Will Managed Services Sink Your Ship or Save the Day?

I’m a big advocate for listening to what your customers are telling you – listen to what they say but anticipate what they need. If you don’t, you risk being irrelevant, obsolete, or worse – entering a death spiral, as I gingerly mentioned in my last article, Is 2013 the End of Our Industry.

A more in depth review of Gartner’s report, Top Predictions for IT Organizations and Users, 2010 and Beyond: A New Balance, offered credence to the migratory path of technology I have observed  over the last decade.

Put simply, technology’s pull on our business-world is inevitable. Necessity drives change and forces innovation.

Leslie Fiering, in her analysis of IT Ownership (section 3.o), summarizes by broadly stating that by 2012, 20% of businesses will own no IT assets.

Some key considerations include:

1. Virtualization renders underlying hardware non-strategic.
2. Security and compliance remain a concern, but increases in virtualization technology will aid organizations in sandboxing their data more effectively.
3. SaaS-offerings are attracting new customers because they are paying for the results, not the hassle to get there. Scalability, pay-as-you-go and hardware-independence are all key issues.
4. Forecasts place SaaS offerings at $6.8 billion in revenue annually in 2013, up from $0.66 billion today.
5. Younger employees in the workforce are demanding more control and choice of their computing needs.
6. The need for computing hardware will not disappear, given data center and desktop demand.
7. Enterprise IT budgets and staff will be reduced or refocused upon more strategic projects.
8. Service providers have to increase and reinforce consultative selling skills to help customers recognize opportunities to replace IT hardware assets with appropriate service offerings.

Wait! Look at #8. Did you read that? How does that stack up on your comp. plan?

Anyone care for some chocolate with that node?

IT has a wonderful way of reducing everything to chunks of digestible data for easy categorization. Thinking in binary – on and off – helps them keep things in their nice , neat little boxes.

Start thinking in terms of on-ramps and off-ramps to an information highway. Have you noticed how most MFP and printer manufacturers now have embedded technologies, with an API-based platform to hook in to? Gee, do you mean their OK with being at the fringe of the network? Sure, as long as they get their slice of the pie – they’ll be a node on the network – just like a highly-specialized, document-processing station.

Some real challenges remain:

1. Standard equipment lease and service agreement business models are not sustainable.
2. Combining function and utilization will yield a new breed of hardware farms. After all, why pay for 10o% of something and only get 20% out of it?
3. Hardware techs are in a declining job pool. Sure the article referenced PC/Server repair techs, but translate that across to our service core.
4. Software will follow suit, and become commoditized and easier to install and support. However, best practices in overlaying the solution to the organizational needs will remain a key area of revenue opportunity for service providers.
5. Old habits die hard. Many are still clinging to the way business was done 5 years ago.

We want what we want! What is that we want again?

We want ways to plug in data and expect a way to get actionable information in return. This is the driving concept behind all SaaS initiatives – and that thirst has paved the road for managed print services’ grand arrival; It has also quietly signaled its eventual demise and consumption by true professional services focused on the other 90% of a documents cost (not output).

The big 4 continue to position for this eventuality (or already have); IBM, HP, Xerox and Dell all either are or have purchased large consulting-houses.

So, while you wonder around trying to figure out whether you should include sunset clauses in your new “MPS Sales Reps” commission schedule, your primary buyer is researching his new monitoring software because he hates printers, being up-sold by someone who’s first line is, “I’m not a copier dealer.”

Our industry is beholden to sell the gear and sell the aftermarket. It certainly has proven lucrative over the years, But until that paradigm changes – we are going to be on the outside looking in; invited to the dance, but with no one to dance with.

Image courtesy of fpsurgeon.

Ken Stewart’s website, ChangeForge, focuses on the collision between the constantly changing worlds of business and technology in an information-centric world. Ken serves on the board of the new Managed Print Services Association, an international industry organization seeking worldwide best practices for the managed print services industry. He is also the founder of Seeking the Son. He is always interested in connecting with you.