Managed Services or Break fix? One size doesn’t fit all
Managed Services seems to be the latest fandango title applied to IT Support companies who offer their services to Small & Medium Sized Businesses who can’t really afford their own internal IT staff.
Just to be clear, I’d suggest that Managed Services is a very distinct risk model from the standard break/fix (or professional services) hourly billing norm.
In Managed Services your IT Support Company takes on the risk. It does the work to keep IT systems running well and provides an account management layer on top of the work it does. Essentially, it takes the problem off your ‘customer’s desk’ in return for a fixed fee.
We speak to thousands of IT Support companies who tell us they are very interested in this model but they’re not sure how to do this. They’re unsure about packaging this, promoting this, pricing this, selling this & how to deliver this service profitably.
So our Building Blocks program helps them do this – grow recurring revenue service’s – which is great if you can.
However… Managed Services as defined above doesn’t suit every customer or every customer relationship IT Support companies have. And it doesn’t suit every IT Company either.
Dead Within 3 Years?
I hear a lot of hype such as ‘if you’re not a managed service provider within 3 years, you’ll be history’. I think it’s nonsense.
Most IT companies I speak to run a hybrid model (Break Fix + Managed Services) because that’s what their customers demand (and I speak to a lot).
I read stats like only 10% of IT Support companies in the US are ‘true’ Managed Service Providers and I shake my head…. My take on it is that’s because some of the end customers prefer it that way (just now).
I’ve myself proposed and sold both break/fix and managed service relationships and I once tried telling a lawyer who clearly understood hourly billing that I proposed billing him the same fee every month regardless of how much/little work our company did. He raised an eyebrow, I got the message.
So, do what your customers need you to do. That’s what’s important.
About the Author: Chris Martin
Chris has a first class Honours degree in Software Engineering and Masters in Computer Science. He has the dubious distinction of being one of the earliest Microsoft Certified Systems Engineers (MCSE) in the UK. Chris started his career in the early 90s in Enterprise IT at NCR/AT&T as a Software Engineer and morphed into Infrastructure looking after company Network & Servers. He then spent some years in small business, forming and running an IT Support Company. Chris lives in Fife, Scotland with his partner, kid and two dogs. He’s a keen sportsman, cycling, running, golfing and various other (sometimes risky) outdoor pursuits. He claims (and we believe him) that he really wants to be an Egyptologist or Economist.
A big thumbs up for this post. I myself don’t buy the idea that you’ll be dead in the water if you’re not a managed service provider with three years. It’s absolutely unfounded. I agree that most customers are satisfied with how things are. And isn’t that the point? In the end, I whole heartedly agree that companies are meant to serve their customers in whatever way they can. Customers aren’t supposed to adapt to the services of your business. It’s the other way around.
I think shoeboxing IT companies that don’t offer managed services as a lost cause is a bit of a stretch. However, that still isn’t to discount the natural benefits of a managed services model in a good number of scenarios. On the other hand, the article raises a good point of running a hybrid model of Break/Fix and managed services. It earns you the flexibility to approach a client’s problem without necessarily adhering to a strict code, and it allows you the leeway to adapt and react to each problem as your company sees fit.
Management in our company has recently decided to make the shift towards managed services within the next half year or so. We’ve been going through the rounds of shifting the model of the company, and it seems to be a lot to work around. However, management seems to have a good plan of where to take the company, but this article does bring up some very solid points worth raising.