START YOUR ENGINE, roll down your window, and turn up the radio. Place your hands on the wheel, step on the gas pedal, and go! The breeze whipping through your hair, tunes blaring, and the open road—ah, not a care in the world! Can you feel the freedom? This is the same freedom you provide your clients each time they adopt your “as-a-service” offering.
I have spoken to many MSPs who believe their clients and prospects won’t buy into this model. Are you one of them? Hop into my car and let’s explore the lucrative road of everything-as-a-service (XaaS).
What Is XaaS?
When you purchase a car, the dealer does not hand you an invoice with the engine, steering wheel, timing belt, and muffler listed separately. You buy or lease the entire car, one price, one predictable payment contract. This analogy can be applied to the as-a-service model. Managed service providers bundle products and services into one service agreement with one monthly fixed price. The agreement typically includes all maintenance of hardware, warranty renewals, and service support.
This is a drastically different approach from the break-fix or time-and-materials model, which is reactive, driven by the client calling and needing service. Your corporate growth is almost always “sitting” in your client’s driveway. You are always chasing projects, waiting for your phone to ring, incurring high up-front hardware costs with low profit margins, and experiencing overall difficulty setting stable budgets.
The as-a-service model, or managed services, is a proactive approach. You, the MSP, are in the driver’s seat:
- You provide greater value to your company and the client by bundling several services together. This shifts focus away from the ability of the client to scrutinize each invoice. Instead, you and the client can count on a predictable monthly payment.
- Because this is a monthly-based service and not a hardware-based sale, your margins can typically fall between 50 percent to 250 percent!
- A predictable monthly revenue stream allows for more accurate cash-flow planning and budgeting.
- With this proactive model, clients receive the latest and greatest technology to run their business, and usually experience very low to zero downtime.
- Contracts lock clients into a relationship with you, making you stickier. It’s also easier to build annual increases into contract renewals.
A Mindset Shift
Rob Schenk, founder and partner of Intivix, a San Francisco-based MSP, adopted the managed services model in 2008. He saw growth potential and higher profitability in shifting his mindset away from solely selling products and projects to managing and maintaining networks.
A few years ago, a large car dealership in the San Francisco area approached Schenk. The dealership had 15 sites, 1,200 employees, 900 computers, and one IT professional who worked a mere 10 hours per week. The business had issues with customer Wi-Fi connectivity, zero central management, poor productivity, and worst of all, a very poor client experience. The lack of a solid IT infrastructure was truly hurting the dealership’s brand and bottom line.
After a long sales process, the dealer’s leadership team realized it had to shift gears and make a change. Today, Intivix is providing the dealership with several managed services offerings including:
- Wireless as a service. Now the sales reps on the lot and the clients in the waiting rooms all have reliable and robust Wi-Fi access.
- Managed network services. Intivix proactively monitors the entire network 24/7.
- Security as a service. Intivix provides constant monitoring, updating, and scanning for any malicious activity that could disrupt the dealership’s productivity and damage the corporate brand.
- Disaster recovery as a service. Intivix backs up data in the cloud to ensure easy retrieval should Mother Nature or a hacker strike.
- Automation. Intivix uses an automated system to roll out new services and applications to implement needed processes.
- Active Directory. Intivix has centralized user/group management. The dealership also has better organized files for increased efficiencies and productivity.
Although the entire overhaul took over a year to implement, today the dealership has streamlined its selling process and offers an enhanced client experience, including free Wi-Fi for customers waiting for service. “The little details that managed services provides really add up to provide huge client value,” says Schenk. He adds that the dealership is now a clear market leader in the industry, selling more cars, increasing repeat clients with a “wow” customer experience, and ultimately, boosting profits.
Hit the Brakes: The Challenges
One of the key challenges of this model that both Schenk and I agree upon is vendor selection. When researching new solutions to offer, ensure that the vendor is channel friendly and thinks like a “partner.” Search for partners with an established as-a-service offerings, such as SonicWall’s security-as-a-service program.
Another issue to explore is how easily does the solution integrate with your existing offerings? Most clients just want their technology to work. Adding an incompatible service that impacts the client experience causes frustration and a potential break in trust in your relationship.
Fill Your Tank with 3 Sales Approaches
A new client: With all new clients, lead with your managed offerings. “I don’t give new clients the option,” says Eric M. Shorr, co-owner of Secure Future Tech Solutions. “I offer the prospect the managed programs we have in place and do not lead with project offerings.” You should take this approach too.
Existing break-fix clients: Transitioning break-fix clients to managed services is definitely a tougher sell. The client is used to the call-as-I-need-you approach. Start by focusing on the benefits of an as-a-service offering and demonstrate the value. For example: “With us managing your network, we are shifting the IT responsibility from your plate to ours. You focus on running your business; we’ll focus on ensuring business continuity.”
Demonstrate the power of fixed pricing and the client’s ability to budget, manage cash flow, and create an annual budget. Consider easing clients into the model slowly. Start by offering a cybersecurity bundle including spam filtering, network security, and dark web monitoring. Get them used to this model and then slowly introduce other services.
Brand building: Don’t be afraid to be the hero. Remind clients that decreased downtime, increased productivity, automation, and fewer cyberattacks ultimately build credibility with clients and prospects. Help them recognize that this demonstrates they are investing in their organization and the products and services they offer their clients.
Which XaaS model will you be adding to your gas tank? Whatever you choose, fill ’er up and hit the road selling value and watch your profits accelerate!
LISA SHORR is a certified advanced image consultant and owner of Shorr Success and Secure Future Tech Solutions. With more than two decades of experience in the sales and marketing arena, she conducts workshops and coaches MSPs on professional development and corporate branding.
