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Managed IT by Scott Cullen

Making the Move into Managed IT Services

Let’s table the discussion on managed print services for now and look at the next big thing—Managed IT Services/Managed Network Services. This segment is gaining greater interest throughout the independent dealer realm. It truly is a valid business opportunity. Consider recent history. There’s GreatAmerica Leasing’s Collabrance subsidiary, the introduction of Konica Minolta’s managed IT services program preceded by last year’s acquisition of Managed IT Services provider All Covered, the introduction of Agiliant’s Affiliate program earlier this year as well as their partnerships with OKI Data and Sharp. Then there’s The Utility Company, a Canada-based virtual IT services company that has dabbled with the independent dealer channel in the past even though they seem to be keeping a low profile of late.

                                                                                                                                                                                                                   Gary Stevens - Agiliant

Managed IT Services represents a natural progression for the office technology dealer, particularly those who are already plugged into their customer’s network infrastructure from a device perspective. That doesn’t mean it’s an easy transition. It’s a daunting challenge for an office technology dealer to walk in the door and offer the customer this value add. How many dealers can confidently relay that message to customers and prospects? Rhetorical question or not, the answer is not many unless they get some outside help. With programs such as those from Agiliant, GreatAmerica, OKI, Sharp, and The Utility Company, traditional office technology dealers can get help with the heavy lifting in the IT Services area, eliminating the need to build their own. Plus some programs bridge the gap between MPS and Managed IT Services, placing both under a Managed Services umbrella, adding even greater value.

Agiliant offers the MITOS (Managed Information Technology & Output Services) suite of managed services that enables organizations to manage all aspects of their IT systems, assets, and operations. MITOS integrates managed network services and managed print services, what Agiliant’s President & CEO Gary Stevens describes as two traditionally disparate business disciplines.

The program was rolled out in January of this year and by all accounts is going great, especially when one considers Agiliant’s subsequent announcements regarding their partnerships with OKI Data and Sharp. Stevens says he’s fielding multiple calls per week from dealers interested in becoming part of the Agiliant Affiliate Program.

“This is almost a utility model to get into a different business model that if you didn’t have you’d have to hire staff,” says Stevens. “If they agree to make the change, we’ll show them what kind of infrastructure they’d have to put in place to make that change, and frankly we cost a fraction of that.”

All affiliates receive the Agiliant base package, which is a go-to-market strategy that helps place them in front of C-level executives.

Right now Agiliant is focusing primarily on BTA dealers but will eventually integrate some VARs into the model that fit their criteria in markets where there’s not a good choice for them on the BTA side. Target affiliates are the top three dealers in a market with revenues of more than $10 million although Stevens has signed up affiliates even smaller than that.

Sam Errigo - Konica Minolta

As with anything new, there’s bound to be misconceptions.

“The big misconception is that this is an easy transition to make,” says Stevens. “If MPS was hard that’s kindergarten compared to this.”

The key to making the move into managed IT services is patience. Truth be told, that’s the key in a solutions selling environment anyway, an environment every dealer should be focusing on in the 21st century rather than the box sale.

How much patience does a dealer need?

“They need to make a full blown commitment out of the gate,” states Stevens. “It’s like a 2,000 or 3,000 major account sale such as a Nordstrom’s or a big law firm. That’s a complex sales because you have to balance all the different silos into that. It’s easier once you get the right sales organization structured and in place.”

Based on past experience Stevens contends BTA dealers can’t simply integrate managed IT services into their existing sales structure and expect to be successful.

“It’s got to be carved out, a separate go-to-market strategy,” notes Stevens. “What BTA dealers do have is the leverage of their current account base.”

He explains that selling managed services requires a different sales structure and people than those who are focused on the dealership’s legacy business even if there are some already on staff who can make the transition.

“Once that sales structure is in place it becomes much easier,” states Stevens.

Dave Pohlman - GreatAmerica Leasing

It may be over dramatic to say the move into managed IT services is do or die, but a dealer who doesn’t consider it may eventually find their dealership on life support somewhere down the road.

“If they want to be successful long term they’re going to have to make this change,” says Stevens. “My second piece of advice is do your homework and understand what’s involved—the investment necessary to make this change and how difficult it is—and make the right choice.”

Konica Minolta’s managed IT services program through All Covered was officially rolled out with great fanfare to its dealers at the Konica Minolta dealer meeting in January.

“The interest and acceptance from dealers has been overwhelming,” reports Sam Errigo, senior vice president of Konica Minolta. “They are seeing the benefit of partnering with Konica Minolta and All Covered as an IT resource and I absolutely believe after talking with many of these dealers they’re getting a full understanding of the synergies between the hardware and IT services. This is a way for them to begin to differentiate their offering to their customers by providing more services that are tightly managed and controlled.”

As part of the on-boarding process Konica Minolta engages on site at the dealer location for 3-4 days and meets with the managing partner of the dealership and their sales team and walks them through the program, explaining the menu of services offered, how they price the services, and how to engage the customer. It’s still too early to gauge success since Konica Minolta is still in the process of signing up and training dealers.

How does Konica Minolta differentiate themselves from other IT services providers?

“When you look at the other companies and what they’re providing, I believe our U.S. presence and what we’ve done from an infrastructure standpoint is well beyond anyone else,” responds Errigo.

Another benefit Errigo sees by bringing dealers into the managed IT services fold is the potential to sell more hardware by linking MFPs with IT services along with an opportunity to sell more solutions. “The third piece of the puzzle is our solutions portfolio and how we’re linking that to the MFP and services like All Covered,” he adds. “It’s really a compelling value proposition.”

That, he explains, is important for dealers to keep in mind as they evaluate the future growth areas for their dealership. “Are they better served going with their primary hardware manufacturer who is providing support and helping them grow their business and taking it to the next level and tying it together in a neat package rather than trying to do it themselves?” asks Errigo.

GreatAmerica Leasing Corp. is on a mission to make managed services easier for its office technology dealers via its Collabrance subsidiary. Collabrance softens the blow for dealers looking to enter the space by eliminating issues related to upfront costs and knowledge of their customer’s IT environment. The organization has an IT infrastructure in place, eliminating a major expense in the dealer’s go-to-market strategy. Essentially, Collabrance is a separate organization that GreatAmerica characterizes as a master managed services provider.

Frank Gaspari - FlexPrint

“We bring all of the remote elements—remote monitoring, remote remediation, backup, knock, help desk, all of those remote pieces—to the table and then the dealer provides the relationship with the customer, onsite activity whenever necessary, the sales effort, and ownership of the customer,” explains David Pohlman, executive vice president and COO with GreatAmerica Leasing. “What dealers like about this is it’s a collaborative way to where they have someone who has done this for a while and it’s a low-risk way for them to enter this business as opposed to building their own network operations center, hiring the people to staff the help desk, etc.”

GreatAmerica has assembled all the different pieces and evaluated all of the different options from backup to virus protection, to e-mail monitoring and services along with all the other various components that make up an IT Services offering.

Dealers can brand and customize the managed services offering for their customers. Last fall the program expanded to include managed print services through a partnership with MWAi.

It’s going on three years since GreatAmerica launched the initial concept in beta form. At that time they had six dealers testing the waters. With the beta behind them Collabrance is now into its 18th month of proactively targeting the dealer channel. From the original six beta sites, there are now about 40 dealers active on Collabrance today. One of the keys for success, and this shouldn’t come as a surprise to any dealer who has made the move into a new business direction, is commitment at the owner/principal level.

“This truly is a new business as opposed to adding a new line or a new manufacturer’s product,” states Pohlman. “There’s a decent amount of planning that goes into where you want to be and how you want to evolve this and we can help in that process. Also, it’s important that you get the right profile of people in certain key roles to execute this. If you can hire the right people and you have high-level leadership helping it evolve, those are the dealers that have really done well.”

When Pohlman talks about having the right people he’s referring to a dedicated sales resource.

“It doesn’t have to be a technology guru by any means because the second role is the one that helps provide some of that. It’s still a fairly aggressive salesperson who isn’t afraid to make the calls, set the stage, and get some appointments.”

The sales rep opens the door, sets the stage, does an initial analysis on the current state, and then what Pohlman calls a “Virtual CIO,” someone with more technical knowledge joins the sales rep for a second meeting to present a more detailed plan of what the customer might want to consider based on the initial analysis.

“That seems to be a pretty good approach to getting the engagement,” states Pohlman.

GreatAmerica can help the dealer in finding the key talent for making their foray into Managed IT Services successful. Their Pathshare Human Resources Services has profiled some of those positions and can tell a dealer exactly what to look for in a candidate, and help with the screening and hiring.

How does Collabrance differ from some of the other managed IT offerings on the market?

“We really offer a collaborative approach,” responds Pohlman. Despite the collaboration, he points out the dealer still owns the customer relationship.

“It’s all done private label and whatever the vendor decides to name their particular program, it’s theirs entirely,” he says.

Does Pohlman have any final advice for dealers pondering whether or not to get into this business?
“If your dealership has been thinking about getting into managed network services or improving its MNS offering, there are three options to consider,” says Pohlman. “You can build, buy or partner.”

There are benefits and drawbacks to each option. He says that building and buying tend to be costlier paths to getting into MNS and can cost up to several hundreds of thousands of dollars. Choosing the appropriate partner to help offer MNS saves dealers not only the upfront capital and labor costs, but also the time it takes to hire and train staff; identify technology partners; and identify, establish and implement operational processes that will make the business run smoothly.

“When partnering, you must trust the decisions of your partner,” he says. “The initial and continued vetting of the technology partners can be time-consuming. Partnering saves the dealer time and can give them confidence in selling MNS.”

Frank Gaspari, president and CEO of FlexPrint in Phoenix, Arizona, is relatively new to the managed IT services game, but there’s nothing like talking to someone where the ink is still wet on his managed IT contracts to get a good lay of the land. FlexPrint just kicked off their managed IT program earlier this year after spending a fair amount of time on research and planning.

“The first quarter of last year we made the decision we wanted to expand our offerings into IT for obvious reasons,” says Gaspari. “One is protective and adds more value to our core customers, and two is to separate ourselves from the clutter in our space.”
FlexPrint didn’t exactly dive into the managed IT services pool, they tested the water temperature before jumping in.

“I’m a believer in doing one thing and doing it really well, and before we dove in we contracted with a consulting company and did a ton of research about the players in the space and just educated ourselves because quite frankly this wasn’t our core competency,” notes Gaspari.

The next thing they did was figure out how to roll out the program. The plan was to focus on their existing 400+ client base. But first they had to find the right person to sell it. That took awhile.

No one at FlexPrint had the right expertise to sell managed IT services, so Gaspari went searching for the right sales leader who also had technical expertise along with the ability to sit in front of a CIO of a million dollar company and talk intelligently about all aspects of IT services.

After three plus months things are going well and the feedback from clients is what Gaspari terms, “Awesome.”

“We’re rolling it out carefully to our current base and in strategic new opportunities,” says Gaspari.

Finding the right partner was also helpful and FlexPrint partnered with Advanced Technology Services out of Chicago.

“There’s a half dozen companies that could have delivered the SLAs for us, but at the end of the day we felt the most comfortable with them,” says Gaspari. “They’re really our partner in delivering the SLAs and we make that very transparent to our customers.”

The questions that keep cropping up from customers and prospects about the program revolve around the ROI, the cost effectiveness of the program, cost savings, and if service levels are better than doing it in house?

“If they have a trusted partner and at least a break-even on ROI, they’ll do it,” says Gaspari.

Although customers may not be clamoring for Managed IT Services, FlexPrint is making progress particularly with their existing customer base.

“That’s where we see the big opportunity,” says Gaspari. “We have the relationship and the history and they know they can trust us and they know we’re not going to present this offering unless we can give the same or better SLAs on this side as we do on the print side.”

FlexPrint is still learning the business yet Gaspari shares the biggest lesson learned to date.

“Like anything else when you’re building something from nothing it takes time, patience and knowledge. We’re going to be successful, but it’s not going to be tomorrow.” u

Scott Cullen has been writing about the office technology industry since 1986.