Don’t Get Blindsided by The Managed Services Honeymoon Period

Every managed services provider feels obligated to offer an attractive all-you-can-eat (AYCE) plan that satisfies customers’ needs without compromising profit margins. In his latest article, 3 Keys to a Successful AYCE Managed Services Offering, Rob Merklinger, vice president of Intronis, describes three common pitfalls MSPs can fall into that make it impossible to offer a predictable monthly flat fee service to your customers.

One point Merklinger makes that every MSP has to contend with is what some call the honeymoon period, which is the three- to six-month period that follows the start of a managed services contract, which is often the most turbulent period in terms of extra labor hours and on-site visits required to get the customer’s network and computers cleaned up, fixed up, and updated.

The important thing to remember, says Merklinger, is not to:

“create a long-term fixed-price agreement with a customer based on the state of their IT infrastructure during the “honeymoon”–especially if this is the first time the company is entering into a managed services agreement. Instead, be upfront about the fact that you’re going to need to get their IT environment up to par first so they can experience the uptime you’re both striving for–and that it may take a few months before they start paying a monthly flat rate.”

Already have this one figured out? Be sure to check out Merklinger’s two other tips, which include: “Don’t Become a Cloud Storage Micromanager” and “Watch Out for Oversimplified Managed Services Models.”

 

 

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Choose Your Managed Services Model Wisely

One of the keys to running a successful managed services business entails developing an attractive model that highlights the features and benefits of your services. Rob Merklinger, vice president of sales at backup and data protection vendor Intronis, outlined the five most common plans that MSPs use, in his latest blog titled: Build A Foolproof Managed Services Sales Strategy.

You may recognize one or more of the following models:

1. The Per-Device Pricing Model
(strength = easy to understand; weakness = too price focused)

2. The Per-User Pricing Model
(strength = simple price model; weakness = more upfront planning required by MSP)

3. The Tiered Managed Services Model
(strength = many customers prefer options; weakness = some customers don’t know which option they really need)

4. The Á La Carte Managed Services Model
(strength = ?; weakness = many, including puts too much burden on the customer to build a managed services plan from scratch)

5. Prepaid Block Time
(strength = adds significant uptick in monthly recurring revenue; weakness = difficult for MSP and customer to predict number of hours needed during the “honeymoon” phase of a new managed services contract)

In addition to explaining each model and pointing out the strengths and potential weaknesses of each one, Merklinger points out two necessary prerequisites to making any managed services model work: 1. The MSP should be the one recommending a specific program, not the customer. (Think “Trusted Advisor) and 2. The discussion should focus on the value of the services being provided rather than the price of each individual component of the program. As Gary Pica, founder of TruMethods, is famous for saying, “You don’t want to be in the business of selling sugar, flour, and eggs — you want to be in the business of selling cake.”

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Overcome Cloud BDR Fears Once and For All

No matter how hard you try to persuade some customers that backing up their data to the cloud is a wise decision and you can help them do it at an affordable price, you’re still going to run into fear-based objections. This objection can sound like this: “How can I really be sure that your cloud backup solution is working if I can’t see the blinking light on the server?”

I recently spoke with Mike McMillan, VP of technical services at DSM Technology Consultants, a 30-employee MSP. DSM had to overcome a fear-based objection with a five-location financial processing company on its way to unseating a multibillion-dollar competitor.

The key to winning over the skeptical prospect entailed setting up a pilot test and giving the prospect an opportunity to try its cloud BDR before committing to the purchase.

“We set up two Unitrends 833 appliances at their facility and worked with their DBA to mirror their SQL database to our private cloud data center every 15 minutes,” says McMillan.

Other files and applications were backed up at different time intervals based upon the company’s RTO and RPO needs and replicated to one of DSM’s out-of-state DR sites. Leveraging DSM’s virtual disaster recovery (VDR) methodology, the financial services company was able to spin up a live server in DSM’s data center and confirm that everything was working properly.

“We showed them how our VMware-based VDR capabilities enabled them to spin up a local server in as few as 15 minutes, and they could recover from a disaster in less than 24 hours. Their previous vendor could not guarantee better than a 72-hour recovery time.”

By putting in a little extra effort upfront, it paid off big time. After winning the deal, which started out as a 12 TB cloud backup opportunity, it quickly grew to 20 TB and now generates $8,000 in monthly recurring revenue for the MSP.

To see the rest of the story, check out Defeating Goliath In The Cloud BDR Arena.

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The Truth About Ingram Micro’s Foray Into The Cloud Service Provider Space

Earlier this year the channel was set abuzz by the announcement from Ingram Micro that it was entering the cloud service provider space with three new Ingram Micro-branded and hosted cloud solutions: Ingram Micro Hosted Exchange, Ingram Micro Virtual Private Servers (VPS), and Ingram Micro Web Hosting.

I recently spoke with Renee Bergeron, Vice President of Managed Services & Cloud Computing at Ingram Micro to get a better understanding of what these new additions mean for Ingram Micro and its channel partners.

Renee Bergeron, VP Managed Services and Cloud Computing, Ingram Micro

Renee Bergeron, VP Managed Services and Cloud Computing, Ingram Micro

Why did Ingram decide to get
into the service provider space?

Renee Bergeron: Our resellers told us that they like having options, including Ingram-hosted options. The fact is that sometimes there are gaps in the marketplace and either no one is offering a solution for the channel or a specific segment of the channel is underserved. Our goal is to address those gaps.

Our most recent offerings were made possible since Ingram acquired Cloud Service Provider SoftCom in September 2013. SoftCom brought to Ingram best practices as a Cloud Services Provider and a unique eCommerce skill set. We also selected Parallels Automation, which provides a global cloud automation platform.

We’re now able to provide our channel partners with access to more than 200 cloud services from more than 70 vendor partners. And, they have a choice: they can select our vendor partners or they can select Ingram-hosted cloud services, whichever option best fits their needs.

Why should resellers add Ingram Micro-hosted solutions to their portfolio?
Renee Bergeron: With this portfolio of cloud services, partners have the horizontal solution they need to solve their customers’ business problems. I look at these categories and solutions as the cloud solution stack. All the horizontal solutions you need covering the different layers of the cloud solution stack. These solutions are essential for your customers, regardless of their business industry.

So, resellers can order, provision and manage all
the Ingram Micro-hosted solutions on the Ingram Micro Cloud Marketplace?
Renee Bergeron: Yes. It can be quite challenging to learn the portals of each cloud service provider, in addition to reviewing each provider’s T&Cs (terms and conditions), and integrating the solutions of each cloud service provider into a seamless business solution for your customers.

Our cloud marketplace is at the heart of our cloud strategy, enabling all of our cloud services to be accessed from one single portal with the interface to our vendor partners, enabling our partners to transact in real-time. No need to learn multiple portals. No need to conduct legal reviews on different contracts.

Now there may still be a need to integrate the cloud services with some customers’ IT systems, but more and more, through Ingram Micro Cloud, the cloud services from the solution stack will be pre-integrated. In the future, as we move to the value stack, end-to-end business bundles will become available and partners will be able to sell a single end-to-end cloud solution to their customers.

Does Ingram Micro plan to continue
to roll out more of their own hosted solutions?
Renee Bergeron: Our goal is not to become a service provider across every type of cloud service, but where we find gaps in the marketplace — if no one is offering a solution for the channel or a specific segment of the channel — we will continue to look for ways to fill those gaps with Ingram-branded services.

More info on Ingram Micro’s hosted cloud services here.

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5 Awards That Really Matter From The Sources That Matter Most

Of the myriad of awards handed out each year at IT industry events or appearing in media outlets, it’s the the awards that are based on the opinions and experiences of those most closely aligned with the recipients’ products or services that carry the most value. One such notable example is the ChannelPro-SMB Reader’s Choice Awards, which are based on the input of more than 800 VARs, MSPs, systems integrators, custom builders and IT consultants.

Ingram Micro was proud to announce recently that for the third consecutive year it outperformed its competition to capture several top honors across multiple categories including:

1. Hardware/Software
2. Cloud/MSP Offering
3. Financing Options
4. Best Sales Support and
5. Best Training Programs

These wins say a lot about Ingram Micro’s dedicated SMB and cloud sales, marketing and technical support teams, as well as its SMB Alliance partner community, professional services and field-deployable credit analysts and financial services offerings. It also backs up Ingram Micro’s claim of maintaining the industry’s broadest portfolio of technology products, solutions and services.

To learn more about the distributor’s top-performing and fastest growing SMB channel partners in the U.S. and to discover the positive impact of a successful relationship with Ingram Micro, check out http://im-smb.com/smb500.

Additionally, for more information about Ingram Micro’s SMB Alliance community, visit www.im-smb.com.

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Why Education is the First Step in Growing Cloud Revenue

I recently interviewed David Malcom, VP of managed services at Computer Services, Inc. (CSI), a $213 million managed services provider that focuses exclusively on the financial services market and reported record revenues during its most recent quarterly financials announcement. Although this giant service provider has been in business since 1965, it’s foray into IT managed services didn’t happen until 2011, after it acquired HEIT, a 100-employee managed services company.

Despite generating new revenue streams from managed services immediately following its acquisition, CSI did not have the same immediate success selling cloud services. To get a better handle on the issue, the MSP began incorporating cloud-related topics into its compliance discussions. “Our customers regularly seek our advice when they’re preparing for external audits, and they want to ensure they’re taking the necessary preparation steps,” says Malcom. “Financial institutions that are prepared for these exams save themselves a lot of time, headaches, and unwelcome surprises, which makes this a popular topic among our clients.”

A few questions CSI asks its customers during these discussions include these two: “Are you looking at cloud services for your business, and if so which areas are you exploring? What due diligence measures have you performed to ensure you’re handling your data appropriately?” CSI uses this opportunity to educate clients about different kinds of cloud services — such as public, private, and hybrid — and it helps clients think through the pitfalls of making the wrong cloud choices. “If, for instance, a customer is already using another vendor’s cloud service, we’ll ask them where the data is stored,” says Malcom. “If it turns out to be outside the United States, that’s a red flag we want to help them resolve right away. It may lead to a potential violation of federal regulations that could be costly and time-consuming to resolve.”

Throughout the consultation process, CSI contrasts public cloud and overseas cloud services with its U.S.- based private cloud offering, which has been specifically designed to protect sensitive financial data.

“Educating customers about the cloud has gone a long way in getting them to entrust us with their cloud initiatives,” says Malcom.

There are a couple of key takeaways MSPs can learn from CSI’s experience. First, consider the fact that this company has focused exclusively on the financial services market since 1965. It knows banking regulations and processes inside and out and is able to generate an immediate rapport with decision makers in this industry. That said, its rapport alone doesn’t sell cloud services — it has to engage clients on this topic, uncover cloud objections and misconceptions, and overcome them with the truth. If business executives and IT decision makers at banks and credit unions need to be educated about the cloud, how much more do business owners and IT decision makers from other small to midsize companies need to be educated?

For additional insights into CSI’s cloud services success, be sure to check out: Take Financial Services To The Cloud.

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The 2 Questions That Will Make/Break Your Cloud Profitability

Although cloud computing adoption is growing exponentially, the end results aren’t always rosy for MSPs and their clients. A study conducted by the IT Process Institute (ITPI), for example, uncovered that 76% of companies reported a low to medium level of success with their cloud projects — nearly twice the failure rate of general IT projects.

Neal Bradbury, co-founder and vice president of channel development at Intronis, says:

One area where MSPs’ cloud expertise is greatly needed is with backup and disaster recovery. Solution providers often give up BDR sales to consumer cloud offerings because they fail to challenge the thinking that drove the SMB to make their decisions.

Bradbury’s suggestion for MSPs looking to boost their clients’ cloud success rates — as well as their cloud profitability, is by learning to ask probing questions before making a cloud recommendation.  Here are two examples Bradbury shares:

  1. What kind of security does [insert name of “less expensive” cloud backup vendor here] provide your data — locally and while at rest in their data center, and especially during transit? Many of the consumer-grade cloud backup services lack security protection in one or more areas, which can put the end user’s data at risk. If the prospect is part of a regulated industry such as healthcare, finance, legal, or retail failing to properly protect their data can lead to stiff fines.
  2. If your local server were to crash, how quickly could you recover your data [from cheaper vendor’s cloud]? This is a huge oversight end users make when they use a low-cost backup service instead of a business-class cloud service. This question should open up a business continuity discussion that will allow you to investigate the prospect’s RTO (recovery time objective) and RPO (recovery point objective) needs, which will be a long ways away from what a consumer cloud service can provide.

Asking these questions helps turn the conversation from “What’s your cost per gigabyte?” to one where real value-adds such as security and data recovery time are factored into the equation, which are two services few companies expect for free.

To gain additional insights into boosting your cloud profit margins, be sure to check out Bradbury’s article: Is Cloud Profitability An Oxymoron?

 

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