Is Your Managed IT Services Provider Stuck in the 90s?

Publication date: October 07, 2015

Managed IT Services have come a long way since the 90s.

Once upon a time, if you had an IT issue, you would have to wait for the next scheduled on-site visit by your IT Support Technician to resolve it.

The technician (let’s call him David) would be on-site on a predetermined day, would visit each staff member, and in turn resolve their individual IT issues.

David would then go to the server room/closet and “check the logs” to make sure the servers were in good health.

Once David was done with his routine tasks, he would hang around (probably browsing the internet) as he was contracted to be on-site for the whole workday.

Evolution of Managed IT Services

That was the 90s. The problem today is that there are organizations that still have this arrangement with their Managed Services Provider (MSP) – the same arrangement they had 20 years ago.

The fault for this lays with many MSPs – they have not evolved their service delivery model over the last two decades.

Nonprofits, associations, and businesses need to focus on their mission and deliver on their promise to members and other stakeholders. To be fully effective, they must break away from legacy service models for IT support.

It makes no sense to have staff save their technical issues for a specific IT service day when the IT provider is on-site. Staff are the most important assets of an organization, and if they have a technical issue, it must be addressed immediately. Prompt IT service ensures that staff can continue to perform their jobs, and ultimately help propel an organization on its mission.

In parallel, your MSP should be proactively monitoring your systems on the back-end server side and addressing any issues as they occur. IT monitoring is to ensure that your systems are continuously in good health, and that they serve the data and tools your end users need to perform their jobs without interruption.

The Modern Managed Services Provider

In today’s on-demand world, the modern, customer-focused MSP is focused on proactively providing their customers with managed IT support and guidance. This means on-demand support when their customer needs it, whether remotely or on-site.

With abundant bandwidth available to most organizations and sophisticated remote access tools, there is no reason why an issue cannot be resolved within minutes, no matter where the end-user is located.

This type of technology service model directly translates into efficiency for the customer and the MSP, which results in cost savings for the customer. The customer doesn’t lose valuable business hours while hindered by technical issues and waiting for the IT vendor to come on-site (not to mention paying for their travel time).

The modern MSP can take on higher volumes of support issues with less staff, making it more profitable, and in theory pass those cost savings on to their customers.

Strategic IT Consulting

Beyond day to day support, the most common complaint we hear from organizations is that their MSP does not provide strategic IT consulting in the form of guidance on future technologies.

This goes back to MSPs being stuck in legacy service delivery models.

If they can’t be proactive in providing support to their clients, how can they be strategic in providing guidance on the future?

Because the two are not mutually exclusive, an MSP that is proactive, agile, and strategic is able to provide their clients with rapid response, proactive support/maintenance, and continuous strategic consultation. A modern MSP should be leveraging the latest technologies themselves, and once thoroughly tested, providing cutting edge IT solutions for their clients.

If the MSPs entire business model does not fit with this philosophy, then they will not be capable of providing their clients with strategic technology guidance.

In fact, they will likely continue to recommend that you purchase expensive on premise equipment, as you always have.

Rollover IT Service Model

The same is true in how an MSP runs the business side of their operations. For example, the majority of MSPs have a “use it or lose it” policy regarding contracted support hours or retainer funds.

It’s your money, shouldn’t you be able to use it when you really need it? This concept is nothing new and has radically changed the wireless telephone business. Customers tired of losing their “minutes” at the end of the month – AT&T soon introduced “rollover” minutes, and shortly after the competition followed.

Most recently this concept has been applied to rollover data plans. So why do MSPs not allow their customers to also rollover funds/hours or apply them towards projects?

The End of Long-Term Contracts

The same philosophy of rollover hours/funds applies to the notion of locking customers into long-term contracts.

T-Mobile was one of the first wireless providers to offer month-to-month plans, as consumers were attracted to flexibility in their service plans.

So why are MSPs still requiring customers to sign two, three, or even five year contracts? Why would you want to be locked in to the same rates for long periods?

Modern MSPs do not require long-term commitments from their clients if they are 100% confident in their services.

A reasonable commitment for a managed services agreement, 12 months, is to allow the MSP to gain an understanding of your environment and implement a support model to meet your organization’s needs.

Any long term commitment to cloud solutions is unnecessary as a provider’s on-boarding process should be sophisticated enough to make locking customers in to recoup implementation costs unnecessary.

Also, modern, customer centric, quality MSPs don’t build in auto renewals into contract terms. They know their service quality is reason enough for you to decide – on your own – to renew the engagement.

Many MSPs will slip a clause into their contracts obligating the customer to provide notice of contract termination within a specified window, e.g. something narrow like 30 to 60 days prior to the end of contract date. If the customer does not provide this notice, the agreement auto renews for another term, often one year.

Disruptive Innovation: Online Price Transparency

Finally, let’s talk about the buying process. It’s amazing that procuring a new MSP or cloud services provider is often like buying a used car.

At first, the sales person won’t give you pricing until you receive their proposal. If you ask for a discount, they may be willing to lower their price, but only if you sign by Friday.

And your organization should be suspicious of a vendor who is willing to negotiate on price. If the vendor’s management is truly confident in its products and services, and if they are smart business people who have priced their products and services competitively in the marketplace, then they have no reason to negotiate.

If the MSP is willing to negotiate on price, consider how and why it might be possible for them to do so. A price reduction is an admission that the original quote for services is not backed by deliverable value, nor is in line with the market. In reality, the original quote was a quick way to pad margins.

And it’s a safe bet that future quotes from the vendor will also be inflated, requiring your organization to invest time to closely scrutinize and comparison shop just to have a fair procurement process.

Disruptors not only innovate product offerings, but they also upend business models. An example of modern market disruptor is Tesla.

Besides introducing radically different engineering and technology, Tesla’s business model is disruptive to the auto industry in the way that they sell their cars.

Gone are the days of car dealerships and salesmen, if you want to buy a Tesla, all you need to do is go to tesla.com, configure your car to your specifications, and then click the button to place your order.

Their pricing, fully transparent, is online for everyone to see, and you can be certain that you are paying the same price as other consumers.

So why do MSPs not have the same transparency in their pricing? Because they want maximize their profits with every deal they sign, just as a traditional car salesman would. If the customer is not a strong negotiator then the MSP will sell them on the higher rates.

If by the time you’ve finished reading this article, you feel that your MSP is stuck in the 90s, then it may be time to move on. And if your vendor is one of the modern MSPs we described, then you’ll want to hold on to that relationship.

5 Key Take-Aways

  1. Seek a managed services provider who has evolved by adapting their service models to meet the changing needs of nonprofits and associations. They should be wholly customer-centric.
  2. Your managed IT services provider should be a strategic partner, providing consultation and guidance on future technologies, thereby empowering your organization to work towards furthering its mission.
  3. Seek an IT provider who offers rollover hours in their service model. Your organization is entitled to the hours it has paid for, and should be given flexibility in how to allocate them.
  4. Long-term contracts and termination fees are a thing of the past. Organizations should have flexibility in their purchases, and deserve to not feel “locked-in” if a vendor does not meet expectations.
  5. Don’t wait until a proposal is provided to review costs. Providers who are dedicated to your organization’s future should be upfront and transparent about their prices.

Written by: Payam Pourkhomami, President & CEO, OSIbeyond

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