By Jay McCall, Business Solutions magazine.
This MSP's (managed services provider's) MPS (managed print services) sales pitch is leading to more BDR (backup and disaster recovery) and VDI (virtual data infrastructure) sales and 100% projected revenue growth.
If there’s one thing that unites VARs of all sizes, it’s a strong dislike for dealing with copiers, printers, and MFPs (multifunction peripherals). Some VARs even take delight in their stance against this technology. (Customer calling into VAR): “Our copier keeps jamming. Can you send someone to take a look at it?” (VAR): “Sorry. We don’t handle those machines.
We just keep your network running smoothly. You’ll need to call your copier dealer.” If this scenario sounds like your business, you might want to reconsider your position. MPS is just selling toner and fixing paper jams, right? No, MPS is about much more than that. Don’t take my word for it; check out how RMC ProIT, a $2 million division of Ray Morgan Company, leverages its MPS to become a total business solutions provider to its customers. The MSP made two business changes last year, which combined with its MPS offering, are leading to a projected $4 million in revenue for 2012.
MPS Is A Gateway To Additional Business Services
Established in 1956, the Ray Morgan Company has grown to be Canon’s largest independent dealer west of the Mississippi. In the early 2000s, the company noticed MFP sales were outselling stand-alone copiers, printers, and fax machines. Not only that, but these new devices were now tied to customers’ networks, enabling such functionality as scan-to-email. To adapt to this change, Ray Morgan had to train its techs and hire networking engineers skilled at integrating MFPs with networks. What the copier dealer also discovered was several of its competitors weren’t changing with the times. “We’d help a new customer integrate its MFP with its SharePoint application, and they’d tell us, ‘My outside IT person has been working on this for months and hasn’t been able to fix this,’” says Tasha Hepburn, workflow analyst at RMC ProIT. “In many instances, their copier dealer didn’t set up the scan-to-email properly, and their MFPs were unable to email scanned documents. By solving these network issues, we’d earn their printer management business, and eventually additional IT service opportunities followed.”
Additionally, Ray Morgan noticed that customers were buying into the idea that leasing equipment such as MFPs and paying on a per-click or per-copy basis was preferable to buying and managing everything themselves. To that end, the Ray Morgan Company capitalized on these trends and in 2005 spun off RMC ProIT, an MSP offering IT solutions encompassing networking, document management, and telephony. Today, RMC ProIT has 140 customers and did $2 million in revenue in 2011. Even though MPS accounted for only about 10% of the MSP’s sales, Hepburn believes that the additional opportunities MPS creates make it an invaluable offering. “Copier dealers are finally starting to see the value of increasing their networking expertise, and we’re seeing more and more small IT VARs being acquired by copier dealers,” says Hepburn. “If an MSP refuses to get into the MPS game, it’s leaving itself vulnerable to these dealers-turned-IT-consultants.”
One of the objections VARs/MSPs have about getting involved with servicing MFPs is the hard cost involved with sending an engineer on-site to do repairs, compared with servers, which can oftentimes be troubleshot remotely. Hepburn’s advice is that it’s usually better for a VAR/ MSP to not handle MPS themselves. “By partnering with an established MPS provider, you can leverage their volume discounts on toner as well as their copier technician expertise,” she says. “Not only can you buy toner from an MPS cheaper than you or your customer can get it from a local retailer, but you can keep your engineers focused on troubleshooting more profitable equipment.”
Some VARs may feel that partnering with an MPS provider puts them in the same predicament they wanted to avoid in the first place — a potential competitor stealing their customers. The difference is that when you proactively partner with these companies, you can set the rules of engagement in writing, so both parties are clear on what’s acceptable and what’s not. It’s also important to remember that a vendor/service provider you bring into a business relationship will be much more agreeable to playing by your rules than one who stumbles upon your customer during their sales prospecting.
Is Your BDR Vendor Worth Keeping?
While MPS is one component behind ProIT’s success, there are two additional business moves the MSP made in 2011, to which it’s also attributing its projected 100% growth this year. One of those moves started by dumping its previous BDR vendor. “We’ve been selling BDR for quite some time,” says Erick Miller, VP of technology at RMC ProIT. “Our previous vendor stopped keeping up with patch management, and when our customers upgraded to Windows 2008 servers, their servers started rebooting at random times throughout the day.” Besides this major problem, Miller also didn’t like the way the previous BDR vendor was inflexible with its storage hardware. The MSP was locked into using only the BDR vendor’s hardware with its BDR software, which made the solution unsuitable for some customers.
After shopping around, RMC ProIT selected StorageCraft as its replacement vendor. “StorageCraft uses the same BDR engine as our previous vendor, but they give us the flexibility to use our own storage hardware (e.g. Dell), and StorageCraft keeps up to date with its patch management,” says Miller. Since making the BDR vendor switch, RMC ProIT has seen its BDR profit margins grow to 60%, nearly double what they were previously. One of the challenges the MSP faced was going back to customers that it sold the previous BDR vendor’s solution to and talking to them about switching to a new system. One thing that made this process a little easier is the MSP’s frequent communication with its customers. “We review our customers’ networks and IT equipment with them quarterly,” says Hepburn. “After we officially made the switch, we approached our BDR customers and told them why we felt they were at potential risk if they didn’t allow us to switch out their BDR.” Selling BDR as part of a managed services package is another thing that made these conversations easier. For example, a customer who was paying $200 per month for their previous BDR might only feel a $50 per month increase by migrating to the StorageCraft solution. Because customers’ networks are dynamic entities — requiring more storage or new applications over time — it’s not uncommon for a customer to see its monthly services bill increase from time to time. In some cases, however, the MSP would absorb all or part of the cost differences for customers that had recently purchased the previous BDR solution and were still several years away from renewing their leases.
VDI Shows Great Potential In Education Vertical
One of the main vertical markets RMC ProIT operates in is education. In fact, in the central and southern California region, the MSP has a presence in half of all the K-12 schools. One of the challenges its education customers have been plagued with is limited funding for IT resources and other supplies. As a result, many schools are unable to update legacy PCs. RMC ProIT sees VDI (virtual desktop infrastructure) as the solution to this problem. In a VDI environment, all the computer processing happens in the network server room instead of at the PC. This creates several benefits. “First, the school doesn’t need to purchase as many software licenses,” says Miller. “Plus, traditional PCs are replaced with thin-client computers, which have no moving parts [i.e. they use flash memory], they last twice as long as the average PC, and they consume much less power than their counterparts.” What’s more, in a thin-client computing environment, software updates and security happen on a server, thus reducing the need to have an IT person update each PC work station. “Two final benefits of VDI are that malware infections can be more easily mitigated, and it enables VARs to repurpose their customers’ legacy PCs,” says Miller. RMC ProIT has been able to drive down its customers’ computer costs by 50% by switching them to a VDI environment. The MSP sees this change in computing becoming a major trend, and analysts agree. According to ABI Research, the VDI market is forecasted to grow from $500 million in 2009 to $5 billion by 2016.
Recognizing the value of VDI was one thing, but selling it was a whole other matter. As it did with MPS, RMC ProIT didn’t try to tackle the problem on its own. In early 2011, the MSP hired a VDI specialist, a person who was familiar with the technical side of setting up a VDI environment, as well as the sales side. Next, RMC ProIT trained its sales reps and its level 2 technicians, the techs that get involved with support when the helpdesk person (level 1) is unable to resolve an issue. Each of RMC ProIT’s sales reps receives training from the VDI specialist on such topics as recognizing VDI sales opportunities and presenting the benefits of the technology to prospects. After a sales rep was engaged with a potential VDI customer, the rep would bring in the VDI specialist to engage with the prospect’s IT and/ or business decision maker. Because the MSP has three locations in California (Chico, Roseville, and Redding), it uses WebEx demos and video/ audio conference calls when possible to keep the VDI expert’s travel down. The bigger learning curve was with the level 2 technicians. “It takes most level 2 technicians six months to a year before they’re comfortable implementing this technology on their own,” says Hepburn. “This was where a lot of our resources were spent during the first year of our transition to selling VDI.”
Even though VDI marks a new service offering for RMC ProIT, it still ties into the MSP’s mission statement of providing its customers with end-to-end IT solutions. What’s more, RMC ProIT serves as a good example of what it means to be a trusted advisor to its customers. Paying attention to IT trends is an important part of that trait, but being willing to help customers in areas considered undesirable by some resellers is also a distinguishing factor.