity to enter a new market without requiring capital expenditures or extensive training to deliver high value.

This approach will allow you to move quickly to develop a managed service offering without incurring any up front expense for help desk, software, or marketing materials. You can focus on improving your customers' network availability and service level management so that their customers can focus on more strategic initiatives rather than reacting to network events. You can establish closer relationships with your customers, proactively manage their networks to reduce downtime and increase customer satisfaction, and create a higher margin, scalable, annuity business.