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Why MSPs should offer vendor management services

While IT solutions providers tend to avoid offering vendor management to their clients, firms may be missing out on a valuable opportunity to strengthen their client relationships.

When converting from a break/fix to a managed services business model, many IT solution providers try not to offer more than they think they can or want to deliver. This is generally a good practice. One of the value-added services they are typically fearful of offering is vendor management inclusive of their managed services offering. Many simply don't want to take responsibility for an IT vendor's problems and others don't want to lose revenue by spending their time being the intermediary between the client and the vendor.

The reality is that when your customer has to contact a vendor for, say, their copier, telephone system or electronic fax service, they will eventually end up calling your company as well. There are a few reasons for this. If your customer isn't quite sure who owns responsibility for the problem -- you or the vendor -- you'll likely get the call. If you are providing great service to your customers, and you should be, they will contact you first because they have a relationship with you (they might deal with many of their vendors rarely, perhaps just to renew a service contract every couple of years). Then there are those times when your customer calls you because the copier vendor is on-site with a new copier and they need your support in adding it to the network.

You can take advantage of this dynamic by incorporating vendor management as a value-added service within your managed service plan offering.

From your customer's perspective, this arrangement gives them one throat to choke. Every employee has to remember only one telephone number or email address for support of anything IT-related: yours. This is a tremendous time saver for customers because employees are alleviated from having to contact vendors, a particular problem when they really don't know vendor-speak. Being in the middle is frustrating for employees, and they often end up caught in an "it's not our problem, it's theirs" disagreement.

By handling IT vendor relationships as a discrete value-add, they simply call you. It allows your customers' employees to remain productive, and it even strengthens your relationship with them.

By offering vendor management, you are always 'in the know' with regard to your customers' computers and networks because nothing will be done without you being involved.

By providing vendor management services to customers, your company gains a different set of benefits. Vendor management services eliminate the need to drop everything when a vendor is on-site because, for instance, it needs a static IP address for a new copier or printer. It also makes your company the go-to company for all of your customers' vendors. This means vendors are less likely to solicit your customers on products and services that you may offer because they typically will have to go through you first. It also makes your company more sticky with customers, since you're able to offer alternative services. In other words, your products and services, not theirs. Sticky is good because there will eventually be a situation in which your customer will consider leaving you and the pain to do so better be high until you can work to resolve that issue or improve the relationship with them. In addition, by offering vendor management, you are always "in the know" with regard to your customers' computers and networks because nothing will be done without you being involved. As an added benefit, offering more products and services to your existing customer base is by far the easiest way to increase your revenue, and offering vendor management services sets you up to be on the receiving end of those product and services sales.

Beyond all those pluses, there's another, softer benefit: The customers that use you for vendor management are likely to become by far your best customers and will be with you a long time as they value their time and the services you offer. These customers realize the value you offer. Relinquishing involvement in vendor relations means they trust your company to satisfy their needs.

On the other hand, customers that don't fully trust you want to retain some control and in many cases that means they aren't completely satisfied and might be afraid to have your company take care of everything for the exact same reasons you want to. They don't want have all their eggs in one basket. If you currently offer vendor management services and your customers aren't taking advantage of it, you should find out why. You might discover some things about your business that need attention.

AJ Gyomber is founder of Technology Visionaries and a member of IT provider community The ASCII Group.

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This was last published in December 2014

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Does offering vendor management to your customers work for your business? If not, why?
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When you are running a security reseller business, then you are faced with a critical decision. In my business, I had to decide whether to go general or specialize in my services. Iconic Mr. Gates speaks of choosing to be king in your field. At first, I opted to offer general services for the wider market I was contemplating. Later on, I changed my Vendor services into a specialist and the competition grew slimmer.
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Vendor management is the correct solution for today's customer centric world. I struggle, however, with how to implement such a strategy when this may be viewed from a vendor as you dipping in their pockets.

The article discusses the customer side of the equation, how do you negotiate the vendor side?
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