GETTING A FOOT IN THE DOOR as a co-managed IT provider to a midsize or larger company can open a floodgate of recurring revenue opportunity. Fast Computers went down this path about six years ago and it now represents about 40% of our business and is our fastest-growing segment.
We have one requirement for taking on any type of customer—there must be some recurring revenue involved. Fully managed IT services for small businesses represents another 40% of our business; projects and recurring services such as managed hosting represent the balance.
One avenue into co-managed IT came through our partnership with Datto for backup services. We started doing boardroom presentations for bigger firms accompanied by a Datto sales engineer, which really helped us close a lot of deals. We felt comfortable doing that because Datto only sells through the channel, so we didn’t have to worry about a vendor poaching business.
Once we got into an account, Office 365 was the next catalyst, then managed networking and security services, and by then a strong relationship was established. And because we provided great service and expertise, our referrals exploded across the country and internationally as well—and so did the additional business we started doing with each customer.
Here’s an example. A co-managed prospect was looking for a backup solution. We were competing with a much larger provider and the prospect asked us to come meet with the CFO, who wasn’t there when we arrived. Turns out the CFO didn’t actually want to meet with us, she just wanted to see if we’d show up. The rep from the larger provider refused to come on-site, and we got the recurring revenue deal for their backup.
Then we got their Office 365 business, then we sold them servers, then desktops and laptops, and most recently a network refresh. Once you’re on the vendor list, it’s much easier to win these opportunities. There is a caveat: While the configuration and implementation of the network refresh, for instance, is billed as a project, it’s not a project we’d take on if that client weren’t already on a recurring revenue agreement.
Another avenue to co-managed IT prospects was partnering with other types of services firms. I am always on my A game when it comes to networking for potential opportunities. For example, I connected with a telecom provider while at a client site and we eventually started lead sharing. The key is to stay in your lane, so we don’t stray into large phone, camera, or copier opportunities.
Tips for Getting Started
There are two ways to approach co-managed IT prospects. One is by trying to eliminate the IT manager and/or department and sell a fully managed service. I would caution against that.
Fast Computers takes the second approach, which is providing additional help to make the in-house IT team’s job easier. That provides a lot of good will, which leads to a deeper relationship. We share our RMM tool with smaller co-managed IT customers and allow them to do basic tasks. The larger enterprises generally have their own monitoring tools and we provide backup and other services.
Several clients frequently consult us on unrelated projects. Even though that’s not always billable, we are happy to share our experience and provide value. Moreover, the amount of business we get in return because we are the preferred vendor more than compensates for the time spent.
Obtaining our first few co-managed IT clients was challenging, but it’s gotten easier as we’ve established our reputation. Partnering was an avenue for us, but you can also find co-managed candidates by joining groups that have local meetups of IT managers, like Spiceworks. Get out there and talk to people.
Assuming you’re doing good work, and assuming you’re building relationships, your referrals and co-managed business will continue to grow, particularly if you anchor every engagement with some recurring revenue.
Fast Computers has low client attrition, low employee turnover, and we are on track to hit over $2 million in revenue this year. All it takes is a foot in the door to open the floodgates.
Photography by Joël Bénard
