A few years back, I wrote an article introducing and extolling the virtues of managed services as a value-added approach. The goal was to illuminate an ongoing revenue stream and show a clear path to facilitate long-term relationships with clients. Well, what began as an aspirational concept has now become an existential necessity. We need to accept the fact that the conditions under which we conduct business today have changed.
Historically, our business has been product centric. Today, however, physical products alone are not enough to sustain most integration businesses. With the abundance of hardware that is easily available to all buyers, commercial integrators need to add value beyond the confines of the hardware that they sell. Integrators also need to expand their thinking and offerings beyond a basic service contract. The key is to present inclusive managed services in a way that will resonate with clients as something tangible and that serves their best interest. The end game is to become a “business fit” — not just a vendor.
Managed Services at its Core
At its core, the concept of managed services centers on outsourcing the responsibility for maintaining and anticipating needs related to a range of processes and functions. Managed services help improve operations and reduce costs related to employers’ staff levels. Typically, a dedicated company with specialized expertise provides managed services, and technology solutions often enhance those services. Conventional outsourcing is usually low complexity service-on-demand, whereas managed services are much more complex and comprehensive and provide higher value.
The managed services provider can offer a menu of items and take over segments of clients’ operations. These include complex elements that require specialized expertise and those that are labor-intensive or incremental that reduce client staff productivity. The benefits of this service delivery model are multifold. Perhaps the most significant benefit centers on cost savings, along with risk avoidance and transference.
The managed services provider takes on the burden of investing in their own people and technological know-how, allowing clients to devote their time, money and attention to the most productive areas.
The first and biggest step for a provider seeking to introduce managed service to an organization is to instill client confidence. Both parties need to understand and trust each other from the outset. As the price of entry, a provider should lead with its good reputation — namely, its well-trained staff of professionals with expertise and certifications in many different fields, bolstered by proven track records and recommendations.
Factors to Consider
Of course, a client-specific needs analysis is a key component of moving forward. However, it ultimately boils down to what to propose and what to charge. I interviewed several integrators with expertise in managed services, and I found some key common elements to consider when making a proposal.
When it comes to managed services, several factors are at play; it is rarely as simple as charging one hour of work for one hour of service. Typically, it is done on a retainer basis in which you estimate your level of involvement and charge what is appropriate (or, more likely, what the client will agree to). There will be some clearly defined hours spent but also undefined hours spent “on call” when and if a need arises. It’s a balancing act for sure.
Key Recommendations
Our experts whom I interviewed offered the following recommendations:
- Employ an omni-service approach. Cover as much as you are capable of servicing, be it AV, IT, digital signage and/or security. A single point of responsibility is a value that resonates.
- Consider your menu of options: onsite service employees, virtual and/or truck rolls.
- Calculate what is being covered (e.g., the number of products/systems, hardware versus software, level of service, and size and location of the operation).
- Determine the SLA response time.
- Determine whether you’ll be working on a private network or shared cloud.
- Establish the length of contract and other variables.
All those elements and more must be considered for a successful managed services contract. It must be a win/win that works for all parties.
Suffice it to say that the opportunity is huge. The global managed services market size was valued at $270 billion in 2023. The market is projected to grow from $297.2 billion in 2024 to $878.71 billion by 2032, reflecting a compound annual growth rate of 14.5% during the forecast period. This outpaces the growth in AV, IT, digital signage and security.
It’s time for integrators to take “we service what we sell” to the next level.
Alan C. Brawn, CTS, DSCE, DSDE, DSNE, DCME, DSSP, IFF-C, is principal of Brawn Consulting.
