How to Package Your Managed Services Offering

Transcription

1 Not sure how to start building your managed services offering? Discover how different approaches to packaging can demonstrate the value of your IT services. 1

2 Building Your Service Offering Whether you re currently running a VAR or a break-fix business, you need to have a vision before you move into the managed services space. Where do you see your managed service business in the next year, the next three years, and even the next five years? How many customers do you want to have? What services do you want to include in your portfolio? Most importantly, level of service do you want to offer? One of the most critical steps to becoming a managed service provider is identifying which services you should include in your offering and how you should package them. Before you start adding services to your offering, there are three areas you need to consider: your technical strengths, your vision, and where the industry is headed. One of the most critical steps to becoming a managed service provider is identifying which services you should include in your offering and how you should package them. 2

3 Technical Strengths Whether you re a team of one or a team of 100, it s important to know your company s strengths and weaknesses. By evaluating your own performance, as well as your technicians, you can identify opportunities for your business to grow. For example, your technicians might not have experience with managing cloud-based applications, but they might have more experience with backup and recovery or endpoint security. If you understand your technicians and your own strengths, you ll have a better gauge on the services you could start introducing. Services Most MSPs offer The mix of services will vary from one MSP to another, but there are a number of offerings that most MSPs have in common. In a study conducted by The 2112 Group and Barracuda MSP, the top 10 managed services that respondents reported offering are network security, cloud-based applications (SaaS), endpoint security, on-premises servers, cloud-based infrastructure (IaaS), network monitoring and management, productivity applications (e.g. Office 365), mobile device management, business applications, and backup. This list should give you some good options for services you can use to start your offering. A successful managed service approach doesn t have to be all or nothing, though, so take the time you need to build your managed service business at your own pace. 3

4 Planning Your MSP Vision How to Package When you re starting your transition to an MSP model, it s essential to figure out if you want to add services all at once or slowly. Adding services all at once can help you get clients on board with multiple solutions right away. In the book Managed Services in a Month, Karl Palachuk suggests that break-fix providers should go all-in with a managed service approach. As he puts it: You don t want to pick up every nickel you find. Instead, he urges providers to break this habit and look for new business. Every hour you spend working with break-fix cheapskates is an hour that could be used to find a managed service client willing to spend at least $1,000 a month with you, writes Karl. Break-fix work is short-term income, whereas a managed service model provides your business with predictable monthly recurring revenue. This approach can work for your MSP business, but you need to make a commitment to yourself and the business. This also presents a few potential downfalls, including losing short-term revenue that you might need to invest back into the business, and your technicians might run into support issues if you introduce too many new services at once. Every hour you spend working with break-fix cheapskates is an hour that could be used to find a managed service client willing to spend at least $1,000 a month with you. Source: Karl Palachuk, Managed Services in a Month 4

5 On the other hand, adding solutions one at a time can help you and your technicians become more comfortable with providing each managed service to customers. This approach can help you smooth out any bumps in the road, so you can be successful when you decide to introduce another new solution. However, this path to becoming a full-fledged managed service provider is longer, and you could lose potential customers by not being a one-stop shop. If you choose this approach, it s important to plan out which services and solutions you ll add next and which ones you ll add further down the road. Either approach could work for your managed service business, but it s important to decide which one best suits your individual goals and needs. Having a vision for your business is crucial to finding managed service success. The average channel partner whether they call themselves VARs, MSPs, or cloud service providers earns up to 30% of its profits from recurring revenue. Source: State of North America Managed Services, The 2112 Group 5

6 Only 15% percent of the IT providers surveyed offer a security service today, but 62% are planning to add security services in the next 12 months. Making Room for Security With today s growing cyber threats, many managed service providers are looking to implement a base level of security for their SMB customers. While most businesses have basic firewalls or security filters in place, this is simply not enough anymore. The managed security service trend is growing as a result. According to a report from The 2112 Group and Barracuda MSP, only 15 percent of the IT providers surveyed offer a security service today, but 62 percent are planning to add security services in the next 12 months. This presents a tremendous opportunity in the channel. While you may not feel comfortable offering security services today, consider whether or not security services fit into your managed service vision. Do you have the technical talent and resources to offer these services? Would your SMB customers be interested in adding these services with you? Evaluate where your business currently stands and decide if this is something you would like to add down the road. State of North America Managed Services, The 2112 Group 6

7 Packaging Strategies When it comes to selling your managed services portfolio to prospective SMB customers, you need to have a consistent, easy-to-understand approach to explaining what you have to offer. Most providers offer their services either à la carte or as a bundled or tiered offering. Each approach has its own pros and cons. We highlighted the advantages and disadvantages to help you determine which approach is best for your business. À la carte À la carte is a popular packaging strategy for IT providers that are just starting out. À la carte pricing enables SMB customers to pick a single service or multiple services from your list of solutions to build their own custom service package. Advantages: This model gives customers flexibility to receive only the solutions and services they want, so it can be a great way to get new customers on board. An SMB might be hesitant to sign on for multiple solutions at once, but they may feel comfortable adding one service at a time. This allows you to build a trusting relationship with them, and they could be open to adding more services to their contract down the line. Disadvantages: As you scale your business, an à la carte offering can complicate your day-to-day processes. The more services and solutions you re offering this way, the harder it will be for your sales team to deliver accurate pricing, your technicians to know which solutions and services they re responsible for from one customer to the next, and your billing team to ensure that monthly invoices are correct. À la carte offerings can also lead to gaps in coverage because most SMBs don t know what services they truly need. For example, they might understand that they need a firewall, but they might decide to skip spam filtering or security services leaving them open to vulnerabilities. 7

8 Bundling your solutions allows your technicians, sales representatives, and customers to have clear guidelines for what s included and what isn t. Bundled Services. Packaging two or more services together to create a service bundle can simplify sales and billing for you as an MSP. There are multiple approaches you can use to bundle your solutions. For example, you could offer a data protection bundle with managed backups, archiving services, firewall, and spam filtering. Many MSPs use a three-tiered approach with gold, silver, and bronze packages, for instance, that offer different levels of coverage. For example, the gold package could be all-inclusive 24/7 support with your services, silver might be 24/5 support, and bronze could be business-hours-only support. Advantages: Bundling your solutions allows your technicians, sales representatives, and customers to have clear guidelines for what s included and what isn t. Instead of checking a list of supported services, they can work on getting the problem resolved. Another advantage is simplified billing. Instead of creating customized bills for every single customer based on their individualized mix of services, which can lead to confusion, you can streamline invoicing because every customer will fall into one of just a few buckets. You ll also know that your SMB customers have at least the basic IT services in place. By creating a baseline service bundle, you can ensure that all of your customers have spam-filtering, security, firewalls, and so on. Often, when SMBs are picking out services à la carte, they ll forego services based on price rather than how the service will impact their organization. However, if the service is bundled into a tier, they are more apt to be happy with the added value of the service rather than viewing it as an extra charge. 8

9 Disadvantages: While this packaging option can streamline your offering for SMB customers and help your business internally, customers might feel they have fewer choices. Another issue you might run into is SMBs that already work with another provider for one of the solutions in a bundle, such as firewalls or security. To keep the customer happy, you might decide to make a one-time exception, remove the service from the bundle, and give them a small price reduction. Another way you can approach this is to tell the customers that bundles are non-negotiable, whether they use every service or not. For the most part, you want to keep your bundles as standard as possible. Whatever you decide to do, train your technicians and sales team on what the protocol is when an issue like this arises. Demonstrating Value When you re communicating with prospective customers, be sure to articulate the value your services provide. What can customers expect to receive from you if they decide to enter a managed service contract? How will you help make their life easier or make their business more efficient? Think about what you have of value to offer clients and find a way to highlight these areas of expertise. Consider using case studies or testimonials from customers to help make your case and demonstrate the value you give customers as a managed service provider. The more you can highlight your expertise and knowledge, the more comfortable SMB customers will be investing in you and your team. For new managed service providers, this piece might not happen overnight, but keep it in mind as you continue to grow. 9

10 Key Takeaways Building Your Service Offering Having a clear vision of what you want to achieve is the most important step to building a successful managed service business. Knowing your team s technical strengths can help you determine which managed services to introduce. Stay on top of IT trends, such as selling security services, and how your SMB customers spend their budgets, so you can take advantage of those opportunities. Packaging Strategies You need a concrete plan for how you will introduce managed services: one at a time or all at once. Offering à la carte pricing gives customers flexibility. Selling bundled services helps you streamline day-today operations and ensure all customers have a base level of coverage. Decide which is best for your business. Focus your conversations in terms of value you deliver, not commoditized services. 10