Tuesday, January 17, 2012

2012 - The Year For Managed Services

I know many people are still break/fix. To be honest, I don't know how they survived the last 3 years.

For those who adopted a managed service model immediately before or during the current recession, it has been a life saver. If you have even one or two clients who prepay for services on the first day of the month, you know what a boost that is for cash flow. It's nice to know that some piece of you nut is covered no matter what else happens.

Now imagine having 100% of your clients on managed services. All the money flows in on day one. The only variables are product sales (hardware/software) and project labor. The core revenue of you company is set.

Believe me, this model reduces stress AND makes it easier to run your company. Regular maintenance might be boring, but it dramatically reduces other work. Maintenance can be scheduled. Most of it can be done remotely. When you do start work on a client project, try to clean up all the tickets they have in the system. Thus the work just flows.

For MSPs that went into the recession with a 100% MSP model, the experience has been a gradual tightening of the belt. As clients slowed down and laid off employees, the per-desktop pricing model reduced their I.T. expenditure . . . and your revenue. Unlike the break/fix crowd, clients can't cut spending to zero and just wait til things break. So there was a gradual reduction in revenue and clients reducing staffing a little here and a little there.

I firmly believe that we'll see a reversal of that in 2012. It won't be fast, but clients will slowly add a desktop here and an employee there. One. One more. One more. In this scenario - with no change in your service agreement - clients will begin paying you more. As they add employees, the per-desktop pricing model will gradually increase your revenue.

We did sales during the draw-down in order to maintain revenue. We needed a few extra clients in order to counteract the reduced revenue from client reductions in force. Now, we have a stronger base. And as clients add desktops, we expect to see a gradual increase in revenue.

I am frequently asked, "Is it too late to get into Managed Services?" Absolutely not. In fact, as I wrote to someone yesterday, I think the managed service model is THE model of the future. It is becoming the default process for delivering technical support. And there are some very clear parallels with other support entities out there.

My favorite adviser on MSP Sales and Marketing is, of course, Robin Robins. She loves to give examples from other service industries, such as heating and air conditioning. These folks do a great job of marketing seasonal maintenance. They'll tune up your heater and your air conditioner. They'll tell you to change your filters. Then they'll put their sticker on your water heater and air conditioner. And when you need service . . . who ya gonna call?

We see the same model with window cleaners and even carpet cleaners. They ink a deal to provide regular service. Of course they get other work as needed.
And they serve their clients under contract before they serve "strangers." In fact, that's a big mantra of the managed services crowd. Think about what happens the first time there's a big heat wave and all the marginal AC units fail. Clients with maintenance agreements get priority service while strangers wait and sweat.

So, managed services is the emerging default model for service delivery. For us and for other companies that provide service.

There will always be break/fix companies. And they will struggle more and more each year.

It's never too late to adopt a successful business model. Managed Services is that model. And 2012 will be a great year for anyone who's on board.

What does your year look like?


Two Great Managed Services Resources:

Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services by Karl W. Palachuk

- Still the best Quick-Start Guide to Managed Services!

Now only $39.95 at SMB Books!


Managed Services in A Month by Karl W. Palachuk

- Check Out the #1 ranked Managed Services book at Amazon!

Buy it as a printed book or ebook!

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