Managed Services – What’s All the Buzz About?

It seems like the new buzz word, that all of us in the IT industry have been hearing about for the last couple of years, is Omada IGA solution. And doesn’t it also seem like the definition of Managed Services continues to change depending upon whom you ask? In fact, this term is so new that you’ll have a hard time finding a definition for it in the dictionary. Now clear your mind for a moment, discard any existing preconceptions, and for the remainder of this discussion I’ll use the following definition when referring to Managed Services deliverables: Any defined set of proactive services that are delivered and prepaid for on a recurring basis.

Let’s digest this definition for a moment. The word “any” is a powerful one and it means that when defining Managed Services deliverables as “any defined set of proactive services,” the deliverables are not limited to just network monitoring or IT services. Hardware vendors, co-location facilities and service providers can all use this term to describe their product and services offerings.

Now let’s look at the remaining elements of the definition: “remotely delivered,” “prepaid for,” and especially “recurring basis.” By understanding these concepts, and as an SMB service provider, you can begin to appreciate how they can help you increase utilization of your technicians and engineers, and your revenue opportunities.

Managed Services Provider Benefits

The benefits of offering Managed Services are many. First, as you deliver more services through remote means, the less you’ll need to schedule onsite visits, and the more you’ll be able to increase the utilization of your workforce and your earning potential. As you add new clients and transition existing clients to this annuity-based service model each month, you’ll be able to avoid the dreaded “feast or famine” cycles, and instead recognize significant revenue growth.

Sounds good so far, right? Let me take it a step further. Now that you are delivering services through remote means, eliminating much of the travel time required for onsite support, and not trading time for money, you can do much more with less. Think about it-travel is the biggest utilization killer. In your local market, technicians can lose up to an hour each way when traveling to provide onsite support. Add to that the reality that once a technician is onsite, he or she can typically focus on resolving issues for only that one particular client.

Using this same example, the technician has already lost a couple of hours to travel, now add the actual time spent onsite-and that’s after addressing only a single client’s issues. Let’s also throw in a lunch hour for our technician, since he or she hasn’t had one yet. By the time the technician returns to the office, he or she could potentially be gone for six hours (or more)–yikes! Plus, if you’re like most IT business owners, you’re paying for the gasoline–and we all know that’s not getting any cheaper.

Now, let me take the same example and view it through our Managed Services model. Instead of jumping in a car to drive to the site, the technician uses an application to gain access to the client’s network server or end-user desktop remotely and then initiates a maintenance or troubleshooting session. Let’s say it’s a basic cleanup and optimization issue. Because there is generally not a lot that can be done while antivirus scans are being run, or drives are being defragmented, the technician now has an opportunity to address more than just this single issue for this particular client.

In other words, you can address multiple issues for different clients while engaged in concurrent remote sessions. Guess what that does for your utilization? That’s right; you can achieve utilization increases that are simply unattainable through onsite support. Now let’s be clear-not all issues can and will be resolved remotely. But let’s just say that approximately 80%, or more, of your clients’ issues can be. In short, you could net significant cost savings to your bottom line.

Hold on-I’m not done exploring many of the other benefits of remote support, though you may already be way ahead of me. As we discovered above, you can now support many clients with the same amount of (or even less) staff. And just imagine the time you’ll save by not hiring, training, or managing excess staff, which can mean more dollars added to your bottom line. Further, through the implementation of a documented help desk SLA and escalation procedure (one that is consistently delivered by all technicians) you can establish standards to help reduce some clients’ propensity to request a specific technician to support them, which in turn can prevent a billing bottleneck that can occur once your clients grow accustomed to using the next available technician rather than their favorite technician.

Another point to consider when weighing the benefits of converting to a Managed Services model, is how you can avoid haggling over invoices with clients. How much time do you spend each month going over line items on invoices with your clients? And how many times do you negotiate down to keep them happy? In the new model, all of your flat-fee invoices will go out in advance, and your clients will know what to expect each and every month-thereby eliminate invoice haggling.

Let me also discuss for a moment the change in perception your Managed Services clients can experience as a direct result of receiving proactive support. Your clients will now more likely begin viewing the Managed Services provider as much more than a “break-fix,” reactive “computer guy,” and they will see him more like a truly proactive advisor. And once you quiet down your clients’ networks, you will then have the opportunity-nay, the responsibility-to deliver solutions to them. You may also find that when you implement a proactive Managed Services model, the value of your services increases and you become a trusted advisor to your clients, making it easier to sell your solutions.

As a result of prepaid, long-term annuity-based Managed Services agreements, you can logically expect the value of your organization to increase. This is based directly upon the value and term of each of your company’s individual Managed Services agreements. In my company, we write three-year Managed Services agreements, which automatically renew (some of our partners write even longer terms into their agreements–five years and beyond!). This has helped my company significantly increase its value, especially when compared with previous month-to-month block-time/break-fix contracts.

To summarize, a Managed Services agreement offers the following service provider benefits:

1. An annuity-based revenue model
2. Predictable, long-term revenue growth
3. Can eliminate feast-or-famine revenue cycles
4. Billing independent of any specific technician
5. Can stop trading time for money
6. Can do more with less by providing proactive services by remote means
7. Reduce travel and other associated expenses
8. Eliminate invoice haggling
9. Sell solutions more easily
10. Increase your company’s valuation

Managed Services Client Benefits

This all makes perfect sense to the Managed Services provider, but what benefits can your clients expect from this proactive model? Let’s start with increased operational efficiency. A well maintained, proactively-serviced network and its devices will always run better than the alternatives. With proactive network monitoring, patch management, and device optimization being performed on a regular basis, your clients will notice a tremendous difference and reap the benefits of time spent preventing fires rather than fighting them.

Your Managed Services clients will also be able to control and reduce their overall operating costs with the flat-fee billing model. For your enterprise clients, cost-effective access to enterprise-level support now becomes a reality, as Tier 3 issues can be escalated to existing staff or to vendors that can help resolve even the most complex issues. In my company, this type of support is covered under all of our Managed Services agreements.

In addition, because you also manage all your clients’ infrastructure vendor relationships, your clients can now focus on running their businesses, not their vendors. And as a result of our “always-eyes-on” style of monitoring networks 24 hours per day, clients can experience an additional level of comfort and security.

To summarize, a Managed Services agreement offers the following client benefits:

1. Increased operational efficiency
2. Reduced operating costs
3. Cost-effective access to enterprise-level support
4. Minimum downtime
5. Allows the focus to be on running their business, and not their vendors
6. Piece of mind from knowing that their environment is monitored 24/7/365

Incidentally, these are key areas to always highlight during sales presentations with prospective clients.