Redefining Vendor/Customer Relationships

My colleague, Joe Panettieri, reports that Dell has won its largest managed services agreement ever with the state of Georgia.

This contract illustrates how Dell, and other technology vendors, are shifting their go-to-market strategies to respond to customers' changing IT management needs.

Anyone who follows the technology industry knows that Dell has been struggling to keep pace with HP when it comes to computer sales. What few casual observers have recognized is how Dell has amassed a new set of remote management capabilities via a series of acquistions over the past year and a half.

Why Managed Services Matter
During that time, Dell has acquired SilverBack Technologies, Everdream, EqualLogic and MessageOne to serve as the foundation for a new portfolio of Software-as-a-Service (SaaS) and managed service capabilities.

Dell understands that it will have a difficult time outpacing HP and other technology vendors on the strength of its products alone as laptops, desktops and servers become more commoditized.

Instead, Dell and other vendors must differentiate themselves on their ability to help customers generate the greatest value from their systems. This means redefining their services to help customers, and their channel partners, better manage these assets to optimize their performance.

Redefining the Meaning of Support
The most cost-effective way for vendors to monitor these devices and proactively administer them is via managed services. The best way for them to offer these capabilities to their channel partners or customers is via SaaS solutions.

These 'on-demand' services redefine the nature of vendor/customer relationships. Customers no longer have to assume the responsibility for managing their systems and software, and wait for their vendors to respond to their problems when something goes wrong.

Now, they can shift the burden on their vendor to ensure the uptime and performance of their systems and software. By the same token, vendors can no longer boast about their customer support response times. Instead, they must demonstrate their willingness to take on this greater responsibility.

Introduction to Managed Network Services

Many companies find it expensive to keep up with new Business Technologies -- or simply prefer to devote their limited IT or Telecom resources to the core business, rather than routine ongoing network management.

Managed network services can quickly enable your company to evolve, by giving business decision makers access to leading network technologies and management expertise -- without requiring high initial capital expenditures (CapEx), or ongoing investments in technology upgrades.

Deploying a Managed Service Solution
When a company subscribes to a managed service, a service provider manages the network equipment and applications on the customer premises according to the terms of a service-level agreement (SLA) established to meet the company's unique business needs.

Some managed services are also hosted, meaning that the service provider hosts the equipment in its facility instead of the customer's, and delivers services to company employees over the Wide Area Network (WAN) to wherever they are physically located.

For small and medium-sized businesses (SMBs), managed services provide enterprise-class capabilities for a predictable monthly fee -- without requiring a large, initial capital investment.

The On-Demand Pay-as-you-go Model
Companies that out-task enjoy high levels of network support and availability, enabling internal IT staff to focus on strategic activities instead of network support, and pay only for those networking services that they need.

Managed services generally include software, hardware, and other Internet Protocol (IP) networking services. The service provider's highly experienced technical experts focus exclusively on providing the network services and support that customers need to meet their business requirements.

Companies have the option to out-task some or all of their network management and monitoring tasks and retain control of the rest -- even if the equipment is physically located at the provider's site.

Key Benefits of managed network Services:

• Reduces costs, including service call fees, hardware, operations, and network transport
• Eases adoption of new technology-enabled business processes
• Increases levels of support and network availability, without additional staff
• Makes your IT and Telecom budget more stable and predictable
• Provides access to the latest technology, with limited risk
• Provides access to an enhanced technical skills base
• Makes it easier to adapt to changing business conditions
• Enables the IT manager and staff to focus on your core business
  

In upcoming posts, we will outline some typical scenarios for deploying managed network service offerings -- including simplified application diagrams that explain the basic concepts.

Small Businesses: Good IT Investments for a Bad Economy

My brother is chief operating officer for a real estate company in Manhattan. He's running a small business facing some very familiar challenges: Rising energy prices, unpredictable operating costs, and tenants who are facing rising unemployment.

In addition to those first-hand business challenges, people like him worry about Wall Street's financial mess spilling over into Main Street USA. The flood of bad financial news from AIG, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch will force small business owners to rethink their financial bets in the months ahead.

Some entrepreneurs may wind up cutting their IT budgets in order to conserve cash. Fact is, they don't want surprise bills for emergency server repairs or break-fix services.

A Smarter Strategy
Instead of saying no to new technology investments, my brother is pursuing a far wiser IT strategy. He's reaching out to so-called managed service providers (MSPs). Generally speaking, MSPs charge a predictable monthly fee for ongoing network and system maintenance.

In many ways, my brother believes in the emerging Business Technology as a Service (BTaaS) mindset. The idea is to outsource as much of IT as possible to drive the business forward.

Start by transitioning on-site applications to the software as a service (SaaS) business model. Explore so-called Hardware as a Service (HaaS) approaches, where your physical infrastructure (servers, printers, PCs, laptops, etc.) is owned and operated by your service provider. Push your antiquated PBXes out the door and embrace hosted voice-over-IP (VoIP) services.

Simply put: Whenever an IT consultant or integrator tries to sell your small business a new IT product, ask if you can evaluate an outsourced alternative instead. Avoid big lump-sum costs, and pursue predictable monthly fees. And shop around to see how the fees and service level agreements (SLAs) vary from MSP to MSP.

Calling for Help
My brother is starting to pursue the so-called BTaaS strategy right now. When his company's IT help desk bills mounted, he reached out to me for advice. I told him it was time to treat his technology infrastructure the same way he'd treat his cable bill or cell phone service: Get a fixed-fee monthly service.

He started by investigating the MSPmentor 100, which tracks some of the world's top managed service providers. Yes, that's a shameless plug for a Web site I run as part of my day job. But my brother found the list valuable, and he's now in discussions with a few MSPs to nail down a service contract that involves predictable monthly fees.

You Can't Ignore IT
As a small business owner myself, I know now is not the time to cut my IT budget. Rather, now is the time to reallocate my IT budget. Aside from our basic network infrastructure, PCs and printers, our company doesn't purchase any IT assets.

The bulk of our business innovations -- and IT investments -- are directed toward our hosted Web sites. Our monthly IT service fees are built into our annual operating budget. With a few rare exceptions, there are no surprise IT costs.

That approach provides peace of mind -- for my small business, and soon for my brother's small business -- especially as the economic storm swirls around us.