Traditional office equipment dealers that are serious about growing their business are always looking for new customers, new products, new services—new revenue streams, in short. Managed IT has been a thing in the document imaging industry for a while now, and although countless dealers have not only embraced but also been successful with it, IT can still be a pain point for others. With the help of the Technology Assurance Group’s Brian Suerth and Dale Stein, we offer up the second entry in our series on the many aspects, facets, and properties of managed IT.
Hurdles, obstacles, roadblocks—all things that need to be overcome to reach the next level. So, in the spirit of that age-old question about big challenges, let’s put a managed IT spin on the topic!
Even the Yellow Brick Road Has Pitfalls
While it can be exciting to start a major initiative in the workplace, such as entering the production arena or improving an MPS program, beyond the optimistic projections and positive outlook, challenges abound. Always. A lotus can’t grow without mud. And when it comes to managed IT services, there’s no exception: Transitioning to provider status can certainly be a daunting task.
Now. At ITEX 2019, in the “5 Steps to Becoming a Managed IT Services Provider” breakout, Brian Suerth, President of TAG, detailed the process in an information-packed hour—here it is at the high level…
1) Define Your Solution Set
2) Implement a Professional Services Automation Software
3) Evaluate Your IT Staff
4) Adopt a Proven MSP Sales Process
5) Develop a Customer Onboarding & Management Process
Each of these parts has its own set of challenges, but the entire scope of what it means to play in the managed IT game has to be addressed from the outset. “It’s a huge jump from being a break/fix shop to transforming business into one that truly manages IT assets, and of course it’s an even longer leap if the company has never been in the space,” Suerth said. “About 80% of office equipment dealers are not in IT because they don’t know where to start, and about 80% of dealers that have an established IT business are losing money at it. A critical point is that dealers need to be fully aware of how to profitably price IT services to achieve 20%-plus EBITDA, but the reality is, most do not and fail to ever hit double digits.”
Another challenge is figuring out how much dealers can expect to scale internally versus what they can achieve via outsourcing. According to Suerth, the classic example is organizations that outsource their Network Operations Center and helpdesk tend to scale faster, and with less risk. Those who keep it inhouse have to recruit, hire, train, and, at least some of the time, fire staff.
Back to the list above. The first step comprises evaluating potential products and selecting the right partners. As a dealer creates an IT portfolio, how many cybersecurity, business continuity and disaster recovery, or cloud-based solutions is enough? And will the company bring any, some, or all of the offerings inhouse, or will it simply outsource the lot? “TAG has analyzed over $5 billion dollars of financials over 20 years in the technology space, and our Members who outsource show a 20 percent gain in profitability and scale at a much more rapid pace,” Suerth said.
Outsourcing enables dealers to keep IT staff headcount low to focus on higher level projects, while leveraging outsourced technicians from companies such as Continuum to handle day-to-day needs. “Very few of our Members have kept it internal,” Suerth commented. “It’s an exciting time for dealers to embark on this journey, and if done properly they enjoy a new revenue stream.”
Dealers must deliver an exceptional customer experience—no different than what they have done on either the hardware or managed print side. They need to conduct quarterly reviews with customers to show them how technology can advance business. Because if a dealer doesn’t master communication, it won’t have that client in its stable for very long.
The Password Is…
There can be a multitude of technical roadblocks when delivering managed IT services. Obviously. Dealers with the experience and expertise have the ability to conquer problems quickly, sure, but one thing stands in their way at customer sites right from the beginning, far too often.
For an IT provider to come into a location where the client isn’t particularly happy with its current situation, the network password is the gateway. Plain and simple. Truth is, though, that many IT firms keep those credentials to themselves as a way of protecting—read: controlling—accounts. So, like the Billy Joel song, it morphs into “A Matter of Trust”, just not in the same rollicking fashion.
“Listen, a dealer’s main objective is to show a prospective customer what the current IT provider isn’t doing—it’s imperative to prove that a chasm in the service exists,” said Dale Stein, Co-Founder of TAG. “A network analyzer can figure things out in 20 minutes, but without the password, the company can’t speak to the chasm and it won’t be able to build a compelling story.
“We’re talking about the key to the kingdom,” Stein continued. “Businesses need the network password, it’s their livelihood. We tell dealers we work with that it’s best practice to obtain the password and then, even before the account is transferred to the new company, to share it with the client. Trust is a two-way street.”
So, what are some of the bigger issues that IT service providers miss handling? They don’t actively manage Active Directory, they fail to perform patch fixes, they leave vulnerabilities to security breaches more open than the Autobahn with no cars on it, and there’s no due diligence when it comes to the dark web. “The risk factor can be very high in these cases, as much as 97 percent,” said Stein, who added that in one instance with a customer, it was discovered that the organization had failed to protect over 5,000 credit card records because they hadn’t been encrypted.
Yikes!
Key Point(s) Summary
It really is a philosophical conversation: On the surface they’re challenges, but when the script is flipped 180 degrees the result is opportunities. The owner and the senior management team must be committed to creating a new line of business as well as building a plan to address the entire “5 Steps to Becoming a Managed IT Services Provider” process. Successful adoption and deployment of managed IT services starts at the top, and it’s easier today than ever before to enter the space. And in this arena, technical expertise is also part of the winning equation.
The net-net: Organizations have challenges, but challenges are good for growth.
Stay tuned for the next installment in the series!
Keep Reading
All Things Managed: The IT Services Story Part 1 (Acquire, Build, Partner)
All statistics courtesy of TAG, a managed IT “brain bank” that’s been around for over 20 years. The company has its own IT services business and runs the Association of Managed Technology Services Providers, while also offering education on topics such as sales training & management and financial analysis & industry benchmarking, as well as assisting in mergers & acquisitions and employee hiring & retention. With over 400,000 customers in approximately 140 markets across the United States and Canada, the Technology Assurance Group is a powerful resource for all things managed IT.