Right now the managed services paradigm feels a lot like an economic forecast. Depending on who you ask, managed services is just at the start of its era. Others feel it’s in the middle of its “run.” And a few even think its hype has reached the point signaling its era might be peaking and on its way down. These are casual observations gleaned from numerous conversations. But I wanted to get the facts instead of opinions (which everyone has). So I offered a short managed services survey in the month of June and added past survey data to write up this Perceptions column.
Let’s jump right into the data.
Q: Are you seeing an opportunity to provide managed services to your clients? If so, which businesses in your market show the most promise?
| Small businesses under 50 employees | 80% |
| Small businesses with 51-250 employees | 20% |
| Mid-sized businesses with 251 to 1000 employees | 0% |
| Large businesses with over 1001 employees | 0% |
Harryb’s take: According to our data, it’s safe to say that the managed services concept is a small business concept. It’s not getting traction in the mid-market or enterprise space. But here’s the irony. I’m convinced that over 15 years ago, companies like CA were “this close” – as Maxwell Smart would say – to nailing managed services. CA’s Unicenter was providing much of the monitoring and remote management embraced today. And – the irony part – Unicenter was at the enterprise-level. What if CA had brought that thinking to the small business-level?
Q: If you’re not offering managed services today, what is your biggest barrier to establishing this offering? (Check all that apply.)
| Market acceptance | 50.0% |
| Current sales staff’s ability to sell and support managed services | 40.0% |
| Current technical staff’s ability to support managed services | 50.0% |
| Investment required to establish managed services offering | 30.0% |
| Ability to track, manage, and bill for services offering | 30.0% |
Harry’s take: I suspected the market acceptance response would score high, but I am a little surprised that staff training was equally strong. That tells me that the real challenge for ISVs providing MSP support software and services is training the actual SMB consultants to best utilize “managed services.” Lots of headroom for learning more about the MSP paradigm. Note to self: Add more MSP training content at the SMB Nation Fall conference!
Q: What type of managed services are you offering most today?
| Remote Management and Monitoring services | 84.0% |
| Data Security – data back- up and recovery services | 52.0% |
| Business Continuity services and solutions | 44.0% |
| Help Desk services | 64.0% |
| Print and Document Management | 4.0% |
| None | 8.0% |
Harry’s take: Confirming what I believe to be true, remote management and monitoring led the way with managed services and largely define the managed services paradigm. I am surprised that business continuity services scored so low (44%). Why? Because I’m really pushing the “mini-management” concept with the Trusted Business Advisor tagline. I’d like to see the business continuity question score much higher in the next poll – even ahead of the techie stuff like remote management and monitoring.
Q: Where do you see the most opportunity to build your managed services portfolio?
| Remote Management and Monitoring services | 54.2% |
| Data Security – data back-up and recovery services | 37.5% |
| Business Continuity services and solutions | 50.0% |
| Help Desk services | 29.2% |
| Print and Document Management | 12.5% |
Harry’s take: This is a forward-looking question. I am pleased to see that folks have more excitement about business continuity services in the future. There is much less excitement for help desk services and even remote management and monitoring services are downplayed. This response set suggests that the managed services paradigm will be changing shortly.
Q: Do you partner with other VARs or MSPs on a regular basis? If so, how many subcontractors do you work with in a month?
| 1-2 subcontractors per month | 40.0% |
| 3-5 subcontractors per month | 8.0% |
| 10-15 subcontractors per month | 4.0% |
| More than 15 subcontractors per month | 0.0% |
| None | 48.0% |
Harry’s take: There is good news and “room for improvement” with this response. The good news is that a simple majority (52%) believe in the power of peer-to-peer partnering. But just under half (48%) haven’t gotten religion yet about partnering.
Q: How much revenue have you generated from your managed services business?
| Under $500,000 | 68.0% |
| $501,000 to $2 million | 20.0% |
| $2.1 million to $5 million | 12.0% |
| $5.1 million to $8 million | 0.0% |
| $8.1 million to $10 million | 0.0% |
| Over $10.1 million | 0.0% |
Harry’s take. In our third annual salary survey (SMB PC 2Q), we asked what percentage of your overall revenue is derived from managed services. The most popular response (statistical mode) was that less than 10% of your revenue came from managed services. The majority of responses (over 50%) reported less than 30% of your revenue came from managed services. So it doesn’t surprise me that the majority response (68%) above was in the smallest revenue category. That’s what I call a direct correlation. Likewise, when I participated in a managed services Webinar with Jim Hamilton (from the MSP Partners trade group), he defined someone as having a managed services business model if over 10% of their revenue came from managed services. And he commented that he didn’t expect SMB consultants to have more than 50% of revenue from managed services. This suggested hybrid-like business models, not “either/or” mutual exclusivity.
Q: Are you using Software-as-a-Service (SaaS) solutions to manage your business? If so, which ones do you use and why?
Harry’s take: We allowed narrative answers for this and the usual suspects appeared, including Zenith, Houngdog, Autotask, Connectwise, Kaseya, and the most popular response: NO.
Q: If you are offering managed services, what do you consider the biggest business challenge facing your company? (Check all that apply.)
| Contracts and Billing Workflow | 18.2% |
| Improving Services Workflow | 18.2% |
| Increasing Tech Efficiency | 31.8% |
| Coordinating Scheduling and Dispatch | 4.5% |
| Getting My Business Organized | 18.2% |
| Improving Profitability | 18.2% |
| Winning New Customers | 68.2% |
| Delivering Your Managed Services | 18.2% |
| Accurate and Timely Reporting and Business Metrics | 27.3% |
| Accessing All of My Business Data in One Place | 22.7% |
Harry’s take: Dog bites man! Isn’t winning new customers always the biggest challenge facing SMB consultants? Hang in there – it’s like the concept of time: it has no start and no end. You will always be engaging in business development your entire career. See my casual correlation next.
Casual Correlations
So I left you hanging on that last question. Winning new customers means a lot of business development activity. And that means a lot of lunches that might have direct or indirect biz dev efforts. So on a trip back East in early June to scope out new SMB Nation Spring 2010 venues, I found myself in Lloyd Neck, NY, (Long Island) having lunch with Joe Panaterri from MSP Mentor.
Harry and Joe at lunch!
While Joe and I do not have direct business between us, we’re stakeholders in the SMB technology community and its good to get together and compare notes. We both agree that the managed services opportunity is huge, and I can tell you that few outlets have capitalized on it like MSP Mentor. Visit this site (www.mspmentor.com), read Joe’s blog, and tell him harrybbb sent ya!
ShoutOuts!
A couple of tweets.
- Thanks to Brian at AutoTask for assisting the design of the managed services survey.
- Thanks to Neil Roiter (TechTarget) for his coverage of this topic and for including me in his article titled Managed services a learning process for VARs, customers (http://bit.ly/qtL5L).
SMB Dude 