How to Transition Your Clients to Managed Services
You’ve realized that the old break-fix model of IT service isn’t sustainable—from a profit perspective or for your peace of mind. You know that the managed services model allows you to build steady, recurring revenue, allows you to proactively manage your clients’ IT needs, and allows you to maintain systems remotely. But how do you position this evolution in service to your clients? Here are some thoughts.
First of all, go slow. By transitioning to managed services, you are altering not only your business model, but your entire business philosophy. Your clients may need time to adjust to a new pricing structure and your new model of service, so start with a few clients with whom you have trusted relationships. Explain how this change is mutually beneficial to both you and your clients.
Be sure that you leverage the value of proactive management: less downtime, regular updates and patches, and glitches solved before they become problems. Not to mention, your profit incentive has shifted. Under the old model, breakdowns were incentivized—especially lengthy fixes that increased billable hours. With managed services, position your incentive as keeping your clients’ business up and running with as little interruption as possible.
Also, explain to your clients the how the managed services model benefits them financially. They will be able to anticipate a regular monthly fee instead of unpredictable service charges. The monthly service contract you choose to offer could include a variety of services such as network management, security, and email.
Choose the initial services you offer carefully. It would behoove you to start off with easy, affordable support tools that are easy to manage and apparently valuable to your clients.
One of the easiest tools to resell to clients is online backup and recovery (that’s our specialty at Intronis). Safer and much less expensive than onsite data storage methods, online backup is an easy sell to your clients. Plus Intronis charges you a flat rate (no startup or licensing fees), so figuring out your projected profit is a simple calculation.
Lastly, tread softly with the pricing. It may take you some time to determine a monthly rate that is profitable. Ease into one or two services with a few clients before launching a full-fledged managed services structure. Once you establish yourself as a trusted advisor, you’ll be able to comfortably add to your service offerings and adjust your pricing accordingly.
Although one of the major cost savings of managed services is that the majority of your work can be handled remotely, be sure to schedule a few onsite visits per year to maintain your client relationship.
As IT services become increasingly commoditized, it the relationships that you establish with your client base that will determine your success or failure in the long run.
Eric Webster is VP of sales and marketing for Intronis. Find Intronis partner program information here. Guest blog entries such as this one are contributed on a monthly basis as part of MSPmentor’s 2010 Platinum sponsorship. Read all of Eric’s guest blog entries here.
Eric
Great piece. I share many of your ideas, thoughts.
Nice one
Chris Martin
GFIMAX
Easy, Affordable Tools for IT Support Co’s/MSP’s
http://www.gfi.com/max
Indeed, great piece. I do, however, want to take issue with one element: “Proactively manage.” Characterizing event management as being proactive is completely wrong. It is by every other defintion reactive. When a system goes down or trap is sent, someone has to “react” to the situation. Not that this is bad, it’s simply wrong to call it proactive.
A truly proactive solution/process encourages regular management interaction and situational awareness. Management is, after all, a process. By monitoring operational status and usage one is in a command amp; control position to effect changes before operations are at risk. Again, this is separate and apart from device/system monitoring for uptime and availability. I’m referring to use of the network because this is what causes 99% of the issues. When all management pesonnel, technical and not-so-technical, can review operations on-demand, and can make informed decisions, this, in my opinion, is the essense of what “proactive management” is all about. In its current context, everyone is simply reacting to whatever issue or crisis the technology tells them to.
Well Done Eric,
I really think the space needs more discussion on this topic. There’s definitely a lot to consider for the typical break fix IT Support Provider when thinking about making this type of transition.
In regards to the ‘proactive’ amp; ‘reactive’ discussion, this industry of ours is rife with these types of terminologies amp; ‘buzz words’. Chris Martin amp; I have had our fair share of good-hearted conversations on this as well. :o)
However, ‘buzz words’ aside, the net-net take away for this article is very solid. If every break fix, IT support provider out there took the time to factor in the points highlighted in this article there would be a lot more successful MSP’s.
Mike Byrne
Director of Partner MGMT | Quest Software – Network Management Division (PacketTrap Networks)
A good brief piece of transitioning to managed services. We ourselves struggled a bit in the beginning with this transition getting the pricing right. In the end, we ended up aiming lower than our initial pricing structure to help land sales and then adjusted as time went on.
It’s a catch-22 for businesses first transitioning. You need to build a NOC to support your MS customers but you need MS sales to drive revenue to build your NOC. Ingram Micro/Tech Data can be a good tool to use during this transition with their support services.
Luis: I’m not sure you need to “build” a NOC. Plenty of MSPs leverage third-party NOCs and third-party help desks. Is that a solution for everyone? Certainly not. But before deciding to “build” a NOC, the MSP needs to determine what business he/she really wants to be in… Business model first, technology second.
-jp