Managed Services is So Last Year!

By vmazek
In Cloud
June 21, 2012

Article By Looks Cloudy

So you got your RMM setup, your PSA is all dialed in, and you’re finally ready to get this whole managed services thing rockin and rollin; but then, the whole industry changes.  The managed services model has been around for many years, but has really seen a major surge in momentum over the last 5 years. Spawned by advances in remote technology, lower cost bandwidth, and a need for IT solution providers to diversify their service model; managed services has provided a much needed recurring revenue solution for struggling IT companies.

A big change is coming

Leaders in the industry and media outlets are reporting these changes, but you have to read between the lines, to see the writing on the wall. The introduction of cloud services to consumers has created awareness, and larger vendors like Microsoft have already introduced direct models for products and services, namely Office 365. I was in awe when I saw this introduced at a conference by Microsoft, as they showed an arrow on the screen that pointed to solution providers completely cut out of the opportunity; this was the first time I had ever heard boo’s at an event. This is where the major change is happening. Vendors are seeing the potential with easy web ordering, provisioning, and higher margins, to provide services direct to a more tech savvy consumer base. This coming change happened in the satellite industry and the comparisons to the beginning of what happened in that industry are striking.

The Satellite Story

Satellite companies used to be channel only offerings. Sold through independent contractors, small retailers, and agents; equipment, installation, setup, and service were all provided through these means. There were conferences and events, lavish parties for top agents, and promises that they would never go direct. It started small, introducing big box retailers where consumers could buy service and equipment at a lower price than independent agents could buy it for. This then moved into direct marketing campaigns, essentially competing directly with independent agents, higher expectations on renewing certifications, and larger expected minimum sales requirements, until it was nearly impossible to continue as an independent satellite provider.

Satellite companies today are completely direct. There are a small number of large independent agents and installation contractors that are able to keep their heads above water; but this is mainly due to satellite not being the main focus of the business.

The Comparison

With the crown jewel of the IT industry Microsoft, making some of the same moves, it’s hard not to see the comparison. Anyone checked out  the latest requirements for Gold status? As well, companies like Dell are commoditizing the managed services space and offering direct solutions to consumers. Smaller solution companies are following suit, and as a whole, that writing on the wall seems a lot clearer.

What’s Next?

By no means is managed services over. IT solution providers have time to make necessary changes to stay on top; but with a changing industry some serious thought needs to be put into what’s next. Vendors understand it is important to provide transition for partners and are creating programs to provide commissions for referral, lead generation, and signups. It is recommended to embrace these programs rather than push back, considering that getting something is always better than getting nothing.

What else can be done?

It is time to look at your organization, slim and optimize every facet of the business. Understand the importance of a sales centric team, and have a diversified solution stack that allows you to speak to any potential technology need a client may have. Worry less about complete package solutions as well as all in pricing, and realize that clients are going to have some of their own solutions already implemented. Look for “done for you services” that allow you to focus on bringing solutions to clients, rather than the ins and outs of learning new platforms. Of course you could always move to another country, I hear managed services is really taking off in Australia and the U.K!

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Author: Frank Gurnee