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Transitioning to an MSP model—the opportunities and challenges

February 11, 2019

The pressure for resellers to transform their business model has never been greater. Hardware and software sales are becoming increasingly commoditized, and margins continue to fall. This makes managed services an increasingly attractive alternative, particularly if you specialize in the SMB market, where customers tend to have limited IT resources in house.

A primary reason for switching to a managed services model is the potential for recurring revenue. According to a State of North America Managed Services study, 64% of the channel partners surveyed said recurring revenue from managed services was the top contributor to their growth. “Recurring revenue is the catalyst for market relevance, business viability and growth,” said the report. “Companies that don’t have solid recurring revenue models will find themselves at a competitive disadvantage, playing catch-up with everyone else—at best.”

Another advantage of managed services is that it allows you to build business relationships based on service rather than price. You have the opportunity to prove yourself on an ongoing basis rather than when a customer needs to make a purchase.
 
Making the transition
One of the biggest changes involved in switching to a managed service provider (MSP) model is mindset. You’ll have to reorient how you sell—focusing on the time, money and headaches you can save the customer rather than product features and benefits. And your technical staff will need to become more vigilant about billable and non-billable hours—making sure that the urge to solve a particular problem isn’t beyond the scope of the contract, also known as the service-level agreement. It’s critical that this agreement spell out very specifically all the services you’ll provide and the technology you’ll cover.

Another major challenge is resources—having the capabilities you need to provide the services you promise. That’s where partnering with Ingram Micro can be invaluable. Ingram Micro’s Seismic Help Desk offers an affordable and scalable technical call center that allows you to offer your customers quality 24/7 technical support while keeping your operating expenses down. You can build a managed service provider practice without investing in a network operations center.

MSP and the cloud
Global spend for managed services is expected to grow over 10% through 2021, driven primarily by the accelerated adoption of cloud services. And you’ll have to have the resources to address your customers’ demand for these services. Relying on the Ingram Micro Cloud platform can be an excellent alternative. It offers a vast portfolio of cloud solutions to choose from.
 
Ingram Micro Cloud allows you to sell cloud software bundled with managed services as well as complementary solutions from Ingram Micro’s vast portfolio—with the convenience of streamlined, automated billing and invoicing. It’s a great way to scale profitably without increasing your overhead.
 
To learn more how leveraging the resources of Ingram Micro can make the transition to managed services a lot easier to undertake, contact Nicholas Vermiglio.