Managed Services Continues To Be Money In The Bank
By Stuart Selbst, ,VP of Channel Sales, My Digital Shield
If you are an “IT guy,” who trades your labor for dollars, then offering managed services (flat rate services) should be a no-brainer. But, that doesn’t necessarily mean your business model can guarantee you are doing it correctly or more importantly, being successful at it. The transition from a break-fix business to a managed services business model is actually not as difficult as many people might think. However, there are two vital factors that must be taken into consideration before deciding to make this transition.
What’s It All Mean?
First, you need to understand the definition of managed services. It’s quite simple — managed services are defined by any service that you can sell to your client once, bill monthly to create recurring revenue or equity in your business, and is backed by a service level agreement. The second, which is probably even more important than the first, is you must understand that managed services is a business model and not a product.
In my practice as a former IT business owner who was an early adopter of the managed services model and a consultant working with managed service providers (MSPs), I led with storage and security services and recommended that my MSP clients do so as well. Storage and security should be two things that your clients (business owners) care about most. The reason for this is because technology savvy business owners want to know where their most business-critical data is located and furthermore, who is able to gain access to that data. In addition, for those MSPs, data storage and network security are two of the most profitable managed services you can offer.
What’s The Benefit?
When making the transition from a break-fix (hourly billing) model to a managed service (recurring revenue) model, it’s a simple sell to current clients on managed security and managed data storage without making a significant dent into their budget. Within the process of “upselling” these valuable services to clients, there is more profit to be seen as a result of recurring revenue streams. Over time, this leads to increased profits through recurring revenue of managed services. Concurrently, it becomes a simple process of bringing on board more new clients that are put directly into your managed services solutions.
As a side note, when you finally get your managed services offering up and running, you will find you can do so while managing more clients without the need to add more human resources to your team, thereby experiencing a higher financial profit margin to your bottom line.
In summary, making the switch from a break-fix to a managed service model doesn’t require such a serious undertaking as many MSPs might think. The key is to become educated on the right steps to take, how and when to take them and have a key understanding of the benefits, both in the short term and down the road.