Friday, April 2, 2010

The Rise of Managed Services

Jay McBain, Director of Small and Medium Business, Lenovo
There has always been one constant in the technology industry. During every major economic downturn, opportunities emerge for Channel Partners to transform their businesses and increase their value to their customers. It is clear that this round is about Managed Services.
What are Managed Services?
The term Managed Services is very broad in its definition. In fact, Wikipedia shows over 30 different major categories of services that fit under the umbrella. Simply, it is the practice of customers transferring day-to-day IT management responsibility as a method to improve the effectiveness and efficiency of operations. To a Managed Service Provider (MSP), it is the evolution from break/fix to Professional Services to fully remote monitoring and control of a client’s IT. Many MSP’s bill a fixed monthly fee and use sophisticated dashboards and reporting tools for providing a defined set of services.
What are the benefits?
For customers, there are several benefits. Probably most important is having IT as a predictable variable expense that can be funded with OpEx vs. CapEx. It allows for reduced IT staffing requirements while tapping into an expert pool of professionals. It also allows the customer to effectively level the playing field with larger competitors and access skills and resources that they would be unable to do on their own.
For MSPs, the benefit is a profitable, recurring revenue stream. This “base” of revenue allows for better planning and growth strategies. As well, Managed Services buffers the margin erosion in many hardware and software products over the past number of years. An increase in customer ownership and retention, as well as more efficient use of technicians makes this model more attractive to traditional break/fix resellers.
Is it too late to get on board?
Absolutely not! While the growth of MSP’s in North America is rapidly increasing, we are still in the infancy stage of this market segment. A couple of years ago, there were roughly 400 MSP’s as compared to over 4,000 today. However, a June survey by Kaseya shows that only 18% of current VARs describe their business as “fully outsourced IT”. Almost 80% of VARs are still operating in a break/fix or project based IT model.
The MSP model has primarily grown in the Small and Medium Business space. In fact, the same survey noted that 90% of VARs have less than 1,000 PC’s under management. In roundtables conducted by Lenovo and Intel, MSPs relayed a “sweet spot” of about 20-30 computers per client or the “2 person IT shop”.
How does Lenovo add value to MSP’s?
Lenovo (and previously IBM), has spent over 15 years investing in key MSP related technologies such as remote management, security and durability. With a strong legacy of supporting large customers with complex IT departments, Lenovo has built a robust set of tools and technologies called “ThinkVantage”. Many of these tools, almost 15 in total, come included at no charge with ThinkPad, ThinkCentre and ThinkServer products and are designed to lower costs from deployment to disposal.
For example, on the security front, Lenovo was the first company to incorporate a security chip in its products, later to become known as the Trusted Platform Module. Lenovo was also first to market with a fingerprint reader as well as robust bios and hard drive passwords, and external port control. Looking forward, a “poison pill” technology allowing MSP’s to send a simple text message to a PC to disable it after it is stolen will be available.
The goal of all MSP’s is to eliminate “truck rolls”, the unprofitable deployment of technicians for software related issues which make up over 80% of helpdesk calls. With Intel’s vPro technology, combined with Lenovo’s ThinkVantage Technologies, an MSP can wake up a system that is turned off and remotely take it over with the same access as being right in front of the unit.
To protect against hardware failure related truck rolls, Lenovo has incorporated durability design attributes into Notebooks such as protective “roll cages” for the screen and motherboard, “air bag” technology for the hard drives that sense a drop and brace for impact, and spill resistance including dual drainage holes in the bottom of the unit. This is in addition to the quality materials protecting against cracks, broken hinges, and cracked screens. In fact, Think products are the only certified PCs by NASA to travel into space!
Finally, Lenovo understands the importance of MSP’s being able to run their businesses from proactive IT management tools such as Kaseya, Level Platforms, N-able and Zenith Infotech. In addition, reporting tools such as ConnectWise or Autotask are important for billing and reporting purposes. Lenovo understands the importance of integration and is working with these firms to incorporate our ThinkVantage tools into their dashboards and tools.
Lenovo has programs and incentives to help MSP’s acquire demo products as well as increasing margins on hardware sales to their customers. A full suite of services and financing are also offered which can be used for Hardware as a Service (HaaS) type of environments.
Again, this is an opportune time for Channel Partners to understand the Managed Services model and choose the right vendors to build or further develop their practice.

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