Greg Dixon, CTO for ScanSource (NASDAQ:SCSC), is an advocate of the managed services model and urges the value-added distributor’s partners to look at it as the model of the future.
Dixon says break-fix has been the norm for many years, however, with the growth of technologies such as cloud-based services and virtualization, the norm is changing — and taking a “wait-and-see attitude” very risky for today’s VARs.
“Resellers have to understand that the traditional business model is not going to be viable long-term,” Dixon says. “As a result, you have to embrace the new model.”
Dixon is referring to the recurring revenue, or as-a-Service business model, familiar to the broader IT channel. “It has become prevalent in the general IT space for exactly the same reasons that it is becoming prevalent in our market.”
Dixon says IT system integrators and VARs who are responsible for servers and storage were the first to provide cloud-based technologies. “They had to look early on at how to respond to this and how to protect their businesses and how to make their business propositions more viable.” He says in the last five years, these businesses converted to a managed services model — and responded well. He credits professional service automation (PSA) companies like Autotask, Tigerpaw, and ConnectWise for helping automate businesses as well as remote monitoring and management (RMM) companies. “What people discovered is that they could now service more customers more efficiently, and it is a more profitable business proposition,” Dixon explains. Indeed, the key to successful managed services is standardizing and gaining efficiencies to do more with less and maximize profits.
Speaking to ScanSource service providers — primarily in communications, point of sale, bar code, and physical security — Dixon says, “We are on the outside circle of this thing. It affected the core of IT first. Now it is working its way outward toward the edges of the network, and we have to respond. The good thing is that we don’t have to invent a plan. We don’t have to wait on some companies to step up and create software tools that would allow us to do these things and allow us to do them efficiently. It is already done for us.”
He also points out, “We have a great opportunity to not simply step into this new model, but to do it more efficiently than our predecessors did — with fewer arrows in our backs — and perhaps do it much more profitably than our predecessors did.”
He cautions, however, that VARs have to make the transition the right way. “You can’t stumble into it this model. You can’t just dabble. You have to be committed to making and following an as-a-Service plan. You always start with a plan.”
Dixon spoke to Jameson Publishing and Business Solutions magazine President Jim Roddy in an exclusive Executive-To-Executive interview conducted at the 2013 ScanSource Partner Conference in Austin, TX. You can listen to the entire interview by clicking here.