Managed service providers (MSPs) need to focus on their value and avoid being sucked into price wars.
Speaking at the MSPAlliance Summit in Framingham, Mass., Tuesday morning, Greg Donovan, CEO of Alpheon Corp., said MSPs must prove their worth to customers with continuous, incremental service improvements and accreditation rather than getting caught in a "race to the bottom" based on low prices.
That advice might be hard to follow in the current economy, but Donovan and others at the event said these are words to live by.
"We don't get into price wars. If a prospect wants to make price the battle, we smile and walk away. Usually we get a call back," Donovan said. "You can't be selling on price, you have to sell your value."
Secondly, Donovan and MSPAlliance president Charles Weaver recommended, unsurprisingly, that attendees get accredited by the organization and talk to each other about best practices.
Donovan, a board member of the MSPAlliance, estimated that the accreditation process took him 100 hours but was well worth it. About 100 of the 6,000 MSPAlliance members are in the MSP accreditation program, Weaver said.
Weaver acknowledged that some MSPs bridle at the notion of listening to MSP competitors talk about their business experiences: "They seem to think there's disinformation going on." But he recommended they get over it. "Every profession educates itself from within -- lawyers, CPAs, doctors. This is how we learn," Weaver said.
Edward Lennon, president of All Business Communications, an IP telephony specialist based in Waltham, Mass., said his company was interested in such accreditation.
Steve Lubahn, senior technical sales representative for Locknet IT Solutions in La Crosse, Wisc., agreed. Since Locknet works with a lot of banks and credit unions, security is a huge concern and the ability to offer secure services is a calling card.
"A lot of customers want SAS 70 accreditation but even if you have that, you still have to prove your IT skills. This accreditation shows you have those skills," Lubahn said.
SAS 70 is an auditing statement that defines the standards used to assess the internal controls of a service organization and issue a service auditor's report.
"I think it's important for customers to know you've been around, and accreditation is one way to show that," Lubahn said.
In addition, other resellers may copy your business plan, right down to the vendors they choose, but having this accreditation helps differentiate your business.
MSPAlliance also offers a way for tech vendors to get accredited, and that could help them more easily price and package their products for this sales model.
Attendees said it is difficult to keep on top of various products and technologies, and it doesn't help that many vendors claim their products are MSP-friendly when it's not the case.
"MSPs are bombarded with offers from vendors, but they're mostly marketing jargon. It's hard for them to keep in front of all this stuff, so vendor accreditation is an important tool to help MSPs create their short list," said Danny Essner, director of marketing for Intermedia, a New York-based company that sells hosted Microsoft Exchange Server, SharePoint and Office Communications Server both direct and through MSPs.