Make the Move to Managed Services—But Don’t Rush It

4 things to consider as you sprinkle in recurring revenue to what you do.

In Part 1 of this series on ConnectWise’s Ultimate Guide to As-a-Service, CI editor-in-chief Tom LeBlanc looked at four ways that model can result in better profitability for your company. In this section, we’ll focus on considerations you’ll need to make to launch the model at your firm.

Part 2 of the ConnectWise guide, titled “How to Plan for the Big Transition,” says no detail is too small and no consideration is too insignificant when you decide to adopt an as-a-service model, whether you abandon your previous model completely or weave them together.

Another key, according to ConnectWise’s team of experts, focuses on the need to not try to do everything overnight—or even in a year. Finally, it’s important as you’re considering whether to launch a managed services department to consider whether that’s all you should do from now on.

THE ULTIMATE GUIDE TO AS-A-SERVICE

Tips, advice, and long-term solutions on how to transition your business to an as-a-service model, and why it’s beneficial to do so.

Part 1: Why Change Your Business Model?—analysis by CI editor Tom LeBlanc

Part 2: How to Plan for the Big Transition—analysis by CI editor-at-large Craig MacCormack

Part 3: Managing Cash Flow

Part 4: Adapting Your Sales Strategy

Part 5: Transitioning Your Existing Clients

Part 6: Business Process Automation

Part 7: How to Retain Clients

Check back for analysis of each section of the Ultimate Guide to As-a-Service to be released on CommercialIntegrator.com.

Here are some of the major takeaways from The Ultimate Guide to As a Service Part 2:

1.) Sweat the small stuff.

Before you go all-in on launching your as-a-service model, make sure you’ve crafted a detailed business plan with specific goals and objectives. The business plan should cover at least three years, but in many cases, it can take as long as 10 years to achieve the goals. Spend plenty of time on the details of the first three years of the plan, but think even longer term as you do. And, once you develop the business plan, don’t stick it on a shelf or delete the PDF copy from your inbox.

The plan can serve as a road map that helps you set where you’re taking the business and why you’re taking it there; remind you how far you’ve come since launching the model and giving you concrete goals to measure your progress; communicate the end goal to your employees, who may be wondering why you’re changing what’s worked for your company; and demonstrate your creditworthiness to the bank, just in case you need a little extra cash to achieve your vision along the way.

2.) Take it slow.

Once you decide to take the plunge and launch a managed services offering at your company, there’s some temptation to try to do it all at once, but avoid that temptation at all costs. If you want your new offering to take off, make the transition over the course of several years, a minimum of three but possibly more.

First, think about how much of your annual revenue you’d like to see coming from recurring revenue streams, then steadily increase that percentage from one year to the next until you’ve reached your ultimate goal. There’s nothing that says you have to reach your goal in a single year. Figure out if you’re more comfortable trying to get there in a couple of years or would rather stretch it to five years, or even 10. ConnectWise suggests three years is the sweet spot but reminds those making the transition to be “ambitious” with their goals.

3.) Be ready for anything.

Another key consideration for companies launching a managed services offering is how many of your customers should fall under that umbrella. Some companies will sell only smaller deals as managed services, while continuing to close larger deals as traditional sales. Others will try to sell all new deals as managed services packages, falling back to traditional sales only when faced with significant objection from a long-time client or large prospect dangling on that hook. Others still will choose to slowly build up their managed services bundle by introducing a few pieces at a time, ranging from network monitoring and digital signage to loyalty and gift card management.

4.) Consider the importance of tradition.

While you’ll no doubt be excited to roll out managed services and surely will generate buzz from existing customers and potential new ones, you’ll have to think about whether you want to get rid of the traditional sales model and run the risk of alienating your legacy customers. While it sounds great to create a model where you’re eliminating one-off projects and installations and sales, the truth is there’s likely room—and probably a need—for both approaches.