Commodities Exchange: If Managed Networked Services is a Commodity Where’s the Opportunity?

Tom Callinan

One of the hottest trends sweeping the office technology industry is IT services, which also encompasses managed networked services (MNS). To be fair, they’re related although they are not necessarily the same thing. Either way, not everybody sees these two related opportunities as the wave of the future for the office technology reseller looking to compete in a world with declining hardware opportunities and paper volumes are spiraling downward.

“IT services are the biggest distraction copier companies are embarking on today,” says Tom Callinan of Strategy Development. “Many [dealers] are boiling IT services down to managed networked services; if you want a commodity just look at managed networked services. Just Google prices for MNS and you’ll see price lists online. There are 18,000 MNS providers out there, so it sounds great, practical revenue, high margin, and it’s a good revenue stream for your own customers because they trust you.”

But, and there’s always a but in there someplace, when one looks at the big picture Callinan has his qualms. Besides emphasizing the number of players already in the space, he talks about how easy it is to enter the business.

“When you look at market attractiveness one thing you look at is your ability to get into the market. Are there barriers to entry? There are zero barriers to entry for MNS, you outsource everything. You can go to one of these master MSPs (managed service providers) and buy the monitoring and buy the help desk. You and I can open up a MNS [operation] and send [client’s] servers and desktops to an IP address at the master MSP, Level Platforms or wherever.”

What it comes down to in his opinion is that dealers are oversimplifying things and now jumping into a crowded pool.

“Just like we try to oversimplify workflow as content management, we’re oversimplifying IT Services as MNS,” emphasizes Callinan. “True IT Services would have workflow. Is that a good place to get into? Absolutely, but I’d pick and choose. One of the big mistakes copier dealers are making today is talking about IT Services as if it hasn’t existed before. There’s a large group of people out there who have been selling it for the last 10, 20, 30 years. It’s a $160-billion business worldwide, from IBM to two-man workshop VARs selling it. It’s a highly competitive area. I’d  pick what I’m going to sell and if I were in the copier business I’d pick workflow and anything that has to do with moving the paper process to digital.”