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ACG Research tackles services strategy for managed services providers

Managed and cloud services got a boost from the recession, and managed service providers (MSPs) and vendors need to have the right strategies in place to build a revenue-generating services business, so ACG Research launched a new practice to help MSPs shore up their go-to-market strategies.

Managed and cloud services is one market that got an unexpected boost from the recession over the last couple of years, as enterprise willingness to try managed or outsourced infrastructure/networking and mobility services became a "C-level" business decision rather than a pure IT decision. This shift has been a boon to managed service providers (MSPs), equipment vendors and value-added resellers (VARs) that have holistic managed services portfolios in place. But the revenue opportunity is lost on MSPs that don't have a step-by-step plan along with the tools for increasing managed services sales, which includes having vendors as channel partners to help them.

ACG recently launched a Managed Services Cloud program to deliver a range of action plans to managed service providers that need help, whether they're starting from scratch or need to refine or completely overhaul their programs. Executive Editor Kate Gerwig talked to ACG's Lauren Robinette -- who has built loyalty and partner-enablement programs at companies such as Cisco, HP, Avaya, Symantec and Fortinet -- about her nine-step managed services training program designed for MSPs and vendors at any stage of the lifecycle.

Why are managed services growing right now?
Lauren Robinette: The economic double dip that we've been going through has caused a lot of enterprises to rethink. The decision-makers, CEOs and CFOs are looking at the CIOs and saying, "Why not?" The interest in managed services is coming more from the business end, because they need to make a change for economic reasons. The recession has probably been the biggest boon for double-digit growth in the managed services market.

Where are you seeing the biggest managed services growth?
Robinette: Depending on the vertical market, it's all over the map. Growth in India is up 22% year over year, for example, and managed services are going crazy in financial and banking services, because what's core to a bank is not servers and staying up to speed on the latest technology. Online trading firms need help, and right behind them are education, health and government. The security offered by a managed service provider is better than having to hire staff and keep up with advanced technology, because that's core to an MSP, as is technology adoption and [pushing] the next new thing.

If managed services are growing so much, why do managed service providers and vendors need help?
Robinette: Yes, the managed services market has seen ridiculously high growth numbers.  The problems are often in the market because this is still new and go-to-market practices for services are still developing and defining best practices. Most vendors don't really get into helping managed service providers with a services sale; they often concentrate on selling products to MSPs. A lot of the best practices modules in my practice have to do with go-to-market strategies that include vendor best practices and how to increase reach through channel partners.

Managed service providers also need help on how to overcome customers' objections, because that's what managed services sales are about. MSPs have to make sure it's a C-level discussion because they're not selling a thing to the consumer market. At the C-level, it's often a move to a service decision they have to make for business reasons.

If vendors worked better with MSPs, what would they do differently?
Robinette: Managed service providers often fail in really developing a vendor-provided loyalty program that is so sticky that the vendor is deeply entrenched in the go-to-market strategy of the provider. Vendors generally want to sell more equipment, and they're good at talking about the next big thing. If vendors tell their VARs why they should resell a product, they should do the same with a service by partnering with an MSP. Through a loyalty program, we can help MSPs develop that kind of plan with their vendors to reach customers the MSP doesn't have today.

Have you built services-oriented value-added reseller programs before?
Robinette: I built a program for Cisco to teach VARs how to get into the service practice business. It was actually simple. Focus on how sales reps can overcome the objections customers have when you want to sell a service, [but] they want to buy a product. You talk to the C-level executives to make sure you understand the value of the business compared to the purpose of the service. Then you compare the value of your business with services compared to with products alone. A lot of it is understanding how to overcome the customer's objections.

Vendors can facilitate the education of building a service practice with their traditional resellers as well as connecting the education to MSPs' delivery teams through go-to-market tools and objection-handling strategies offered in a loyalty program.

Can you describe the modules in your managed services training practice?
Robinette: We address best practices in the lifecycles of managed service providers. If you're a vendor, you need to know who your providers are selling to -- enterprise, small and midsize businesses or consumers. You also need to get in closer to the service providers that have already adopted your technologies. If you're a service provider, you probably need to do further analysis, including who to go after, what to tell potential customers about you technology and what you can do for their business.

We customize these modules to create a business plan to make sure MSPs have the education, the awareness and the differentiation to go to market with customizable HTML tools so their customers will feel loved and stay with them for reasons beyond the technology choices. The goal for MSPs is to win more business and analyze whether they have an awareness or a brand problem.

Do you work more with vendors or managed service providers at this point?
Robinette: The vendors tend to be the biggest problem. MSPs might to go their vendors and ask for help in differentiating their services, so we can give managed service providers the vendors that can help them, too. They need vendors to sell with them, so it's a full paradigm change, and it's hard to break that down. The modules break the lifecycle down to support the transformation.

Is interest in cloud services the major emphasis of your business right now?
Robinette: One of my managed service provider clients describes customers as being on a journey toward cloud [computing] services. Many enterprises want their servers on premises for security and other reasons. But as their memory needs grow, they become willing to buy backup and storage as a hosted service. Then they need more power, and then a backup solution, which can also be hosted services. After all of that, they're ready to make the big move to the cloud, which totally changes the paradigm of what the customer wants to buy.

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