There's a big difference between working at a $28 billion IT distributor and a small solution provider shop looking to break into the managed services game. But Justin Crotty, vice president of services, North America, for Ingram Micro, has spent the past few years developing the distributor's Seismic managed services portfolio. During that time, he's talked to his fair share of successful MSP practices and culled some ideas that he shared with 200 VARs at this week's SMB Alliance Invitational conference in Charlotte, N.C.. Many of these VARs are just starting down the path to a services-based model.
"Has the managed services hype ruined your life? Do you think, 'I'm not good enough?' 'Everyone else is making money at it except for me.' It's common," Crotty said. "Managed services is about process, marketing, branding and selling -- not technology. The trends we have seen in a lot of our solution provider partners are that they are generally doing [five] things, and very little has to do with technology expertise."
Characteristic 1: They've Done Something
Crotty said successful MSPs have taken risks, made mistakes and tried again. "That's often the hardest part. You'll make mistakes, but well-executed plans overcome mistakes," he said. "Find something comfortable and take a shot at it. I still see a lot of hesitation out there. People say,' I'm not sure that's the right course of action.' Yeah, it is."
Characteristic 2: Understand The Difference Between Product And Service
The IT industry is not as good at selling solutions as it wants to believe, Crotty said. "We sell a bag of ingredients to people. This is a major crux of the services business. Good services companies understand the difference between product and service. Products are ingredients."
For example, bakeries don't sell you a bag of ingredients to make a wedding cake, they sell you the cake as a "solution," Crotty said.
"How much is a wedding cake? $1,000? Are you kidding me? How much are the ingredients that go into that cake? They know you can add it up and get $4.12. You can go source those ingredients, but the bakery knows you can't bake it or don't have time to bake it. They're in the commodity business too, but they know how to protect their value."
Solution providers haven't done a good job pricing the value they provide to customers, Crotty added.
"Services are experienced, not consumed. We are great at selling tools in this business but customers don't want tools, they want services. I can't cook like Emeril. I can use the same tools, but if I go to his restaurant and eat his meal, I'm much more satisfied," he said.
Characteristic 3: Focus On Process And Execution, Not Technology
Most customers know they need technology and they want to understand how to use it, but they don't care about the technology itself, Crotty said. "No application or tool will work without the right process around it. The best MSPs start at methodology and work everything else into it," he said.
Characteristic 4: Understand How To Get Paid For Your Value
Crotty reiterated that the IT industry hasn't learned from other industries about how to protect their value. "Value is something that your customers cannot deliver themselves. We are in one of the most complex industries in world. The solutions you build are difficult to do. Not many people can do it," Crotty said. "So why have an issue with getting paid for that value? The commoditization in this business is a function of not selling well and not defending value.
I know if I buy a BMW 7 series now, it will cost more if I buy it 10 years from now. But in 10 years it will be built faster, better and cheaper. So why is technology coming out tomorrow so much cheaper than today? It's a function of defending the value."
Characteristic 5: They Lead With Their Own Brand
Too many solution providers don't recognize the importance that dedicated branding resources can play in a company's success, Crotty said. "Somebody has to wake up with the sole focus in life is to build and message your value proposition, how to make you more valuable to customers," Crotty said.
Too many VARs also have the same resources selling products and services, he added. Generally speaking, successful MSPs have resources dedicated to selling only services, while others might sell products. "They have no product quote, no other responsibilities than to get services out the door," he said. "Back to the BMW 7 Series, do you ask what kind of muffler is on that thing? No. That's not the value proposition of a BMW. Do you care what kind of mower your gardener uses? No. As long as he shows up and everything looks good, that's the value of his brand. In this business, we have to do a better job selling a valuable experience."