From The Editor | August 7, 2015

A Managed Services Tsunami In POS/Bar Coding Is Coming. Don't Say You Weren't Warned.

Jim Roddy

By Jim Roddy, Vantiv

Greg Dixon, the Chief Technology Officer and Technology Evangelist for ScanSource

We interrupt our regularly scheduled Business Solutions channel content for this message:

Resellers in the point of sale and data collection channel need to embrace managed services soon or their business will suffer, maybe even die in the next decade.

This isn’t just my opinion. First let’s hear from Greg Dixon (pictured), ScanSource’s CTO and technology evangelist, then we’ll point to data from several managed services vendors that support my case that you need to take action ASAP.

The following are excerpts from my recent lengthy interview with Dixon (ScanSource’s Dixon Urges POS, AIDC VARs To Look To Managed Services), with some quotes bolded for emphasis. When you hear a key leader at a multibillion distributor with its roots in POS and bar coding make these statements, I hope you realize this shift to services is real. And if you don’t change, your business could get steamrolled.

Managed services is not new. It’s not new to the IT industry. It’s five or six years old. It’s a maturing market space for those who are involved in more of the core parts of the network. If there are four or five layers here, layers one, two, and three, those are the core parts. It’s the ERP [enterprise resource planning], it’s the CRM [customer relationship management], it’s the voice communications parts of the network, it’s the storage and all those things. Managed services is not a new thing for those. Our customers live at the edge of that network, and so those edge suppliers, like point of sale, like mobile devices, just to use those two examples, are really, really ready for managed services.

Those customers were already getting managed services opportunities from their core network folks and are already accustomed to it. They’re already accustomed to paying a monthly bill for a service level agreement. The language — you don’t have to reinvent this. It’s something that’s already in place. Our customers, though, who serve the edge of the network, really need to become aware of these things. (Our customers) need to learn to speak that language, and they need also to learn how to embrace and manage these devices, these edge devices. Otherwise, I’m afraid they’re going to be overrun and sort of pushed out of the network.

… If you’re going to manage the devices, you ought to own the network that they’re running on. That’s been a huge issue of mine, is that our customers want to let other people put in the network, even the wireless components, and then we hook our things to their network. To me, that’s just bad business.

What we’ve been doing this year, and what we’ll be doing a lot in the next few months, is providing solutions that help POS resellers, who are maybe unaccustomed to networking, really get good at the network, get a managed network and make it PCI-managed, make sure it’s absolutely secure and then give them the tools, those dashboards and those RMM, remote monitoring and management tools, that give them the ability now to take some baby steps. Maybe if that’s what they want, we’ll help them with baby steps, even though I think the day of baby steps might be rapidly coming to an end. We’re going to have to dive into the deep end of the pool here sometime, and we’re going to help people do that. But I think that’s where we are. We’re at the cusp of a real change in our industry here, one way or the other.

(For resellers who are not changing), there’s a discomfort there that they can’t deny. They can’t deny the world is changing below their feet and only a fool stands still when the ground moves.

… The old business model is old and it’s getting older, fast. As a result, there will be less companies to point to and say, “There’s another one, there’s another one, there’s another one.” There’s going to be a decline in just the sheer numbers of companies that are capable of doing this, and unfortunately the big guys are going to get bigger, and the small guys are going to go away.

Now, that’s a little harsh, and it doesn’t mean to be harsh. What it says is that we’re in the middle of a time when it’s really critical that distributors like ourselves are consistent with our message, that we’re doing everything we can possibly do to make our customers hear it.

… We have to make sure that they’re hearing it loud and clear. Every time you put me on a stage, I can’t help it, but this is what I want to talk about. You’ve got me on a stage right now, and I’m not going to let my customers down. They need to hear that we’re living in different times these days. These are different times.

I’m 38 years in the IT business. Trust me, I’ve seen everything come and go. We’re seeing another thing here come, and some things are going to go as part of it. You can blame the cloud, blame an Internet that is reliable and fast and capable, blame these kinds of things, blame virtualization, blame VMware. I don’t know, you can blame a lot of things. Blame Amazon. But the facts are, it’s a different world. Our business models are going to have to change to accommodate that new world.

So a multibillion-dollar distributor with point of sale and data collection origins is pushing you and its own resources towards managed services. Combine that with the emerging trend from the “other” side of the IT channel — many traditional managed services vendors are embracing retail and hospitality, verticals they previously ignored. Examples:

  • In the May 2015 issue of Business Solutions, an article titled “Why RMM Is Right For Retail” included the perspectives of executives from LogicNow, N-Able, Continuum, and Vigilix.
  • In our March issue, we featured VAR Lonestar POS (“A Marriage Of POS & Managed Services”). The former ECR (electronic cash register) dealer’s line card includes traditional hospitality and retail vendors Aldelo, APG Cash Drawer, Cayan, Epson, Honeywell, and pcAmerica along with distributor BlueStar. Lonestar moved into managed services recently (and successfully) with the help of AVG, Continuum, and eFolder.         
  • Vendors Carbonite, Unitrends, Datto and LogicNow preached the importance of BDR (backup and disaster recovery) for retailers in this article titled “No Time For POS Downtime.” Said LogicNow’s Dave Sobel, “With retail organizations generating revenue on an hourly and sometimes minute-by-minute basis, downtime can be much higher than with other organizations that have less frequent transactions.”
  • BDR provider StorageCraft assisted MSP OMNIPOTECH with an install for the Dessert Gallery, a high-end bakery and café (“Turn Your Customer’s Downtime Into A Cloud Upsell Opportunity”). The solution supports the POS and credit card systems.
  • Network security vendor My Digital Shield is reaching out to retail IT resellers, providing advice to them in a Business Solutions column titled “POS Security: 5 Ways To Protect Against Data Breaches” Company Founder and CEO Andrew Bagrin wrote, “With the right vendor, channel partners can deliver solutions tailored to small businesses such as retail, restaurants, and professional services.”
  • The Business Solutions feature “Break Out Of Paltry POS Sales” detailed how tools from ConnectWise enabled Dakota Retail Technologies, a VAR focusing on the retail and hospitality verticals, to grow its revenues 150% in just one year.
  • The client list for solutions provider Nuspire Networks includes Volkswagen and General Motors, but with the help of vendor F-Secure, the MSP branched out into retail with a 4,500-location installation (“Taking Security-as-a-Service To New Levels”). Nuspire parlayed the original install into three additional projects with the retailer.

That’s 13 different managed services vendors opening their arms to retail and hospitality. These are the companies that are going to further accelerate the business model change in POS and bar coding — the “new world” ScanSource’s Dixon referred to.

I understand not every independent retailer, restaurant, or grocer can be convinced (or should be convinced) to invest in a managed services for their business. Some are just too small or don’t need that level of technological sophistication. But they aren’t the majority of retail and hospitality end users; they’re just a fraction of the target market for solutions providers. Furthermore, they’re not the path for VARs who want achieve greater profits and recurring revenue, building a sustainable business model that will be of real value when they retire or hand the reins to the next generation.

POS and bar coding resellers need to embrace managed services today; act as if there’s no tomorrow. Because when the managed services tsunami hits, you might be right.