October 24, 2012
This guest blog provided by Lori Berry from our HTG sponsor Great America Leasing.
Managed Services has evolved from being a buzz word to a very real, high growth industry. No one can say for sure when managed services became popular, but it has been around in one form or another for a very long time. Managed Service Providers (MSPs) have mastered selling a payment whether it is per node, per device or per user, but most are forgetting a very large piece of the puzzle, the hardware.
The cloud is also growing rapidly. Some even say that because of the cloud, hardware is going away altogether. I can’t help but think about the multiple user devices each of us have and the extensive backend it takes to run those devices. Hardware may be moving location, but it is not going away any time soon. In the meantime MSPs are leaving money on the table every day by not including hardware in their managed service solution. There are four key points to including hardware in your managed services offering.
Standardization - The key to keeping your system engineers and your clients happy is standardization. Putting together a 3 – 5 year plan for your clients and wrapping the hardware cost into your managed service offering is a wonderful way to standardize. There will always be some exceptions because of that one application that only runs on X, but this is a great start. Plus you are being very proactive by helping your client budget and keep up on technology. Did I mention this makes your most important asset (your people) happy?
Warranty – Including the hardware in your managed service offering also makes it easy to include the manufacturer warranty. Including the warranty for the term of the agreement will cover you and your client when something breaks but also creates a decision point when that warranty comes due. At that point your managed service no longer covers that piece of hardware, so the client needs to decide to upgrade and keep it under managed services or risk it and take it out of your agreement. This will eliminate the MSP from supporting 5+ year old equipment.
Differentiation - Managed services are popping up everywhere and MSPs are always looking for ways to differentiate from their competitors. Imagine the scenario where an MSP says, “Our managed service fee is $2,000/month, but our SLA requires that to be covered under our program your hardware must be under warranty.” Then they drop the bomb that the customer needs to spend $15,000 or more in hardware upgrades to get everything up-to-date before they start the managed service. Now imagine going into a sale saying for $2,700 a month we will upgrade all of your hardware and take care of it for you. SOLD!
Margin - We all know about margins continuing to dwindle, however if the hardware is part of the Managed Service, you can gain some of that margin back. The MSP is showing the value of their services, which include the hardware. It is also difficult to price shop when the hardware is included with everything the service level agreement (SLA) spells out. It is a win-win situation.
Stickiness - If your managed service matches the warranty or life-cycle of the hardware you put in place, you are no longer looking at month-to-month contracts. That only makes sense because the clients want you to be there to support the hardware you install. You are much stickier when including hardware in your solution.
Managed service providers are in a beautiful position. They are agile enough to move to cloud in the areas it makes sense. In fact, you can even build some cloud services into your managed service offering today. MSPs can narrow their product lines, or choose to expand into areas that fit their market. They can choose verticals to focus on or work on a region. The important thing is that they do what is best for them, their employees and their clients. Help yourself and your customers out and include the hardware.