10 Tips Along The Path To A Managed Services Model3:00 PM EST Fri. Apr. 26, 2013
Specifics around a move from traditional resale to a managed services model vary by company, by circumstance and by objective. Most channel companies that have moved in this direction have blazed their own trail, to a large extent. But based on interviews with solution providers, certain practices seem to rise to the top. Here is a list of action items that can serve as a helpful starting point in developing your business transformation methodology.
What are your customers' opinions of managed services and cloud-based services? Assess their desire and their willingness to move in this direction, as opposed to maintaining systems on their premises. Pay close attention to who within the organization is in favor of the move and who within the organization is not. You may find that some customers will begin this discussion adamantly opposed to a managed services model, but then become more open to the idea after gaining a better understanding of the business case. This can occur within a single discussion or sometimes over the course of several months. But understanding your customers' willingness is your own first step for developing a strategy.
Take a look at how each customer is using information technology at the customer premises and begin to draw parallels between those configurations and how the cloud and/or managed services might be used. Develop your own recommendations for what technologies can be easily and safely moved into the managed services model, and be prepared to articulate both the risks and advantages of doing so.
Once you have completed your assessment of customer readiness, look to your own company's capabilities and differentiators. Develop cloud and managed services alternatives for as many of your offerings as possible. It's best for customers to see that your service line includes everything for which you are familiar to them. Develop the capability to function as an evangelist for managed services and cloud-based services. Familiarize yourself with the business case, and understand where it is best deployed, and where on-premise remains the legitimate choice for customers.
Although many established, traditional IT vendors are developing software and services specifically to support the cloud and managed services model, there may be instances in which new vendors that specialize in cloud technologies can be added to your mix. Evaluate everything in terms of fixing business problems by way of technology, rather than selling technology for the sake of technology. Develop underlying methods for becoming familiar with customer business problems that can then be extrapolated to specific solutions.
Recognize that the move toward cloud and managed services will extend revenue over a lengthy period of time but will reduce the up-front revenue with which traditional resale is associated. Therefore, it is important to make sure that expenses are timed commensurate with the rate at which revenue is collected in order to avoid critical cash flow problems.
This may be more of an issue at some companies than at others, but the champion of managed services and cloud services within your organization undoubtedly will need support from the executive suite in order to realize the business model migration. A detailed cost/benefit analysis can be augmented by articulating how industry trends are forcing much of the channel in this direction. Therefore, buy-in may not be difficult to achieve. Nonetheless, the executive team will need to see sufficient data to support the move, as well as an efficient and workable strategy for execution.
Most solution providers familiar with the VAR/integrator business model have sales teams that are highly attuned toward building profitability through the sale of products. A move toward managed services and cloud-related services will force these individuals to reassess their tactics for presenting the value proposition and eventually closing the deal. Some may see this shift as a threatening development. Others will acknowledge the industry trend and actively seek to shift their approach to doing business. Build sales strategies that reflect the new model, and execute those strategies either through your existing sales force or through a new sales force dedicated to managed services. Finally, assess your back-end systems to make sure they can handle a business model based on monthly recurring revenue.
Regardless of how carefully you plan your transition into managed services, there inevitably will be certain factors and developments that were unforeseen or otherwise overlooked. It is important to have a specific "tiger team" charged with navigating and executing the transition's components, regardless of whether they are planned or unplanned. Management representatives should be joined by all the major groups within the organization, including sales, engineering, marketing and operations.
As you near the formalized rollout of your new business model, develop a comprehensive marketing strategy aimed at articulating the benefit to your customers while also demonstrating that your company is the right choice to help them down this path. Very often, solution provider organizations are launched by technologists who understand how to leverage products and services, but are not necessarily experts in the marketing field. It will be important to have such talent on board in order to capture the attention of your customers.
Establish a list of key metrics that you intend to track in evaluating the relative success of your transition. Aspects such as customer retention, cost of acquisition and profitability will obviously factor heavily into this equation. But it is also important to see to what extent managed services and cloud services are helping you to extend your footprint, both geographically as well as into new technologies. Make sure to set reasonable benchmarks and objectives.