EU Customer Conference keynote - The managed services imperative
I’m at the Wembley Hilton Hotel in London - next door to the famous national stadium - joining 135+ Managed Service Providers for the 2013 GFI Max European Customer Conference.
Chris Gonsalves - Vice-President at The 2112 Group - has just delivered a passionate and thought-provoking Keynote presentation entitled “The Managed Services Imperative”, sharing exactly why IT Solution Providers are embracing Managed Services and what the future holds for Managed Service Providers (MSP’s).
How the world has changed for MSP’s
Gonsalves opened his presentation by describing how the world has changed:-
- Cost structures have been revised
- Risk Tolerances have diminished
- Operational Expectations have increased
- IT is being “Consumerised”
- The rise of Virtualization is unstoppable
- Oh yes... Cloud, Cloud & Cloud!
“You don’t have a single customer who wakes up and says “You know what? I want to fiddle with a server” Gonsalves told the audience. That’s an uncomfortable statement for many IT business owners - who are traditionally technicians - to listen to, but it’s how the world is changing.
Managed Services is not about technology
“Managed Services is not about technology. That isn’t what we do anymore” went on Gonsalves. “It’s about delivering results. It’s about taking the burden from your clients.”
70% of the Channel now offers some form of Managed Services. It’s easy to understand why when you understand what it means for those IT Solution Providers adopting the model:-
- Recurring and predictable revenues
- Higher and predictable profits
- Scalability and flexibility
This is in contrast to the old peaks and troughs of project and break/fix based work - “When it stops being predictable, it stops being profitable” shared Gonsalves.
What’s more, the appeal of Managed Services to customers is the same - predictable expenses, access to expertise, reduction of IT expenses.
In short, Managed Services is a win-win proposition for MSP’s and their clients.
The Recurring Revenue Paradigm
For MSP’s, it’s all about the recurring revenue paradigm. “MSP’s need to focus on three key areas - net new clients, upsell to clients, customer retention.” shares Gonsalves. “Most MSP’s do at least one of these things, but you need to do all three to be successful”.
Customer retention is hugely important to recurring revenue. “You can’t fake satisfaction and satisfaction is the key to retention” advises Gonsalves.
“Ensure your pricing is right” offers Gonsalves before sharing the need for MSP’s to dispense with the myth that they need to drop prices. This leads to artificial commoditization and the gross undervaluation of services.
The Future of Managed Services
So where does Gonsalves see the future of Managed Services heading? “Growth is not a choice, if you’re not growing you’re contracting” he suggests - leaving the comment to sink in with his audience.
The Cloud and Services are key shared Gonsalves.
Don’t make the mistake of saying “I know better than my customers. I know what they want” shares Gonsalves. “Look at Microsoft. Their growth figures are anemic”.
“It’s a wake-up call for MSP’s” said Jonathan Fox, MD of Flying Fox IT of Gonsalves’ presentation. “I wonder how many MSP’s in this room know they should be doing the things he spoke about, but in reality arent” Fox concluded.
“Managed Services isn’t easy. But it’s not as big or as imposing or as complicated as we imagine it is. Done well, it’s going to be your stepping stone to the practices you will build that will last for a long, profitable time.” concludes Gonsalves.
Check out the video below for more from Chris Gonsalves!