“Seismic” Events in IT Services

Managed Services: Old-School Fundamentals by Justin Crotty
May 16, 2008, 8:03 am
Filed under: IT Services, Managed Services, Miscellaneous

The hype and hysteria surrounding the rise of managed services in the IT channel has neglected two of the most fundamental elements that should be driving solution provider decision making: brand and unique value proposition.

First, let’s debunk one of the greatest myths of managed services: It ain’t about the tools. It’s about the partners you choose and how you differentiate yourself. Aren’t these the same things that have driven solution providers’ decisions for years? Maybe things haven’t changed that much.

Let’s also face another reality that is difficult for the IT channel to admit: Managed services isn’t about cool technology or flashy applications. It’s about the ability of a solution provider to acquire managed capabilities with a reasonable investment and to quickly turn that investment into revenue and profits for his or her company.

Over the years I’ve had many conversations with solution providers about managed services and where to place their bets. They’ve told me about the agonizing lengths they’ve gone to in evaluating the technical capabilities of different applications and weighing the merits of building their own data centers or NOCs (network operations centers) to support their managed services businesses. Others have talked about the price differentials they will be charged for the various applications or tools.

All of this heartburn and overanalyzing is misguided. They are worrying about the small stuff.

On the other hand, I rarely hear about solution providers who worry about developing a solid value proposition or designing a marketing and brand strategy around their managed services capabilities. Ignoring these critical differentiators is a huge mistake. Solution providers’ ability to clearly articulate their unique value proposition and design effective marketing and sales plans will determine success or failure in this market, just as it always has.

Managed services is not about solution providers’ technical capabilities or fancy infrastructure, but rather their ability to develop solid value propositions and solutions offerings to their clients. For customers, times haven’t changed that much. They want great service at a price they can afford. They want to do business with reputable and accountable organizations they can trust.

The days of leading with vendor certifications and technical capabilities are over. Sure, there is a need for technical competencies—those are table stakes. But being “Gold Certified” or a “Platinum Partner” of any given vendor does nothing to articulate the unique value you bring to customers. These authorizations only reaffirm the same capabilities and certifications that hundreds, maybe even thousands, of other solution providers have earned.

Another truth: Establishing a managed services practice doesn’t have to be expensive. With the right partners you can deliver the commodity stuff—data centers, NOC service, help desk, and so on. Spending your resources on duplicating these commodity investments makes no sense.

Your clients only care that you will solve their business problems effectively, efficiently, and at a good value. Focus your dollars and resources on the things that truly differentiate you: your value proposition and brand promise. These will never be commoditized. In fact, they are the only things you can defend as unique. Business models and technologies can be duplicated. Well-crafted value propositions and your company’s brand promise cannot. That’s old school.





2 Comments so far
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Very interesting article. I found it while researching this issue for my company at http://www.ProgressiveOffice.com. Good blogging to you. Keep up the good work.

Comment by stukish

All great points. However, without a sizable investment in tools, people and business processes, you will not have a way to ensure profitable service delivery. At my company, http://www.sysarc.com ,we invested over $500K in software applications to more effectively and efficiently support our clients.

Comment by James Eglin

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