Managed Storage: It's All About Business, Not Technology

ServIT is among the growing cadre of IT providers that fully understand that the opportunity for business growth is not related to hardware. Rather, it is all about the services you sell and how you build enough recurring revenue that the ebb and flow of project work simply doesn’t matter anymore. For Tony Merendino, president of ServIT, who has been running that managed services business for a decade, storage sales no longer revolve around better technology or the hardware product. “There used to be those IT companies that concentrated on the newest and latest technology, and if they were super tech-savvy, and a bit lucky, they maybe could weather this economic storm,” says Merendino. “But, in the storage market, you must evolve beyond the technology. The industry has dumbed down the technology so more people can use it, and that changes the value we offer to our customers.” That reality signals an end to legacy technology companies that built growth on the foundation of ever-improving technology solutions — today it is all about identifying and servicing your customers’ business needs.

Find Business Drivers Behind Storage Needs
Merendino explains that an ongoing explosion of data is driving storage sales growth in every market from SMB to enterprise. “We need to store more data — electronic medical records, archived emails because of compliance, product videos, whatever — and that is driving a mountain of information, and thus, storage solutions,” he says. However, because each business is different, the reasons behind its storage needs are unique. So, ServIT trains from top to bottom to take a consultative approach so it can learn enough about each customer’s business goals to offer them the best storage solution. “We have to know what our customer is trying to do. What is driving its decisions? Is it compliance; is it going green? Once we know that, we can partner with them and make the best recommendations,” says Merendino. “We don’t go after sales from the hardware perspective, even though storage is traditionally a hardware sell. We take a consultative approach, and that makes our storage sales nontraditional.” Merendino, whose business enjoyed 25% revenue growth last year, says that while his company still completes storage deployments, it is evolving to an agile, service-oriented business. “Flexibility is the answer today; it doesn’t matter who owns the SAN [storage attached network], where it is, or what products it includes. We just take care of the customers’ needs so they can get back to business — whatever that is.”

Merendino says that when he sits down with a customer, the conversation gets tactical quite quickly as that person starts talking about what they think they need. But what ServIT wants to know is what the customer is trying to accomplish with that network. The ensuing conversation often entails a lot of “what” and “why” questions, such as: What is causing the business to go out and spend this money, and what has changed within the business that this project is now a priority? For example, an acquisition and its impact on data storage needs could be the business issue driving the purchasing decision, and that is what an MSP needs to discover. From there, the conversation goes along the path of where that new data will be stored and archived, who will manage it, and whether the customer needs external backup and disaster recovery services.

Flexible Storage Solutions Keep Focus On Services
At that point in the sales cycle, ServIT’s flexibility in terms of solutions has an impact. The MSP handles customers in one of three ways. One, the IT provider stores all the customer’s data on storage area networks (SANs) in one of its two data centers. Two, they monitor and manage SANs at the customer’s site. Three, the MSP offers a hybrid choice where ServIT handles the customer’s archiving and disaster recovery SAN offsite as well as monitoring and managing the customer’s internal SAN. The challenge is determining which model is the best fit for the customer: Is it a better fit for ServIT to just offer support, or is it a better business decision for the customer to move its entire network into ServIT’s data center and let the MSP handle the storage needs, the archiving, and the network? In today’s economy, Merendino says, the latter decision is often the most popular one, especially for companies that have 50 to 150 desktops and revenue ranging from $25 to $75 million. “With this economy, it makes a lot more sense to let us own the network and worry about keeping it working while you, the customer, concentrate on whatever your business does.”

No matter how ServIT delivers its services — on-site or off — its capacity to handle nearly all storage product lines is another key part of its storage solution offering. Obviously, when a customer takes advantage of a full services package with ServIT, everything transfers to the MSP’s data center, which uses the ROBOBAK suite of data storage products. If the solution is a hybrid or an on-site solution, offering flexibility around technology products allows ServIT to take the technology off the table and return to its goal of resolving the business issue driving a change in the network. “You can’t say to a customer that you want to partner with them, and then demand they use what you want them to use,” says Merendino. That said, ServIT does have stronger relationships with certain vendors and does have technology preferences, which it includes in its recommendations. The MSP also doesn’t allow the patients to run the asylum, as the old saying goes. “We make our recommendation, and then we can have a logical conversation about why we believe that solution is best for the customer if they have an objection,” says Merendino. But, if the customer is entrenched with a technology product that ServIT doesn’t support, and it won’t compromise on that product decision, two things happen. Merendino tries to find out what reasoning is behind the customer decision, and if it isn’t something ServIT can address, he will recommend another solutions provider. “We will walk away; we will not agree to a situation where we can’t support the technology,” he says, adding that situations rarely reach that point.

The catch to handling such a wide array of products is the cost of training and certification. Since the annual cost to train an IT technician, per vendor partner, can be very expensive, you may wonder how ServIT manages that cost. The question makes Merendino chuckle. “That is why we don’t hate recurring revenue; we have the cash flow to train when we need to,” he says. One way the MSP handles training is by holding large, quarterly training events. For example, in early summer, the company held ServIT University and pulled its 40-plus technicians from all 17 states it services for a four-day training seminar. “We paid $10,000 for a distributor partner of ours to organize a multivendor training event, and we brought our core people in for that,” says Merendino. On top of those quarterly sessions, ServIT takes advantage of its scale. If a project in one city includes a product line technicians in that location aren’t comfortable with, it is possible to pull a tech from another region with knowledge of that product.

Hiring Key To Successful Managed Services
Hiring people open to ServIT’s consultative business model versus the standard break/fix, hardware sales business model is another place ServIT seems to differ from other VARs. ServIT has four key points to its hiring process. First, each manager is asked to suggest three people they believe would fit well into the ServIT corporate culture. Those names are entered into an HR database. From there, when it is time to hire a new staff member, HR looks at those contacts and invites prospects for interviews. Included in the interview process with ServIT is a personality test to confirm that a prospect is a good fit for a particular job opening. Those outsourced personality tests cost about $250 for each person.

Also, during the hiring process, three leaders within ServIT interview the prospect to provide unique perspectives on the prospect’s fit with the company. As a side note, the company does not require a background in IT. “We are not hiring skills, we are hiring people,” says Merendino. “We want people with the same core values, who want to be part of a team; it is more about character.” The last step: a commitment between both parties. The company will educate any employee interested in advancement, if they are willing to grow; and it doesn’t believe in year-end reviews, but rather asks each employee to complete 10 tasks (such as closing two service tickets, making five sales calls, or billing a certain number of accounts) every day. ServIT provides monetary incentives for meeting or exceeding the companywide goal of 7.5 tasks finished each day. “We believe in investing in our people, and in return we believe they are invested in the success of our business,” says Merendino.

For more on a successful managed services model, go to BSMinfo.com/jp/3992.

Ask him how all this — his consultative approach to selling, flexibility of solutions and product offerings, and the company’s corporate culture — helps the bottom line, and he’ll talk about growth. His goal is to hit $30 million in the next few years (ServIT posted $18 million in revenue last year). But he says the best way to gauge the company’s success is its relationship with its customers. And that, he adds, is a relationship any VAR or MSP can build if they are willing to walk away from the legacy approach to IT sales. “If we do all this right, no one talks about money anymore,” he says. “Our customers call us up, tell us what is wrong, and we take care of it; they haven’t talked to us about money in years. Instead, they partner with us and they trust us to do the right thing for their business, not just sell them up or sell them products.”