Taking a Closer Look at Offering Managed Network Services

posted by David Pohlman on Sunday, January 01, 2012

The Imaging Channel, January 2012, Vol. 3, No. 1

By David Pohlman

It’s an accepted fact that progressive office equipment dealers are actively moving down the path of managed network services (MNS). By transferring the day-to-day management of technology to a third-party MNS provider, small and medium-size businesses (SMBs) are able to get away from the break/fix model and move toward a more proactive technology management approach. MNS goes beyond selling technology equipment; it involves helping to keep your customers’ equipment running, backing up their data and protecting their email. For office equipment dealers, this is the biggest opportunity for growth since managed print.

Dealers are already working with SMBs, providing them with many of their technology needs. But an IT gap exists for many SMBs, and dealers are often best poised to fill it. After all, they have the relationship with customers and have built a strong model around selling to and servicing them. If dealers are simply selling boxes, they are vulnerable to any competitor coming in and replacing that box — and the dealership. What successful dealers have learned is the dealer who “owns” the network “owns” the customer. If a dealer has gained the trust of customers to manage their networks, a natural progression of that technology trust is for those customers to look to that provider for other technology advice and recommendations down the line.

Offering MNS brings with it new benefits to office equipment dealers. Now dealers have the opportunity to expand into a business with the same high margins and recurring monthly revenue they have become accustomed to with the services and supplies aspect of their business. While equipment margins continue to fall in the industry, service-related margins remain strong.

MNS is not just a profitable new offering for a dealer’s current customer base. Adding MNS to a dealer’s business will likely add new customers and further open the market for expansion. These new customers will likely also benefit from other opportunities beyond MNS. Dealers can help customers better optimize their technology dollars with things like managed print/document solutions.

The customer realizes the benefits too. Automation and the latest tools allow dealers to catch things before they become problems for their customers. This results in less downtime for customers. Additionally, customers now only deal with one source for their technological needs. SMBs, like most businesses, are always looking for ways to maximize their budgets and simplify their lives. In the role of the trusted advisor, dealers can work with the SMB to develop a strategic technology plan that ensures the business’s needs are being met. This includes managing growth, controlling costs and keeping technology refreshed on a regular basis.

Getting into managed services: Build, buy or partner

If your dealership has been thinking about getting into managed network services or improving its MNS offering, there are three options to consider: You can build, buy or partner. There are benefits and drawbacks to each option, so let’s take a closer look.

Option 1: Build

Building your own solution allows you the most control over your MNS offering. This route can be an expensive and time-consuming undertaking, and it’s not for the faint of heart.

If your dealership has been thinking about getting into managed network services or improving its MNS offering, there are three options to consider: You can build, buy or partner. There are benefits and drawbacks to each option, so let’s take a closer look.

The costs can run several hundreds of thousands of dollars, and that is just for the network operations center (NOC) itself. You’ll need to consider significant capital expenditures, including the NOC, as well as software tools and equipment costs. Figuring out your product offering (backup solutions, anti-virus software, etc.) is no simple task. Careful vetting and selection of the sources of your software applications and tools takes time. If you’re going to stay relevant, ongoing evaluation of your technology partners is necessary and takes considerable energy.

Another expense when building your own solution is the cost and time involved with hiring the right talent. Hiring and retaining a service-oriented team of experienced NOC engineers and help-desk technicians is critical to ensuring a positive customer experience from your MNS offering.

Finally, your company also needs to consider the importance of wrapping all of this with a sophisticated operations process. This alone can take months, even years, to develop. How these components are operationally integrated and used can dictate success or define failure. Processes ensure error avoidance (running proper scripts, etc.), ease of onboarding for customers and the building of efficiencies for your personnel to maximize available tools. These business processes are a big challenge, and your managed network services initiative cannot prosper without them.

Option 2: Buy

Buying an existing managed network services provider is another option for getting into MNS. This can also be a cost-prohibitive proposition. A dealer again needs to perform proper due diligence to ensure the business it is purchasing has best-in-class tools and qualified personnel to bring to the table. The company you select will also likely need to successfully transition from a break/fix model to a proactive managed approach.

Choosing to partner to help offer MNS saves dealers not only the upfront capital and labor costs, but also the time it takes to hire and train staff; identify technology partners; and identify, establish and implement operational processes that will make the business run smoothly.

While an acquisition allows a dealer to “get into the MNS game,” it is always a risk to successfully integrate another company with an existing one. The company cultures can be very different, and it can be challenging to ensure a seamless transition.

Option 3: Partner

Partnering with an existing provider is the most cost-effective choice because it minimizes the upfront capital expenditure and limits the costs associated with staffing technical positions. It can allow a dealer to create a profitable recurring revenue stream starting with the first agreement signed by the first customer.

Choosing to partner to help offer MNS saves dealers not only the upfront capital and labor costs, but also the time it takes to hire and train staff; identify technology partners; and identify, establish and implement operational processes that will make the business run smoothly.

When outsourcing your managed network services, it’s critical that you partner with a company that understands your market, your dealership’s expectations for customer service and your culture. Your dealership needs to feel confident that the outsourced company can provide a level of service that is in line with — or better yet, above — the service standards you’ve established among your customers. For example, in the case of a partnership with the GreatAmerica Leasing Collabrance managed network services team, dealers are able to leverage a proven and trusted company that has carefully vetted every technology tool and partner chosen while they provide expanded services under their own brands.

When partnering, you must trust the decisions of your partner. The initial and continued vetting of the technology partners can be time-consuming. Partnering saves the dealer time and can give them confidence in selling MNS.

Keys to your dealership’s success in managed network services

No matter which route you choose to take, if you choose to enter MNS, there are a few core factors for success:

A solid business plan. This is a new business initiative, and depending on the method of entry, it can be very costly. Take time to develop a business plan that helps ensure your success and reduces the risks of the unknown.

Owner/principal active participation. Having an owner/CEO that champions the initiative and “owns it” is critical to a dealer’s success. A leader that makes certain everyone understands their roles and executes properly will help avoid missteps.

A dedicated sales resource. Selling managed network services is a different sales process than selling equipment. This role requires a more technical, needs-based, relationship salesperson. Because MNS has a longer sales cycle, it could easily frustrate your existing sales representatives.

A sociable technical resource, often thought of as the VCIO (virtual chief information officer). A technical sales engineer who is comfortable with fixing problems on-site but who is also good in front of customers and can carry out the technology planning piece will make or break the success of your MNS offering.

As you evaluate the managed network services market opportunity, make sure you have a well-thought-out understanding of the viable options for market entry and plan for your sales and operational execution.

Getting into MNS has its challenges, but the opportunity is here. SMBs’ increasing awareness of various evolving technological options (cloud computing, mobile devices, etc.) has opened the way to this new means of supporting their internal IT environments. They are realizing that they need professional help to navigate technology management easily. This has only enhanced the opportunity for office equipment dealers. Your dealership has significant opportunity in this space, if done well. The good news is that there are credible options to make market entry affordable and less risky.
On the Web

Collabrance LLC is a wholly owned subsidiary of GreatAmerica Leasing Corp.

This article originally appeared in the January 2012 issue of The Imaging Channel.

 

About The Author

David Pohlman is executive vice president and COO of GreatAmerica Financial Corp. and a member of the GreatAmerica Office of the President, which makes strategic, financial and operational decisions that set the direction of the company. In his role as COO, he is responsible for the sales, market ... read more

  • Glass Door
1-800-234-8787