MSP Today Expert Feature
August 15, 2011

CIT Group Study Shows Lack of Understanding of Managed Services Benefits is Primary Barrier for SMB Market

A new study from CIT Group Inc., a provider of global vendor financing solutions, claims that the benefits of managed IT services are not fully understood by many small to medium-sized businesses (SMBs). According to the study, this lack of understanding creates a barrier to VARs, who are increasingly focused on selling managed services to the SMB market.

The report, “Technology Channel Outlook: Are SMBs Ready to Embrace Managed Services,” examines a number of managed services geared toward SMBs, including third-party monitoring, managing and maintenance of computers, networks and software and other IT services.

The study was prepared in July in association with Forbes Insights and gathered information from more than 100 executives at technology VARs and technology channel partners that sell to SMBs. Nearly half of the respondents (45 percent) were owners of their business or C-level executives, including CEO, COO or CFO. The respondents worked for companies with annual revenues between $1 and $100 million.

According to the report, 49 percent of respondents say a lack of understanding of the benefits of managed services is their primary barrier in selling them to their SMB customers. The popularity of cloud computing has, however, made it easier to sell managed services to SMBs, according to 63 percent of respondents. And 52 percent of those surveyed felt tablets will replace laptops for executives by 2013.

Other findings of the report show that 62 percent of respondents agreed or strongly agreed that their customers do not understand the benefits of managed services. They also felt that overall cost and desire of SMBs to maintain their own infrastructures were barriers to selling managed services.

Respondents cited reduced costs as the most compelling benefit of managed services for SMBs, as well as the ability to free up resources to focus on other aspects of business and reduced IT headcount. Nearly two-thirds of respondents believed the popularity of the cloud has made it easier for them to sell managed services to their SMB customers, saying that the cloud has helped customers become more familiar with the idea of software as a service (SaaS (News - Alert)).

In terms of the impact of technologies over the next two years, 51 percent of respondents believed cloud computing would have the greatest impact, along with tablets and smart phones. Nearly a quarter of respondents believed all applications and data storage will migrate to the cloud. In looking to the future, nearly a quarter of those surveyed also responded that managed services will likely make up up more than half of their 2011 revenues, while nearly two-thirds said they expect revenue from managed services to increase. Sixteen percent of those surveyed said they expect revenues from those services to increase by 20 percent or more.

“The findings of this study are consistent with our experience in financing managed service contracts,” said Ron Arrington, global president of vendor finance at CIT. “We have found that the most successful managed services programs are those in which the VAR clearly articulates the offering and quantifies the impact for the SMB. Likewise, when an SMB is committed to implementing a managed services solution, it soon realizes that it can play an important role in the growth plans and expense management of the company.”

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Edited by Jennifer Russell