Blog | January 14, 2014

Avoid These 4 Deadly Sins Of Managed Services

By Jay McCall

BSM-Risk-Reward

During a conversation I had with Bob Lawson, product director at GFI MAX, we discussed the major pitfalls MSPs run into that can sabotage their practices. After much thought and consideration, here are the top four any MSP would do well to avoid:

1. Being too greedy. Let’s face it, it probably would be better for your customers to have all their IT hardware and software on a managed services plan with your company. But, according to Lawson, you should avoid “Swinging for the home run — straight off.” Instead, start with an offer that’s easy for your customers to buy, like keeping a watch on their systems and flagging any problems early. After they have a chance to see the value you offer, then you can discuss moving them onto a “fix it” contract.

This point is probably the most controversial because many MSPs have had success selling bundled “all-or-nothing” IT solutions to their customers. The issue here is how you handle the exceptions conversations. For example, let’s say you sell an IT bundle that includes McAfee antivirus, but your customer recently renewed its Kaspersky software licenses a couple of months before engaging with you. It’s natural for them to want to use their AV with your bundle and ask for a discount on the AV portion. But, if you make a habit of making too many exceptions, what’s the point of offering a bundle in the first place? How about this for a compromise: After explaining why it’s better for them and you to standardize your bundle, offer to offset at least some of their AV licensing costs until their subscription with the other AV company runs out. That way they’ll feel as though their recent purchase wasn’t completely in vain, and you won’t have to start out the business relationship on a negative note. Problem solved and greed averted.

2. Not standardizing your services offering. This will help with efficient delivery (and cost management). It also will be much easier to focus your sales teams on the types of contracts you want them to sell and make sure your techs who are delivering the service understand the SLAs (service level agreements) and response times.

3. Vague contracts. Unless you have thought through your managed services contracts and scope of work ahead of time — and carefully defined what’s out of contract — it will cost you a lot of money in labor doing things you hadn’t planned to do for your customer. Also, it kills any chance to upsell and move customers from a basic plan to an intermediate plan.

4. Failing to understand what you’re signing up for. According to Lawson, a 24/7 fixed-price managed services contract means a transfer of risk from the customer to you, the MSP. If you don’t know the customer’s systems, you don’t know the risks and issues that lurk in the shadows.

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