The Importance of Vendor Management for MSPs
While the term “Managed Services” is subjective as relates to the IT industry, I like to favor the following definition. To me, an SMB Managed IT Service is one where an IT company provides to their client for a flat monthly fee:
- Unlimited “All You Can Eat” Technical Support
- 24x7x365 Monitoring and Maintenance
- Vendor Management
In this blog post I’d like to focus on the Vendor Management aspect of Managed Services, as while it is often overlooked, mastering it can be the difference between operating a profitable Managed Service contract and one that sucks your time, energy and profit away.
Vendors, Vendors Everywhere
As an MSP, when you win a new Managed Service client – they are rarely a “green field” site. That is to say, they typically have incumbent IT vendors providing services of their own that you are expected to manage on behalf of the client. These services could be:
- E-Mail Security
- Off-Site Backup and Disaster Recovery
- Broadband Internet
- Hardware Maintenance
- Web Hosting
Your role as MSP is to manage these vendors to ensure the client receives the service they need and deserve.
In addition to documenting in your internal systems and process and teaching your staff how to obtain support and account management from each of these vendors, you often need to train your engineers in how to provide 1st line support to the product, understand emergency support escalation procedures, and keep up to date on any technological changes in the vendors product.
As a smaller MSP, initially this may not be a challenge. In fact, building relationships with new vendors and learning new Technologies may help broaden your experience.
But as you win more Managed Service clients, and acquire an ever growing range of Vendors and Vendor Products to manage – things become very different. Imagine trying to manage 60 clients each with 3 or 4 different vendor products. It becomes a huge undertaking, and all the time you and and your staff take trying to manage the clients vendors eats into profit.
Offer Your Own Portfolio
The solution is to build your own portfolio of preferred products and vendors, and put in place a structured approach for helping your client migrate to these products.
The benefits of moving your clients to your own preferred vendors and products are three-fold.
One - working with one preferred vendor for a product enables your company to build both a deeper relationship with that vendor – which can help you negotiate price breaks and special deals on your way to becoming that vendors favorite client.
Secondly it helps you deliver a much more efficient service to your clients. When your engineers only need to deal with one one vendor Technical Support team, your finance team only needs to deal with one Account Manager, and when you only need to write up one escalation procedure for your company Operations Manual – supporting your client becomes much more efficient and profitable.
The third benefit is that more often than not, when promoting a Vendor that you know and trust, you can generate a referral fee or a recurring revenue stream from re-selling the vendors product. I must stress that choosing a Vendor based purely on a favorable referral fee is a false economy – you must find a Vendor who rewards you for new business, but also has a strong product and are a good company to work with.
Anything less is selling your client short – and after all, you’re putting your own companies name to the vendor recommendation, so you want to be represented well.
The Challenge is Worth It
While migrating your clients IT services to your preferred vendor might be a challenging task, it is worth the effort. When your clients are working with your preferred vendors, you will be able to deliver a faster and stronger service, and you’ll in turn become more profitable.
Richard Tubb is an IT Business Consultant who works with ambitious IT companies who want to grow their businesses in a scalable and sustainable way.