I’m a firm believer that managed service providers (MSPs) must offer “feet on the street” and face-to-face interaction with customers, otherwise you risk losing close, long-term relationships. Even if you offer software as a service (SaaS), you need to force yourself to visit customers regularly (once a month to once a quarter). That’s where the “software plus service” or “hybrid” business model comes into focus.
In the hybrid model, you’re still installing and maintaining key on-site IT components for customers — their network infrastructure, appliances, etc. Although I’ve written about the hybrid model a bit, Curt Hall offers some new thoughts and perspectives in this blog entry. Hall caught my attention because he covers the pros — and the cons — of software plus service, especially as it relates to big software companies serving enterprises.
I realize most of our readers are not working on big SAP enterprise projects (an area that Hall covers), but I do think small and midsize MSPs face some of the same challenges that SAP, Microsoft and others are encountering.
Posted In: Software as a Service and Hardware as a Service
Tags: Curt Hall | Microsoft | SaaS | SAP | Software as a Service and Hardware as a Service | software plus service
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Absolutely, Joe. The majority of Logicomm’s wins are significantly tied to our ability to establish and maintain relationships with our clients. Client facing time is an item in our budget.
That approach separates us from the larger shops who are located hundreds or thousands of miles away, and has prevented commoditization of our services.
Given the challenges, including costs, of attracting new clients, customer retention is critical to the success of any MSP, and remember, that in spite of all the nifty tools out there, clients are paying for access to YOUR expertise (and the occasional free lunch:)).
Jim: You earned my quote of the day with that line about “client-facing time is an item in our budget.”
I agree. Even though you can deliver the application over the wire, the business relationship that support the decision to change to the SaaS model and to successfully use the technology still requires people to work with people. Because the economic model is not a one-time purchase transaction, the long-term retention of customers is the key to making SaaS work — the real profits come in year 4,5, and 6 of using a SaaS application for both the customer and vendor.
It’s good to hear the hybrid “software plus service” model is getting some traction. Since there was many solutions focused on system-level monitoring and maintenance for business continuity sake, we believed there was room for higher-level/value reporting related to ensuring regulatory compliance/best practice and documenting same, promoting network quality assurance and enhanced executive planning. This framework would enable the truly proactive-thinking, and acting, service providers the ability to expand their discussions and role beyond the IT department and into the executive suite. Who will be the sage to venture forth from these safe confines and start having executive talks? Definitely not the guys who like to quote a price and resell other people’s boxes. For those who want go above and beyond the monitor/response/rack/stack/break/fix mould, hybridization is worth a look. Scott W. Smith, CEO Congruity Technologies
Joe,
MSP’s need to better understand the specific needs of each client so that this ongoing “face-to-face” interaction creates value in building & sustaining long-term relationships. This includes Trends in Technology, Thought Leadership, Best Practices & Networking to other similar companies…..as well as regular Status Meetings that review performance & SLA’s. There remains a fine line between bundling standard offerings for scale and growth & personalized 1-1 service.
Just my thoughts…..
Chet Barnard (VP Managed Services - Managed Technology Partners……. formerly CBE Technologies)
Chet’s point is valid. However, I think MSPs also need to step outside their “technology box” and start having business-level discussions with their customer stakeholders. Technology is just a tool. Ideally, it should help foster and simplify achieving the company’s goals and do so in a secure, compliant and cost-effective manner. Technology is not the endgame. Achieving company objectives is: increased sales. More customers. Reducing costs. Improving employee productivity. Too often the MSP focus is exclusively on the quality of technology. Is it patched? Is it performing ok? Is there enough bandwidth? Is SLA being met? More importantly, does IT provide an ROI? Is it being used to support or undermine the objectives? The latter points are what stakeholders and investors need to understand. By helping them see how IT resources are used and achieve their directives, both the MSP and customer share in the enlightenment and the benefits therein.