IT and Business Insights for SMB Solution Providers

The Move to Managed Services: A Cautionary Tale

The switch to managed services entails a complete shift in your operations. If you don’t embrace that, you’re setting yourself up for failure. There is no magic bullet. By Jon Nitto

When we started hearing about managed services, it seemed like a natural fit and progression for us. In our eyes we were doing managed services, just without the automated tools. So we bought a tool and thought we were done--we would all be working less and making more money.

But the opposite happened. We had client and employee issues, because we didn't understand or embrace the process. And the reason we couldn't embrace it was because there was no process. We just said "go" and stopped there. So for a year and a half we were frustrated, wasted a lot of money, and missed out on opportunities because we had failed to clearly communicate our message to our clients and to our own team.


So it came down to, scrap the tool or embrace it. We decided to move forward and evaluate what we were doing and where we wanted to go. To make that happen, we took a significant step back and made a serious, year-long commitment to the project. That is, the CEO, sales director, two of our techs, and I met every day to develop a plan. We couldn't afford to pull all of our people out of the field and involve them in the daily details, which was really unfortunate, as we would later learn.

As a starting point, the tech team proved to us what the product could do. Then we came up with a marketing plan and some collateral to use with existing clients. Once we felt we had a solid product and reasonably good marketing, we did our five-year business plan, including sales, operations, marketing, PR, everything--with managed services at the center. It wasn't easy, and we needed lots of input from other partners, our distributor, and even the vendors at our distributor's trade shows.

 We worked out most of the pieces over the course of months, but lacked a value proposition. And until you understand that the switch to managed services is a complete shift, there's no way you can take it to a customer and show them value. How do you explain the value of reducing your on-site time from 20 hours a week to two? That's not a value proposition. That's you trying to make more profit from your customer. We knew what we were doing for our clients. We just had to position and articulate it to remove any doubts that we could provide an even higher level of service than before. In the end, it wasn't that hard. We simply didn't think we had to do it.


By this time we felt comfortable with the product, our salesperson was out uncovering opportunities, and we were trying to generate excitement in our own organization with the people who were not part of the change. Unfortunately, talking about how we converted a $2,000-a-year customer to a $3,000-a-month customer wasn't the motivation we needed. There was some resentment because they felt they had kept the company running and the clients happy while we met day after day.

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