Are You Expanding Into Managed IT? Here's How to be Different.

How smart was your IT partner 10 years ago? You needed a network? They hooked up Microsoft. You needed an email server, they hooked up Microsoft. You needed a CRM or accounting system, they hooked up Microsoft. Today? You pay Google, Salesforce, and yes even Microsoft a monthly subscription. At a certain point, customers will ask the question: what is it again that you do for me? How do you respond?

If you took a sledgehammer and smashed my server to bits inside my dusty server room, I wouldn’t care, apart from a few minor inconveniences and, well the mess it would make. My business’s critical functions do not run on my server. It’s a local backup for files, but those too are uploaded to a cloud server.

Everything I do, when it comes to software, is now subscription based - it’s more than just the monthly payment that is important, it's the “all inclusive” nature of monthly payments. I don’t pay extra for support. I don’t have a maintenance bill. The psychology of a monthly bill subscription changes my relationship with my vendors. As well, this approach causes some “disintermediation” for the managed service provider.

Think back to the earlier description of installing Microsoft software. If your email “went down” who’s fault was it? You had two points of failure, the service provider and the software vendor. When it’s a monthly subscription, and you access software online, your data is online, and the software is maintained in the cloud. If something goes wrong, you can’t really point a finger at the service provider, can you?

Monthly subscriptions to cloud services disintermediate managed service providers.

Managed service providers have a few basic services. They:

  • Manage network security
  • Keep applications updated
  • Monitor and manage hardware
  • Provide disaster recovery
  • Provide advice on software and hardware investments

Why should you care? Well, let's get back to that current service provider, the value-added reseller. Their value-added piece is/was very much tied to the expertise of keeping all of these things running on that dusty server in the broom closet. How valuable is that in a world where your important documents and mission-critical applications are hosted in the cloud? Most of the above basic services of MSPs are actually now managed by the software vendors.

In actual fact, I’d be careful not to give those VARs too much credit, they were the ones that had me cram that old server with software in the first place!

Now, back to hardware. Let’s look at the mobile phone market for a moment. In a world dominated by software and monthly services, why on earth would you not copy that winning formula and paste it into your hardware sales? What would you rather have, an HTC low-end mobile phone or an iPhone X? That’s a no-brainer, of course you want the iPhone. When bundled into a 3-year maintenance contract, the incremental increase is only a few dollars a month.

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If you create packages of high-end printers and laptops that bundle in monthly subscriptions, you’re going to win. Packages are easy to buy. They bake in margin. They bake in upgrades. They shrink the delta between higher and lower-end hardware.