The managed services market has grown in contrast to the general economic climate for several the past several years. Market research points to the fact that managed service providers (MSPs) are not going away any time soon, and that more and more companies are looking towards management and cloud solutions to take care of their IT needs.
Value added resellers (VARs) are a major component in the growth and success of managed services, and have been an important and valuable part of the channel. But there are a few important factors VARs need to be mindful of before successfully selling managed services.
One of the biggest concepts VARs need to grasp is that managed services come with an entirely different business model than their traditional operating mode, and cannot be sold as a simple add-on to existing VAR offerings.
“A true managed services arrangement means that the MSP assumes the risk of supporting the customer’s environment and can no longer assume that any work the MSP does will generate revenue directly,” said Alistair Forbes, general manager at GFI MAX. “A failure to understand this can mean pitching at a price that causes the MSP to service the client at a profit loss or cut corners on service, which eventually causes customers to go away.”
Standardizing internal systems and processes is another important factor in ensuring profitability with the managed services model. Delivering the highest quality of service at the lowest internal operating cost is the absolute key to profitability in this type of business setup.
“Conducting a thorough network health check and agreeing to an initial piece of chargeable work with the customer to bring the network up to a sustainable state will avoid the MSP incurring large costs that will be difficult to recover later,” said Forbes.
Selecting the proper technology tools is also important. Remote monitoring and management (RMM) software, as well as professional services automation (PSA) solutions are essential to MSP success.
“A quoting solution is another important tool that MSPs should add to their must-have list,” said Matt Nachtrab, CEO of LabTech. "Any sales rep who’s ever spent hours putting together a quote for a customer, only to have the customer come back and want to see 'two or three more options,' will appreciate the value of this tool."
Finally, developing new marketing and sales skills is essential to MSP and VAR staying power and profitability. And to successfully cultivate those skills, key people from different departments within your organization must communicate effectively and be on the same page.
“If your technicians, sales reps, and COO are not on the same page, the chances of running a successful managed services practice decrease dramatically,” said Marco LaVecchia, director of North American sales for N-able. “The fact is that the largest [and most profitable] MSPs have well-trained salespeople and smaller MSPs don’t. If you want your business to grow, then invest in sales and marketing. It’s that simple.”
“Help your staff to understand the ‘what, why, and how’ of your managed services plan,” added Nachtrab. “It’s also important to define each person’s new role and responsibility and be committed to building managed services specialists through ongoing education and training.”
Edited by
Ashley Caputo
