Nearly everyone in the office equipment industry readily admits that our industry is undergoing change. Many decidedly progressive dealers are down the path, or determining their path, of evolving their businesses. While equipment margins continue to fall in the industry, service-related margins remain fairly solid. Managed IT services brings fresh enthusiasm and opportunity. Clearly, new skills and technical abilities are essential, but the business model bears a close resemblance to what dealers have been practicing for years. Office equipment dealers are quite at ease with placing equipment, refreshing hardware and providing services for recurring revenue. If you’ve started down this path, or are considering doing so, it’s important you view it as a journey. One that will develop over time as you learn, gain experience and build the tools and processes for success.
Where does the Journey Begin?
If you’re considering getting into managed IT services, there are three options to consider: you can build, buy or partner. There are benefits and drawbacks to each option. Generally speaking, building your own solution allows you the most control over your managed IT offering, but this takes time, a significant amount of resources and can be very costly. Buying an existing IT business is another viable option, but can also be cost prohibitive. A dealer needs to perform proper due diligence to ensure the business it is purchasing has best-in-class tools and qualified personnel to bring to the table. When acquiring another business, company culture alignment is paramount and can be quite a challenge. If speed to market and minimizing the upfront investment is important to you, then partnering is often a great way to get started. It can allow a dealer to create a profitable recurring revenue stream starting with the first agreement signed by the first customer.
Just over three years ago, we recognized the need to help dealers and resellers offer managed IT services to their customers. To provide a relatively low cost and quick way to enter this space, GreatAmerica started Collabrance LLC and invested in the Network Operations Center (NOC), Help Desk, tools and processes to help our customers succeed. Since that time we’ve been on our own journey. We’ve leveraged our knowledge of and experience in the office equipment space and information technology to speed our own success. Alongside our customers, we’ve figured out best practices.
Who Needs This Service?
As you embark on your journey, you’ll find there are a lot of organizations that would love managed IT services, but you don’t necessarily want them as customers. Simply putting your “managed IT services shingle out” and signing up every customer that comes your way can be disastrous.
So let’s talk about the customer profile. From the Collabrance perspective, we see the ideal customer size within the range of 15-50 users, particularly in the early stages of a managed services provider’s business. Within that range, our dealers are able to create great value and alleviate the IT burden.
Greater than 50 or so users, and companies tend to have their own IT departments and are accustomed to a level of onsite attention that can be difficult to replicate as an outsource provider. Larger customers can also make it difficult for your internal resources to scale effectively, putting customer satisfaction at risk. It’s important to note that while a service and support offering from a partnership like Collabrance has the capability of scaling quickly, your onsite technical resources and processes also need to be ready to keep up with customer growth.
Beyond size, we also encourage our Collabrance partners to consider choosing prospects that depend on technology and value its uptime. If the customer is too small, or isn’t highly dependent on system availability, cost is just going to be viewed as too high for value delivered. They are going to be very cost oriented, require a lot of attention, and will likely avoid investing in upgrading technology, all of which will reduce your ability to create a profitable relationship with them.
Once you’ve identified the general profile of a prospective customer, take the time early on to really understand their technology environment. Your customers’ technology environments are going to have a wide range of stability and reliability. The range spans from completely out of date and dilapidated, to highly efficient with current hardware and software, perhaps only requiring a few tweaks to become optimized.
If you jump in and offer fixed cost managed IT services to those customers with completely out of date and dilapidated environments, you’ll end up with far more effort required and a significant profit margin reduction. Additionally, your customer’s satisfaction will be compromised. By getting an accurate technology assessment upfront, you will have the opportunity to educate your customer on the status of their environment and the best approach to help them achieve their business goals efficiently and effectively.
This may involve more effort upfront, including investments in their infrastructure, such as, servers, PCs, etc. This effort makes their environment more efficiently supported and increases their performance, uptime and satisfaction. These hardware investments are often ‘swallowed’ better by putting them on a monthly payment. Sound familiar?
Getting the Technology Standardized Improves the Journey
Stabilizing the customer’s environment prior to signing them onto a fixed price managed IT services agreement is generally how dealers grow profitably. They tend to get there by realizing the critical benefit of standards. This includes your technology offering, or “technology stack”.
When it comes to the technology offering, dealerships must think like a CIO. In a larger enterprise setting, the CIO strives to standardize the technology its employees use. They understand that you can’t be an expert in every antivirus software program, hardware platform or firewall. CIOs rely on standards. This is a similar approach to your dealership standardizing on one or two OEM copier lines, because you can’t be an expert in four or five. You can quickly see how this becomes problematic when considering all of the technologies in a customer’s environment. How can you become an expert on every hardware, software, security, email, and data protection technology? You can’t. So consider thinking like a CIO, and standardize the technology offered to your customers, and your customers will benefit from your efficiency.
If you choose the customer profile well, assess their situation and engage accordingly, your experience will be smoother and your profits on this journey will be greater. This is where a solid partner can be a big help by bringing proven processes and technology standards to the relationship.
Does the Technology Offering Evolve with the Journey?
I think the answer to this question is yes. These days, it’s easy to get overwhelmed with the technology solutions that IT can provide. There’s mobility solutions, cloud computing, virtualization… and the list goes on. Additionally, you’re used to focusing in on your customers’ print output devices, now there’s servers, workstations, software, etc. There are aspects of the technology offering that are simply going to require you to become more educated.
Before selling your first managed IT contract, we recommend getting comfortable with your initial technology offering. Look around your own office; ask a friend who owns a small business with 20 workstations or fewer if you can take a look around their office. (Or a couple of customers that match this criteria.) Don’t try to sell anything, just get a feel for where your dealership will be able to provide the most value. Is it data protection, providing uptime, end user help and/or security and email that will be in your initial offering? Something different? As you do this with a few smaller environments, you’ll find there is a core set of things they all need. Again, standardize on these offerings so that you gain efficiencies for you and your customers. You can then start your product portfolio there and grow it as you grow with your customers and as you gain knowledge and experience.
Though You’ve Arrived, the Journey Doesn’t End
Imagine getting a call from one of your customers. They’re asking for your opinion relating to the new building they’re constructing for their business. Their call to you is the first call they’ve made seeking advice. It is at that point you know you’ve arrived! They truly see you as a trusted advisor. They’re buying IT services from you with a predictable monthly payment, and they’re using all the services in your wheelhouse. But even then, the journey doesn’t end. Through quarterly or monthly reviews and continued engagement with your customers you’ll be viewed as an integral part of their team, helping them support their overall business strategy. When you’ve got that kind of relationship with your customers, you can quickly see where offering managed IT services can be a great way to enhance your existing successful business.
