Managed Services. Your 10-Week Guide to Becoming an MSP

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1 Managed Services Your 10-Week Guide to Becoming an MSP

2 Managed services is one of the fastest-growing segments in IT services. U.S. revenues associated with the managed services market are predicted to grow from $34 billion in 2013 to $51 billion in i -THE INSIGHT RESEARCH CORPORATION As product margins decline and it becomes more difficult to sustain a break/fix model of business, it s easy to see why many IT service providers have made the transition to managed services. Managed services is the ongoing management, monitoring and maintenance of networks, software, hardware and related IT services by an external organization. Managed service providers offer detailed service level agreements (SLAs), which can include provisions for performance, security, efficiency, accountability, response time and upgrades. Managed services can provide security in an uncertain market. Becoming a managed service provider (MSP) has become a lifeline for many companies, because it generates a constant stream of recurring revenues. An MSP bills monthly for ongoing services based on the level of service it provides instead of relying on an unpredictable income from product sales, computer repairs and short-lived projects. Making the transition to managed services requires a systematic plan with well-thought out steps that range from sizing up the market to retooling your staff. If you re considering becoming a managed service provider, this 10-Week Guide to Becoming an MSP can help. As you read through the guide, keep in mind that the best strategy is to have a strategy.

3 1Review the Market removal and PC tune-ups. If offering managed services is possibly on your horizon, your first step is to determine what services you d like to provide. A great source to help you make this decision is your existing customers. If you ve conducted customer satisfaction surveys, review them to see what services customers have requested. You can also review time logs and past billings to see what tasks can be automated or packaged as part of your SLA. These tasks might include patch or antivirus definition updates, malware If you need more information, talk to your customers and ask what services they need. Take your research a step further and review market research data. This has information about what services businesses typically outsource and is invaluable when determining which services to provide when you re targeting existing clients or new business.

4 Fill in the Gaps 2With so many options available, it might be difficult to choose what managed services to provide. Although responding to your customers needs is important, you also should identify where you have experience and strengths. Services that have the most profit potential can also help drive your selection. Industry resources, such as CompTIA s MSP Best in Class Benchmark Report, can help you select the best potential services for your company. Once you assess your skills, chances are you ll discover some gaps. When that happens, figure out how you will close the gaps. For example, you might develop the skill in-house or partner with another vendor. MSPs often find that partnering is more cost-effective than cultivating the skill or service on their own. Just remember, if you are going to partner, make sure the partner you select has a reputation for performance and values that are consistent with yours. Possible Service Offerings: Remote Monitoring and Management (RMM) Managed Storage Managed Hosting Managed Security Managed Print Managed Communication

5 3Get Ready to Deliver Once you ve chosen what services to offer, the next step is to decide how much to charge. If you think this will be tough, you re not alone. Nearly 62% of MSPs surveyed by CompTIA rated this task as somewhat or extremely difficult. No matter how difficult the task, pricing can t be overlooked. Nearly 95% said arriving at the correct pricing model is somewhat or very important to their success. To create the best pricing strategy, do your research and run the numbers. Determine the cost of salaries, software licensing, office space, utilities and fees paid to your vendor partners. Balance those costs against what you think your customers will pay and compare them against what you think your competitors charge. Assess the skills of your technical and sales staff and provide any training needed, or hire new employees. With a qualified staff and proper training, you can feel confident about delivering consistent services to every client, every time.

6 Automate Essential Functions 4Remote monitoring and management (RMM) and automation make the managed services model work. Remote monitoring boosts profits since a technician doesn t have to visit a client s site to solve most problems. Automation allows an MSP to deliver services profitably and consistently across multiple customers and devices. MSPs rely on RMM software to provide services remotely and achieve automation. The software identifies and resolves issues before they occur to prevent even larger problems later on. An RMM tool can provide a multitude of essential functions, such as monitoring and alerting, asset management, patch management and remote management of servers and other devices. Most MSPs also rely on professional services automation (PSA) software to help them run their business. A PSA solution handles service desk automation, billing, project management, customer account management and other essential functions. When selecting RMM and PSA tools, look for software that is scalable, integrates with other MSP tools and supports your business with training and other resources.

7 5Focus on Marketing When crafting your marketing strategy, create a message and brand that reflects your shift to managed services and highlights the value these services provide. Make sure your clients know they are buying peace of mind and can expect minimum interruptions to their business operations. IT executives suggest that MSPs approach an organization s top executives first. High-level executives always like to hear about initiatives that can cut costs and improve their strategic focus. MSPs should position themselves as business advisors instead of a company that sells equipment and offers repairs. Approach your clients in-house IT team only after you ve won over the business leaders, and make sure you stress the partnership aspect of your new relationship. Be aware that many in-house technicians view managed services as a threat. When creating your marketing strategy, try a balanced marketing approach. While it s important to focus on your website and social media, don t overlook traditional media, such as newspaper ads and radio spots. Tradeshows and conferences also provide opportunities to spread the word.

8 Prepare Your Sales Force 6Selling managed services is different than selling products, break/fix services and projects. The sales cycle is longer, and IT service providers are selling an intangible product under a long-term contract. According to a CompTIA survey, once companies decided to adopt the MSP model, nearly 39% hired new sales reps with experience selling managed services, and nearly 51% retrained their existing sales force. However you decide to build and train your staff, you must compensate them fairly. Some MSPs pay a commission based on a total contract value, while others pay a commission based on gross profit instead of revenue. Once your sales staff is in place, ask them to help generate leads through networking and referrals. Cultivate business and vendor partners and consider joining a chamber of commerce, industry trade group and technology association.

9 Build Value with Solutions 7It s great when you land your first managed services contract. But how do you keep your clients and thrive? Your best bet is to take the time to understand your clients business issues and develop ways to solve them. Here are some ways you can do this: TAKE A STRATEGIC APPROACH. Instead of starting the conversation with information about specific technologies, discuss your client s concerns and goals. ASK ABOUT THE FUTURE. Your client could be considering growing the company through acquisitions or by adding additional services. Be ready to assess the impact and offer solutions. BECOME A CONSULTANT. If you don t already offer consulting services, consider adding them. It s a natural fit for the consultation-based approach of an MSP.

10 Target Your Market 8It s easy to open your doors and post an everyone welcome sign. But narrowing your focus and specialization should be considered. Targeting a specific trade or profession is one way to set your company apart. And, if you stay true to the MSP model and focus on solutions, it makes sense to learn as much as you can about your customers industry. Once you become knowledgeable about one industry, the next logical move is to pursue more business within that industry. Several markets already show great promise to MSPs. Many of these markets are faced with creating or expanding their IT infrastructure because of a growing list of government and industry requirements. This opens the doors for a multitude of managed services, ranging from privacy and security to hosting and archiving. Some active markets to consider include: Healthcare Legal Government Financial Services

11 Build Credibility 9Credentials say a lot about a professional s level of expertise, and IT service providers are no exception. Industry organizations and product vendors offer many ways an MSP can acquire credentials. Credentials can build a client s confidence in your services and provide assurance that you ve met specific standards. Professional organizations, such as CompTIA s Partners Trustmark Program and MSPAlliance, offer business credentials that aren t tied to any particular vendor. Vendors offer certifications that have a more narrow focus and are generally tied to their products. Some technology vendors offer MSP certifications. Credentials are great marketing tools. List your credentials on your website, correspondence and advertising to further boost awareness of your skills and set your business apart from other IT service providers.

12 10 Once you feel comfortable as a managed service provider, it s easy to maintain the status quo. However, research shows that the most successful MSPs invest in new service offerings to improve their margins and stand out. If you keep up Plan for Growth with IT news, you can determine which markets are emerging and shape your services accordingly. Here is a list of growing markets you can consider now: Cloud Computing and Software as a Service (Saas). While some MSPs see computing as a threat, others see opportunities in cloud computing. Many clients need guidance on how to implement a trustworthy and reliable cloud service. Managed Security Services. Small companies may want to turn over their security to an MSP, while larger companies may need to augment their staff. Telecom. The convergence of IP telephony, unified communications and multimedia networking is providing new opportunities for MSPs. Mobile Device Management. Many RMM tools include mobile device management as part of their product offerings, allowing MSPs to easily manage their clients mobile devices and protect them from mobile security threats.

13 Summary By offering managed services, you have the opportunity to become a valued member of your clients team. You ll become more than an IT company selling products and fixing computers by providing consulting and business advice that can help your clients plan and improve their operations. Government regulations and emerging technology often drive a company s IT infrastructure, and as an MSP, you ll be better positioned to support their new and growing demands. Becoming an MSP requires time and financial resources. You may need to evaluate your existing services, retrain your staff and possibly hire new employees. Expanding your marketing and investing in new software tools are also key. Plus, you ll have to make a cultural shift within your company and introduce a new way of thinking to your technical and sales staff. This 10-week guide will get you started, but there s much more to do. The good news is, plenty of industry resources and IT services vendors will help you find and follow the right path. About LabTech Software LabTech Software is the brainchild of a managed service provider (MSP) that struggled with the usual challenges and inefficiencies of a reactive IT maintenance and support model. LabTech its flagship solution was born of the urgent need to eliminate technician inefficiencies and the desire to provide preventive and proactive service. Developed with cutting-edge, agent technology, LabTech is the only remote monitoring and management (RMM) platform created by system administrators for system administrators to automate your IT services and eliminate inefficiencies. For more information, please visit labtechsoftware.com or call George Road, Suite 200 Tampa, Florida labtechsoftware.com Unless otherwise noted, content for this document was adopted from Managed Services. The CompTIA Managed Services Provider Guide A 10-Week Plan to Launch Your MSP Business, CompTIA, i. Managed Services in an IP World: Global Opportunities for Wireless and Wired Networks, , The Insight Research Corporation, April 24, 2013.