Blog | August 5, 2012

Why Now Is The Right Time To Sell Managed Services

By The Business Solutions Network

Of all the statistics I'm confronted with on a regular basis, the one that sticks with me the most is one I heard while attending a training session for MSPs (managed services providers) not too long ago. The stat was attributed to CompTIA and stated that only 40% of VARs are currently offering any kind of managed services. If that's true, then it means that the other 60% are selling products or break/fix services only.

In the April issue of Business Solutions, I interviewed three industry experts about this statistic (Alex Rogers, CEO of CharTec; Jason Bystrak, director of sales at Ingram Micro; and Eric Townsend, SMB and managed services director of North America at Intel) to get their take on why an overwhelming majority of channel companies are still not selling managed services. You  can check out the article here.

Of all the points the three experts shared, I suspect the number one reason most VARs don't sell managed services is because it's too scary to think about replacing the up-front revenue that comes with a traditional hardware/software sale with the much smaller revenue stream that comes with a managed services contract. The first business model has all the allure of winning big at a casino -- all your financial worries are solved RIGHT NOW. Conversely, the latter business model may seem more akin to an elderly person's fixed income that's barely enough to keep up with utilities, food, and medical expenses.

The three things I've observed from longer-sighted VARs who have transitioned over to the MSP model are 1.) their sales cycle is shorter 2.) they're working with a higher number of customers and 3.) Once the VAR gets the hang of selling managed services, the monthly revenue streams add up and eventually surpass the former income model.