![\"Doug](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/Doug-Grimm.jpg\")
Doug Grimm, Collabrance<\/p><\/div>\n
The reason you are getting into managed services makes a difference. \u201cA lot of dealers got in from a defensive as much as an offensive perspective,\u201d said Doug Grimm, VP and GM of Collabrance, which provides a technology stack, service desk outsourcing, and other resources that enable dealers to provide managed services. \u201cHe who owns the network will own all output devices. If that\u2019s the only reason, the focus and determination to succeed may be not as great as those looking to diversify or raise the valuation of the business,\u201d he added, noting that the office equipment businesses that also do managed services often sell for more money when acquired.<\/p>\n
Providing managed services also allows dealers to get more intimate with their customers. \u201cSome dealers want to go deeper and wider with their customers rather than get new customers. Managed services is a natural fit,\u201d said Mr. Grimm.<\/p>\n
![\"Mike](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/MikeWeir.jpg\")
Mike Weir, HP<\/p><\/div>\n
All this translates into gaining a competitive advantage. Everyone we spoke with said that dealers are not only getting more revenue from existing office equipment buyers, but also earning office equipment business from new managed services customers. That\u2019s especially true for those already offering managed print services. \u201cDoing both print and PC enables channel partners to move up [the customer\u2019s] stack, adding more and more value over time,\u201d said Mr. Weir, General Manager and Global Head of Print Services for Hewlett-Packard.<\/p>\n
\u201cFive years ago, [dealers] were asking \u2018What is this, and why should it be relevant to me?\u2019 Now they know exactly what managed services are and their role in diversifying revenue,\u201d said Michael Amiri, director of dealer services at Continuum, a provider of outsourced IT services. \u201cIf [dealers] are not doing it now or have a plan to launch soon, they are a little bit late to the game.\u201d<\/p>\n
Assess Your Potential for Success<\/strong><\/p>\n Providing IT services is quite different from selling office equipment. It requires its own approach to marketing, sales, and support. \u201cA lot of the things that made dealers successful will not make them successful in managed services,\u201d said Lindsay Dick, director of sales for Collabrance.<\/p>\n The technical support that dealers or IT VARs provide is often based on the break-fix model, where they only hear from the customer when there is a problem. \u201cThat\u2019s not a scalable model,\u201d said Jeff Loeb, VP of operations at ProSource, an office equipment dealer in the Midwest that offers managed services. You can\u2019t predict demand, he pointed out, and once you solve a problem, you\u2019re \u201cat zero again\u201d with that customer.<\/p>\n Lindsay Dick, Collabrance<\/p><\/div>\n Another issue with the break-fix model is that it does not align with the needs of the customer, who is looking for a trouble-free operation, said Mr. Loeb. Instead of break-fix, the managed services model is one of monitoring, managing, and maintaining. It offers more value, not to mention an ongoing revenue stream for the dealer.<\/p>\n \u201cWe look for dealers who want to grow, scale, and invest in managed services like it\u2019s more than just another line of business,\u201d said Ms. Dick. The company considers dealers that have at least $5 million in revenue as good partner candidates. \u201cCertainly we have partners that have less than $5 million in revenue, but typically those partners aren\u2019t willing to make the investment to make it scale,\u201d said Ms. Dick. For example, Collabrance expect its partners to invest in a dedicated sales person and a technical staff to handle issues that can\u2019t be taken care of remotely.<\/p>\n \u201cPartners who have started other ancillary businesses and have been successful with them have greatly enhanced our success rate,\u201d said Mr. Grimm. These partners have already gone through the process of assessing the needs of starting a new line and making it work with the core business.<\/p>\n Commitment to managed services at the top of the organization is another success indicator. Collabrance looks for C-level commitment in its potential partners. \u201cWe look at how involved they are. From the top down, what is their commitment to getting managed services off the ground? What is their ability to make strategic changes?\u201d said Ms. Dick.<\/p>\n \u201cSomeone needs to own the IT services deliverables, manage sales forecasts, and make sure [the dealer] is ready,\u201d said Mr. Amiri. The dealer sales team, along with the deliverables owner, will be driving a more diverse conversation with the customer, and someone needs to frame that conversation and make sure it is delivered consistently and accurately.<\/p>\n Focus and Pick a Sweet Spot<\/strong><\/p>\n The range of managed services a dealer might provide is large. They include network management, help desk, back-up and recovery, website development and management, and hosting. Each service requires its own in-house expertise and support infrastructure, all of which comes with overhead. As much as 90 percent of those services will be done remotely. The more services you provide, the greater the investment and risk. If you spread yourself too thin to properly deliver everything, customers will eventually seek other providers.<\/p>\n \u201cSome dealers try getting in by selling the lowest-cost solution,\u201d said Ms. Dick. They haven\u2019t sold a standard package on the service side. This leads to them having to support a multitude of different technologies. \u201cYou\u2019re managing to an exception rather than a norm, and that becomes pretty challenging,\u201d said Mr. Grimm.<\/p>\n It\u2019s important to figure out who the target customer is, which is most likely at the SMB level. SMB customers with 10 to 100 users and no internal IT are ideal prospects for managed services, according to Ms. Dick.<\/p>\n Jeff Loeb, ProSource<\/p><\/div>\n It\u2019s also important that the business is completely dependent on its IT to provide its products or services. In other words, if the server goes down, business stops. \u201cIf a company sees IT as an expense and not a strategic advantage, then it is not going to have the appetite for what managed services offers,\u201d said Mr. Loeb.<\/p>\n \u201cIt\u2019s difficult to provide [consistently good] managed services to both a 20-user and a 500-user company,\u201d said Mr. Loeb. Those companies will use dramatically different technologies. ProSource focuses on companies with 20 to 100 users. This allows them to train and certify its support team on all the network firewalls, anti-virus software, and equipment its customer base uses. \u201cBy doing this, we can support our customers quickly, profitably, and reliably,\u201d said Mr. Loeb.<\/p>\n Staff and Train Appropriately<\/strong><\/p>\n To support managed services, dealers need staffing strategies for two key areas: sales and technical support. On the sales side, it\u2019s common for a dealer to have their core sales or imaging reps sell managed services as an add-on. That\u2019s often a mistake because selling managed services requires a different type of conversation with the customer and a different knowledge set on the part of the reps.<\/p>\n The core sales team can play a significant role in developing the managed services business, particularly in producing sales leads. It\u2019s best if they have an incentive to pass leads along to the managed services sales team. \u201cAn office equipment dealer might have 50 sales reps out in the field every day,\u201d said Mr. Loeb. For managed services, they can be an effective lead generation arm, he added.<\/p>\n At ProSource, the sales team is trained to look for clients that fit their ideal customer profile. When they find them, they ask a few qualifying questions and pass the lead to the managed services team, which sends a specialist to make an introduction. The managed services specialist explains to the customer what managed services are and asks questions about the customer\u2019s business to determine whether they are a fit.<\/p>\n ProSource looks for people with account management skills, even on the technical side. A key role at the company is the virtual CIO (VCIO). \u201cThe VCIO has strong technical skills and customer relationship skills–about 50\/50,\u201d said Mr. Loeb. \u201cThat person is difficult to find and more expensive than the typical engineer.\u201d<\/p>\n The VCIO\u2019s job pre-sale is to assess the customer\u2019s IT infrastructure. He or she should understand the level of support needed and to identify issues that will need to be addressed. Once a contract is made, the VCIO works on the customer onboarding process, which includes stabilizing the network environment and installing the monitoring agents.<\/p>\n The in-house technical expertise of most dealers is typically focused on implementing projects. That\u2019s useful, but fulfilling a managed services contract requires people who can monitor and maintain the client\u2019s IT infrastructure as well. \u201cSome of our larger clients have tried to run a project shop and a managed IT services shop with same people,\u201d said Ms. Dick. However, the profile of someone who can do project work well is significantly different from someone capable of the work that a managed services contract requires. That\u2019s one reason why some dealers outsource managed services operations that can be handled remotely and keep project work internal, she added.<\/p>\n Supporting managed services requires people with deep knowledge of back-end IT infrastructures. \u201cDealers that are new to IT don\u2019t know what those people look like, so having a partner that delivers that back-end talent is important\u201d said Mr. Amiri. \u201cSales teams need to have confidence in the deliverables to support the customers\u2019 IT demands,\u201d he added. Otherwise, they will not risk their core relationship with the customer by pushing something new like managed services.<\/p>\n Preston Woolfolk, Documation<\/p><\/div>\n Preston Woolfolk, director of managed network services at business technology integrator Documation, echoed the need to work to get sales onboard. \u201cOne of our biggest hurdles was our traditional copier sales reps not wanting to learn something new,\u201d he said. Once the company had a few successes in managed IT services under its belt, however, these same reps bought in to managed services quickly.<\/p>\n Price Based on Value and Cost<\/strong><\/p>\n Some dealers don\u2019t put enough effort into building a business plan and sales strategy for their managed services offerings. This can lead to underestimating the costs associated with fulfilling managed services contracts, which can be disastrous when establishing pricing for those services.<\/p>\n \u201cPartners who are already offering managed services might come to us because revenue is not meeting projections or the costs are so high and the work is unpredictable,\u201d said Collabrance\u2019s Grimm.<\/p>\n Mr. Loeb said that ProSource settled on a flat-rate model after experimenting with other pricing methods. They started with a per-device model, which worked until businesses started using more mobile devices. Then ProSource went to a per-user model, which also worked for awhile. The flat-rate that they use today is based on the number of computers, users, and interactions, and they review each account monthly to monitor changes. ProSource finds this model the easiest to manage.<\/p>\n \u201cPricing is very difficult,\u201d said Mr. Loeb. \u201cYou can\u2019t price for a worst-case scenario.\u201d He thinks most dealers under-price their managed services offerings because of their break-fix mentality. \u201cThey will spend more time with their customers than with the break-fix model. If they don\u2019t, then they won\u2019t be able to provide value,\u201d he said.<\/p>\n Mr. Loeb said that it took ProSource several years to find the right pricing level based on their true costs and the customers\u2019 perceived value. They built a spreadsheet outlining all their costs including personnel, outsourced services, and training. Once they knew the true cost, they were able to build in enough margin. \u201cCustomers are willing to pay a premium if you\u2019re willing to be an integral part of their business,\u201d he said.<\/p>\n It took time for Documation to understand its costs as well. \u201cOnce we were able to build in all our cost of goods, we had a much better relationship and service level,\u201d said Mr. Woolfolk. They were able to set customer expectations much more accurately. \u201cWe under-assumed what customers were willing to pay,\u201d he added. \u201cWe didn\u2019t realize the value we were offering.\u201d<\/p>\n The value might even be higher for some customers. \u201c[An emphasis on] security or compliance creates more willingness to pay,\u201d said Mr. Weir.<\/p>\n Customers that have been used to a break-fix relationship might balk at first at a monthly fee, because most of the time they are not paying that much for IT in a given month. Mr. Loeb said that this is easy to counter. \u201cOver the years, there are spikes in IT costs. When you average them out the true costs become clear and there\u2019s not much difference compared to managed services,\u201d he said.<\/p>\n Partner Rather than Build<\/strong><\/p>\n Some dealers have built their own support stacks to monitor and manage the IT services they provide. While that might work for those with the expertise and a limited customer base, doing it yourself presents a host of issues.<\/p>\n First, it puts the dealer in the software development business. As systems change, the stack needs to be updated. In addition, the dealer becomes responsible for keeping up with ever-changing security issues. If the customer base uses a wide range of applications and networking platforms, it can be a nightmare to create a support stack that can work well with them all.<\/p>\n \u201cDo not build in-house,\u201d warns Mr. Woolfolk. \u201cDon\u2019t even consider your own network operations center (NOC) unless you have at least $100,000 in recurring monthly revenue.\u201d Risk is a factor. \u201cIf something goes wrong with a copier, the worst case is you replace the copier,\u201d he said. \u201cIf something goes wrong in IT, like you delete data, you might put the customer out of business.\u201d By using Collabrance, Documation mitigates that risk.<\/p>\n Leading providers like Collabrance and Continuum offer resources beyond a technology platform and outsourced services. They have a vested interest in their partners\u2019 success, so they also offer best practices templates, advice for building business plans, and other information resources. Using a managed services platform not only makes costs more predictable, but also provides guidance for establishing resource needs. Outsourcing also lets you automate parts of the IT management process, including network monitoring, system updates, and predictive maintenance.<\/p>\n Michael Amiri, Continuum<\/p><\/div>\n When Documation first considered managed IT services, they realized they were looking at a significant investment, particularly in the right personnel. \u201cYou need boots on the ground,\u201d said Mr. Woolfolk. \u201cWe looked at the full head-count and how many people we would need to hire.\u201d The company partnered with Collabrance to outsource services, reducing in-house hiring and Documation\u2019s up-front investment in managed IT services.<\/p>\n \u201cContinuum provides a blueprint for programs and specifics to help dealers who are transitioning into IT systems, whether it\u2019s technology, people, or the processes between them,\u201d said Mr. Amiri. For example, Continuum offers a dealer launch program that does \u201call the heavy lifting\u201d for dealers to get ready–marketing, sales, pricing, proposals, compensation, margin forecasts, and commissions. The services that Continuum supports can be white-labeled, so that the dealer\u2019s brand is protected.<\/p>\n A dealer can go to market with managed services more quickly and with less financial risk. \u201cDue to a time-tested launch plan, dealers don\u2019t have to start from scratch,\u201d said Mr. Amiri. \u201cWe\u2019ll arm sales teams with the right kinds of tools to enjoy success immediately.\u201d<\/p>\n Finding a partner requires a lot of due diligence, because it\u2019s hard to change a tool or support stack once it\u2019s in place. ProSource went through a trial-and-error process with several different tools before it settled on the Continuum product. \u201cA lot of them created more work for us,\u201d said Mr. Loeb. \u201cWe were getting hundreds of alerts, and most of them were not anything we needed to know about.\u201d<\/p>\n Some OEM partners provide managed services, notably Konica-Minolta\u2019s All Covered and Ricoh\u2019s mindShift. Hewlett-Packard\u2019s Managed PC and Print Services might be the largest of them, and it offers the opportunity for its channel partners to share in that business. \u201cA dealer might have a [managed services] customer in the Pacific Northwest that has an office in Texas,\u201d said Mr. Weir.<\/p>\n \u201cThey have the ability to service the customer locally, while we manage the Texas office.\u201d HP partners can also resell HP\u2019s service offerings or earn a commission through referrals.<\/p>\n Earn the Customer\u2019s Confidence<\/strong><\/p>\n Selling and fulfilling managed services requires a much more intimate relationship with your customers. \u201cWe are more involved with our customers on their business goals,\u201d said Mr. Loeb. By understanding what they are trying to accomplish, a managed services provider is better placed to build and maintain an IT infrastructure that will help their customers achieve their goals.<\/p>\n For instance, ProSource works with its managed services customers to build a five-year technology roadmap that aligns with their business goals. That plan is reviewed every quarter with the customer to avoid surprises. For example, if a server needs to be replaced, this process ensures that the customer knows well ahead of time and can budget accordingly.<\/p>\n At first, you might have an easier time selling managed services to new customers, as Documation discovered. \u201cOur current customers were more hesitant,\u201d said Mr. Woolfolk. \u201cSome had never heard of managed IT services before.\u201d They also questioned an office equipment dealer\u2019s ability to provide those services, much like Documation\u2019s own internal sales team. With new customers, it was easier to have a conversation about the company\u2019s full range of capabilities.<\/p>\n Keeping the conversation focused on the business and goals will help earn trust. \u201cDon\u2019t talk technology, talk about what tech does,\u201d said Mr. Grimm. \u201cIt doesn\u2019t matter what brand is on the firewall, just that it keeps the security threats out.\u201d<\/p>\n <\/p>\n Do\u2019s<\/strong><\/p>\n <\/p>\n Don\u2019ts<\/strong><\/p>\n Providing managed IT services has been a boon to many office equipment dealers. In some cases, it has even saved the business as demand for printer and copier sales and services decline. It\u2019s a natural fit, because supporting networked printers and copiers gives dealers insight into their customers\u2019 network infrastructure. That and their relationship as a trusted service provider puts office equipment dealers in a unique position to effectively provide IT services to their customers. The fit and success of others does not mean it will be easy to provide managed services. Like any worthwhile opportunity, it requires a lot of thought, research, planning, and investment. If you don\u2019t understand what to expect and fail to prepare accordingly, you risk pitfalls and low returns. ENX spoke with a number of dealers with successful managed services programs. We also interviewed companies that provide support and software for dealers\u2019 managed service offerings. From them, we learned what they did to succeed in managed services, as well as some common mistakes that dealers should avoid. Ask Yourself \u201cWhy?\u201d The reason you are getting into managed services makes a difference. \u201cA lot of dealers got in from a defensive as much as an offensive perspective,\u201d said Doug Grimm, VP and GM of Collabrance, which provides a technology stack, service desk outsourcing, and other resources that enable dealers to provide managed services. \u201cHe who owns the network will own all output devices. If that\u2019s the only reason, the focus and determination to succeed may be not as great as those looking to diversify or raise the valuation of the business,\u201d he added, noting that the office equipment businesses that also do managed services often sell for more money when acquired. Providing managed services also allows dealers to get more intimate with their customers. \u201cSome dealers want to go deeper and wider with their customers rather than get new customers. Managed services is a natural fit,\u201d said Mr. Grimm. All this translates into gaining a competitive advantage. Everyone we spoke with said that dealers are not only getting more revenue from existing office equipment buyers, but also earning office equipment business from new managed services customers. That\u2019s especially true for those already offering managed print services. \u201cDoing both print and PC enables channel partners to move up [the customer\u2019s] stack, adding more and more value over time,\u201d said Mr. Weir, General Manager and Global Head of Print Services for Hewlett-Packard. \u201cFive years ago, [dealers] were asking \u2018What is this, and why should it be relevant to me?\u2019 Now they know exactly what managed services are and their role in diversifying revenue,\u201d said Michael Amiri, director of dealer services at Continuum, a provider of outsourced IT services. \u201cIf [dealers] are not doing it now or have a plan to launch soon, they are a little bit late to the game.\u201d Assess Your Potential for Success Providing IT services is quite different from selling office equipment. It requires its own approach to marketing, sales, and support. \u201cA lot of the things that made dealers successful will not make them successful in managed services,\u201d said Lindsay Dick, director of sales for Collabrance. The technical support that dealers or IT VARs provide is often based on the break-fix model, where they only hear from the customer when there is a problem. \u201cThat\u2019s not a scalable model,\u201d said Jeff Loeb, VP of operations at ProSource, an office equipment dealer in the Midwest that offers managed services. You can\u2019t predict demand, he pointed out, and once you solve a problem, you\u2019re \u201cat zero again\u201d with that customer. Another issue with the break-fix model is that it does not align with the needs of the customer, who is looking for a trouble-free operation, said Mr. Loeb. Instead of break-fix, the managed services model is one of monitoring, managing, and maintaining. It offers more value, not to mention an ongoing revenue stream for the dealer. \u201cWe look for dealers who want to grow, scale, and invest in managed services like it\u2019s more than just another line of business,\u201d said Ms. Dick. The company considers dealers that have at least $5 million in revenue as good partner candidates. \u201cCertainly we have partners that have less than $5 million in revenue, but typically those partners aren\u2019t willing to make the investment to make it scale,\u201d said Ms. Dick. For example, Collabrance expect its partners to invest in a dedicated sales person and a technical staff to handle issues that can\u2019t be taken care of remotely. \u201cPartners who have started other ancillary businesses and have been successful with them have greatly enhanced our success rate,\u201d said Mr. Grimm. These partners have already gone through the process of assessing the needs of starting a new line and making it work with the core business. Commitment to managed services at the top of the organization is another success indicator. Collabrance looks for C-level commitment in its potential partners. \u201cWe look at how involved they are. From the top down, what is their commitment to getting managed services off the ground? What is their ability to make strategic changes?\u201d said Ms. Dick. \u201cSomeone needs to own the IT services deliverables, manage sales forecasts, and make sure [the dealer] is ready,\u201d said Mr. Amiri. The dealer sales team, along with the deliverables owner, will be driving a more diverse conversation with the customer, and someone needs to frame that conversation and make sure it is delivered consistently and accurately. Focus and Pick a Sweet Spot The range of managed services a dealer might provide is large. They include network management, help desk, back-up and recovery, website development and management, and hosting. Each service requires its own in-house expertise and support infrastructure, all of which comes with overhead. As much as 90 percent of those services will be done remotely. The more services you provide, the greater the investment and risk. If you spread yourself too thin to properly deliver everything, customers will eventually seek other providers. \u201cSome dealers try getting in […]<\/p>\n","protected":false},"author":115,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1641],"tags":[],"_links":{"self":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/18793"}],"collection":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/115"}],"replies":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=18793"}],"version-history":[{"count":7,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/18793\/revisions"}],"predecessor-version":[{"id":18806,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/18793\/revisions\/18806"}],"wp:attachment":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=18793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=18793"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=18793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Lindsay](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/Lindsay-Dick.jpg\")
![\"Jeff](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/Jeffrey-Loeb.jpg\")
![\"Preston](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/Preston-Woolfolk.jpg\")
![\"Michael](\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2016\/06\/michael-amiri.jpg\")
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