By: ENX Magazine on July 6th, 2014
Why Getting into Managed IT Services Doesn't have to be as Difficult as You Might Think
The next wave of opportunity is here for office technology dealers and there's little surprise that wave is Managed IT Services/Managed Services. Everybody is talking about it and it seems to have replaced MPS as the next big thing.
But not everybody is buying into it. Common concerns about making the transition revolve around it being a new service, the cost of entry, and the many responsibilities associated with IT services. However, dealers have successfully made big transitions in the past such as analog to digital, connected devices, monochrome to color, production print, and Managed Print Services. Making a move into Managed IT Services doesn't have to be as difficult as one might think, particularly since there's a bounty of resources throughout the industry to help office technology dealers make the transition.
Konica Minolta's All Covered IT Services organization has become the go-to Managed IT Services option for those Konica Minolta dealers ready to make that transition. All Covered, which has been doing this for a couple of decades now, could write a book on how to be successful marketing IT Services.
Drew Cataldo, vice president of sales for All Covered, doesn't see the transition as being all that frightening, especially since many customers already perceive their dealers as having IT expertise, at least from a basic IT services perspective, because they've already got a service contract for their connected MFPs.
A lot of it comes down to having the confidence to do it well. "They don't want to introduce a new service to their clients until they know for certain that they can handle everything," says Cataldo. They don't want to rock the boat or [want to offer a new service] that they'll be 100 percent confident in delivering."
Not to turn this into an advertorial for All Covered, but the organization is structured to deliver these services to a dealer's clients and to deliver them well, fostering that much needed confidence that clients will receive service on a par with what the dealer has been providing for their MFPs and printers.
It also takes cost of entry out of the equation.
"The most costly component of any type of IT services work is setting up the Help Desk and Network Operations Center (NOC)," states Cataldo. "Now, rather than the dealer spending hundreds of thousands of dollars to get into the business and providing the resources to be on that Help Desk and redundancy like any other service the dealer provides, we provide all of that for them and the training and support on the front end."
Even though All Covered provides a full suite of IT services, from data migration to network assessments as well as core managed IT services, virtualization applications, and other services, Cataldo suggests that for some dealers a good strategy is simply starting with the basic components.
"Start with that desktop support you provide already," he says. "Maybe you can offer PC upgrades or server upgrades, and in the locations where we have engineers available, we can also support them on that project. It's almost as simple as the dealer counts how many PCs and how many servers, and we price it accordingly and make it very easy to get the client on board."
Figuring that the average sized client has 25 users and a couple of servers, All Covered can manage that for the client for far less than the dealer can if he hired a full time resource, reports Cataldo. "It's an easy pencil sell for the client, now instead of basic support they get Level 1, Level 2, Level 3 support and today when you manage a network unless something needs to be plugged in or turned on, everything else can be done remotely."
Lindsay Dick, director of sales, for Collabrance LLC, a subsidiary of GreatAmerica Financial Services Corp., also doesn't think getting into Managed IT Services has to be as difficult as some dealers think as long as they step back and talk to their peers who have been there and done that, and learned some of their best practices.
"I know some people don't like to talk to consultants, but there are consultants and other industry experts who have built successful Managed IT practices," states Dick. "The other thing is reflecting on their own businesses and understanding how they've successfully implemented other solutions because there are parallels."
Some of those parallels include billing processes and standard processes.
"When you go out and sell something you have to have a standard platform from which to sell and deliver services," observes Dick. "Build a plan around a service delivery model and the standards they're going to take to market. It doesn't have to be that hard."
Collabrance has partnered with Service Leadership, a company with a lot of experience in the IT space to set up industry peer groups to share best practices on Managed Services. Collabrance also hosts Navigator IT training, which is facilitated by one of its partners, a copier dealer, who has built a successful Managed Services business. "He comes in for a day and a half and shares what it takes to be successful, and what are the people, processes, and practices that you need in the Managed Services space," notes Dick.
Anybody interested can attend Navigator IT training, not just a Collabrance or GreatAmerica Financial Services partner.
Two of the biggest concerns of dealers attending these sessions are fear of ruining the reputation they built with their customers because managing their customer's network is riskier than managing their print environment and how to be profitable at Managed IT.
"From a copier perspective everybody needs a copier and you sell it to everybody," notes Dick. "In the Managed Services business you have to focus your attention on people who are strategic buyers and have an IT need and are willing to outsource everything. We help dealers focus on identifying the right customers, and from a reputation perspective, it's building those processes and services and a delivery model to ensure they're successful."
It's helpful to know too that a critical mass is necessary for a successful Managed IT Services operation. "We suggest no lower than 15 users because of the value proposition and the pricing," says Dick. "[Less than that] take just as long to implement and onboard as a company double that size."
Sharp may not be at the leading edge of the Managed IT revolution, but Senior Vice President of Marketing & Business Solutions Group for Sharp, Mike Marusic, acknowledges its importance and reports that the company is in the midst of vetting partners to help their dealers make that transition into Managed IT.
He doesn't feel the transition into Managed IT has to be all that difficult because of the many resources available to the dealer community. "The good thing about our industry is there are a lot of smart people who are working as consultants to guide a dealer into Managed Services."
As mentioned earlier, one of the daunting things about Managed Services is that dealers perceive that it is outside of their traditional space because it's IT.
"They get a little nervous and say they're not an IT company, yet they have network certified people, they're connecting network copiers and MFPs, and doing document workflow," observes Marusic. "They have a lot of skills and there's a lot of third-party companies now that can help you make that transition and do a lot of the heavy lifting for them. A lot of that is doable because there are a lot of consultants, a lot of Webinars, and BTA does a great job sharing information about how to get into it."
One challenge that Marusic sees is that one size doesn't fit all. "We think it's very hard to say every dealer—a $5-million and a $130-million dealer—can use the same partner. That's where I think dealers have to decide if they want to work with a regional partner, with a national partner, or leverage the relationships their leasing companies may have."
He doesn't think that dealers need to be overly concerned about starting the process. "Start out with a partner, start out with key customers, then go through that learning curve and develop the business."
Sharp recently completed a series of six road shows and made the pitch to its dealers on why managed services and why selling third party products are important, and where it sees the value proposition.
"If you're going to do managed services, the key word is services, and a lot of that is done remotely," notes Marusic. "There's not a lot of investing in a broad number of specialized people to do services. The copier dealer has people on staff today to help with an integration situation or a minor tweak. That's reassuring to an end user to say we got into a lot of this using high technology remotely so you're always being monitored, but if you need a person, we have a person and that's a huge value proposition over any kind of VAR going after that business. That's how copier dealers are going to be more successful selling this once they get over the hump of getting into it."
It may be overstating the case that Managed IT Services is a must have service, but the threats to the dealer channel are real.
"You want that tool in your tool chest," contends Marusic. "You want to be able to go into the marketplace and if a customer needs those services you'll be able to provide it. Over the next couple of years more dealerships will be in this space. We're not alone in the copier segment, Sharp has a lot of IT business partners and we see a lot of VARs actively getting into this space today. You don't want to put your customer at risk."
On the aforementioned topic of education, the Business Technology Association (BTA) offers the BTA Managed Services Workshop, which thoroughly addresses the dealer's transition into managed IT services. The workshop is taught by Mitch Morgan and Chris Ryne of Growth Achievement Partners (GAP), thought leaders in this space who have been leading this workshop since 2010.
The course is designed for new entrants as well as companies that want to improve their performance in this area," says BTA Executive Director Brent Hoskins. "Attendees gain an understanding of an established managed services business model, covering such areas as: the income statement; products and services margin and mix; staff requirements and compensation; utilization and profitability; and key metrics. GAP also provides insight into a repeatable sales process and integration strategy with actions, tools and metrics for activity, pipeline requirements, pricing strategies and contract value, ensuring ongoing client retention and expansion."
For dealers still sitting on the fence and wondering ‘should I or shouldn't I?' Sharp's Marusic doesn't hesitate in answering that question. "Every dealer should be actively evaluating with their partners or looking at training or programs others have so they understand it better and then make a decision."
Collabrance's Dick serves up some numbers in her response, noting that based on Service Leadership estimates, it takes about 200 customers to build a successful $12-million managed services practice. "That [should be] very appealing to dealers with a customer base of 3,000-5,000," she says. "All they need is a small percentage of those to say yes to this strategy."
"With reductions in print volume that's driving down the hardware costs and margins, if a dealer wants to grow their business, they've got to look to services to do that," adds All Covered's Cataldo.
And now is the time, he says.
"Managed print was a service continuous to the business, but some people held back almost to the point where it was too late and once they wanted to get
involved there were almost too many players in the space. I don't think Managed IT is too far behind that. Everybody who is in the space who wants to get in the services space, and that's the next big thing, they need to take a good hard look at it. This is a way to keep out the competition and deliver a total solution to the client."