By Justin Crotty, Senior Vice President and General Manager, NetEnrich
I don’t know of any IT solutions provider that has entered the services business to lose money. Yet for some, building a profitable IT services business hasn’t come easy.
As a sales executive, I’ve spent a lot of time with VARs and MSPs in the trenches, talking about the challenges they face, and what they need to build a successful and profitable, services business. During these conversations, I’ve learned that one of the top obstacles many solutions providers face is this: failure to account for hidden costs associated with their services businesses, such as the extra time they spend during the onboarding process to ensure customer satisfaction.
Other road blocks include poor pricing strategies that don’t take into account “value,” overlooking recurring revenue opportunities such as managed security, and simply not leaving room to bill for “scope creep.” These misses result in solutions providers not being paid for the true business value that their services provide and in other cases simply leaving money on the table.
So, how can VARs and MSPs overcome these obstacles to profitability? First of all, they must realize that they cannot approach the sale — or the support of their services business — the same way that they would the products or solutions they offer. Other best practices include:
When VARs and MSPs understand the value of the services they provide, price their services according to value, and communicate that value to their customers, a successful and profitable IT services business is will within their reach.
Justin Crotty serves as senior vice president and general manager for NetEnrich Inc. He’s responsible for driving growth and scale for NetEnrich and its partners and customers. Prior to joining NetEnrich, Crotty conceived and launched the services division at Ingram Micro, where his team built and grew the first and most innovative managed and cloud services business in IT distribution. Widely recognized as an IT channel champion, Crotty has held management positions in IT sales and marketing, and began his career as an IT network engineer with IBM.