THE COMING COMMODITIZATION OF MANAGED SERVICES (Part II)
by Bob Vogel, CMO of Autotask
This is a follow up to my last guest post on this blog, where I wrote about (what I believe and predict will be) the coming commoditization of basic IT managed services (e.g. patch management, monitoring).
In that post, I suggested that the IT service providers who are going to come out on top, in my view, are the ones who develop a clearly identified specialty – either in a proprietary business solution, or in one or more vertical markets – that they can use to establish themselves as “the business technology gurus” within their areas of specialization.
In my role at Autotask Corporation, I have had the opportunity to interact with thousands of IT service providers during the past few years. And one of the things that I have learned is that while, broadly speaking, they are all in the same line of business – providing outsourced technology services to support the businesses of their clients – there are both subtle and obvious differences among them.
As Mike pointed out in his comment to my previous blog, for the longest time there really have been no standards in this industry. Today ITIL is starting to get some traction, as are other best practices that are being developed and shared by a growing number of MSP training organizations.
But still, the vast majority of solution providers are entrepreneurs who either by design or by happenstance have found themselves in business. The services offered are more driven by their familiarity with specific products, their relationships with specific vendors, by their own skill sets and those of their staffs, and by the requests/demands of their clients.
So many aspects of these businesses are grown organically and developed on an ad hoc basis, rather than by design. It is a rare company in this space that starts from ground zero based on a carefully developed business plan. Most have found success through incremental decisions, made at the moment, to pursue specific lines of business, hire specific types of people, and to offer specific types of services… often being driven by existing and new clients won through referral, rather than targeted marketing programs.
Sound familiar?
There’s nothing wrong with running and building a business opportunistically, as long as you are doing it with your eyes wide open – and at least have a specific direction in which you are headed. As I pointed out in my last post here, there is strong evidence of the rapid proliferation of managed services. But “managed services” is a very broad term with varying definitions … and from what we’ve seen so far, there’s a wide mix of services falling under that umbrella. This is complicated by the entrepreneurial nature of most IT service organizations, which are generating hugely variant business terms and SLA expectations attached to those services, along with widely varying pricing methodologies.
That’s why, in today’s world, one solution provider’s managed services offerings may seem very different from the next guy’s. But that won’t last for long. Services like hosted MS Exchange, virus protection, remote back-up, and remote monitoring are quickly becoming standard managed services offerings. And because they are mostly product-centric, these are the ones that are going to be easiest for your clients to compare pricing for… and, for that matter, easiest to buy from someone else on an a-la-carte basis.
Worse yet, as IT companies demand more support from their software and hardware vendors, meanwhile missing the sales numbers expected by these vendors, you are going to see a steady increase in the number of those vendors that decide to go direct to your clients.
So, why should your clients buy these services from YOU? If you’ve done your job with your clients, and established yourself as their trusted business technology advisor, AND have consistently delivered excellent service at appropriate prices, your client probably isn’t even looking at, or listening to, your competitors. But it is up to you to continue to bring opportunities and recommendations for new services to your clients, and keep tabs on the things that they may be thinking about, or exploring.
But what if your clients need a service that currently is not in your menu of offerings – whether it be a recurring managed service, or a one-time specialty project? The answer, of course, is to outsource it. The only question is whether you are going to leave it to your customer to find their own supplemental provider to get the work done — and risk losing control over the environment, and worse, opening the door for a competitor to steal the account – or whether YOU outsource the project to your own partners, and maintain control of both the project, and the overall customer relationship.
This is why outsourcing is such a critical part of every solution provider’s future. In my next post, I’ll talk about the things that Autotask Corporation is doing to create the tools and the infrastructure to allow virtually any solution provider to outsource to, and partner with, any other solution provider or vendor or even their clients.
