The More Things Change, The More They Stay the Same

I received an email the other day congratulating me on a column I wrote for NetworkWorld nearly three years ago entitled, "Why Managed Services Fail."

The 'shelf-life' of web content always amazes me, but it is gratifying to have people stumble across my past writings and still find them timely.

What struck me as I revisited this 2005 column was how many of my points were still true,

• "...Almost every supplier and service provider I talk to admits that selling managed services has been harder than expected."
• "The first problem these managed service providers face is packaging."
• "The second issue is pricing."
• "The third challenge is positioning these services properly."
• "But the biggest obstacle to selling managed services is poor sales skills."

Sound familiar?
Although industry research clearly shows that customers are becoming more receptive towards managed services and the economy is even driving an increasing number of customers to actively pursue managed service alternatives, many MSPs are still suffering from poor sales and marketing skills to respond to these opportunities.

They are still thinking in terms of selling products rather than services. They are still promoting the 'speeds and feeds' of their technical capabilities rather than the business value of their service capabilities.

As a consequence, many MSPs end up selling their services to IT managers who are only interested in continuing to buy systems and software rather than selling solutions to higher level decision makers who are interested in the business impact of their services.

Worthy of Your Business?
So, if you are an IT or business decision-maker who is seeking to acquire managed services, don't be surprised if your potential MSPs are talking to you in the wrong terms and trying to sell you the wrong value propositions.

Making Sure The Numbers Favor Managed Services

As industry analyst forecasts mount predicting the rapid growth of managed services, an increasing proportion of IT and business decision-makers are taking a closer look at how these alternatives can impact their operations.

The challenge is effectively measuring the costs and benefits of these options.

Gartner kicked off 2008 predicting, "By 2011, early technology adopters will forgo capital expenditures and instead purchase 40 per cent of their IT infrastructure as a service." And with today's unprecedented economy crisis, THINKstrategies believes the shift to managed services will be faster and more pronounced than predicted.

As a consequence, every responsible IT and business decision-maker is obligated to carefully reassess their current operations and thoroughly evaluate all of the available alternatives to better manage their IT environments so they can better support their business objectives.

Substantive Cost Comparisons
However, many of the current methods for evaluating the financial impact of today's managed services fall short because they don't effectively measure the full cost implications and additional business benefits of these services.

For instance, many managed service providers (MSPs) utilize web-based total cost of ownership (TCO) or return on investment (ROI) calculators to help potential customers understand the cost-savings they can generate using managed services.

Yet, these calculators often include generic cost comparisons which are irrelevant or of little value to specific companies. Or, they suggest that managed services can eliminate valuable staff positions which raises fears among potential customers that they will lose their jobs by hiring a MSP.

Comprehensive Assessments
What thoughtful IT and business decision-makers need instead are interactive tools which enable them to work with MSPs to more thoroughly measure the real cost-savings and additional business benefits -- both tangible and intangible -- that managed services can produce for their organization.

This requires more sophisticated calculators and skilled salespeople who can work with customers in utilizing these tools effectively.