The traditional break/fix IT services model has had its day.
In an increasingly competitive environment, managed service providers simply cannot deliver the depth, breadth or quality of service required using the traditional on site, engineer based approach. This highly reactive business model fails to deliver the quality of service customers require in todays 24x7 environment. And, as a result, too many providers are experiencing untenable levels of customer attrition even as high as 30% a year. The only way managed services providers can grow the business, stabilise the revenue stream and improve customer retention is to embrace a business model based upon highly integrated remote monitoring and automation, insists Philip Sansom, Senior Vice President, Kaseya UK.
The managed services market may be growing fast but, in the UK at least, few organisations are maximising profitability. With an over reliance on customer site visits to carry out both routine and emergency tasks, too many IT services companies are struggling to create a sustainable growth path.
Using the traditional, resource heavy model, each new customer win prompts a flurry of technical staff recruitment simply to keep pace with demand. Yet these engineers are, at best, only productive 30% of the time. The rest is spent either travelling to and from customer sites or on emergency stand-by. What business, irrespective of industry, can afford to have a highly skilled, high cost work force unproductive for the majority of the working day?
Furthermore, frequent on site engineer visits may appease a customer, but their presence is hardly indicative of a well managed, efficient contract. In the majority of cases, it is simply too expensive or time consuming for managed services providers to complete the key routine tasks required to keep customer equipment in good condition. From regular patch updates to disk defragmentation, these core service roles are too often overlooked as organisations struggle to react to the day to day outages affecting customers.
Blue chip service, SME price
Yet these day to day outages can be significantly reduced if these routine tasks are carried out effectively. This can, however, never be achieved using a manual on site team the costs are unsustainable. As blue chip organisations have discovered over the past few years, it is only by combining remote monitoring with automation that these core activities can be delivered cost effectively.
There is now a very real opportunity for managed services providers to leverage this automated, remote business model to deliver high quality customer services at a fraction of the costs experienced by blue chips. The economies of scale of the managed service model offer SME organisations for the first time access to the robust, highly available IT systems required to be competitive in todays marketplace.
Some providers have dabbled with point solutions that deliver remote monitoring or audit. However, without a completely integrated solution, they have been unable to achieve the high levels of automation required such as link from email to ticketing system to truly transform productivity and profitability.
Using an integrated, automated solution, providers can ensure patch and security updates are always carried out; that anti-spyware is up to date; anti-virus software correctly configured; and temporary Internet files deleted. Furthermore, alerts raised by monitoring software can be acted upon not by an engineer on standby but by an automated solution that can repair and reboot machines remotely.
By creating the right policies and services, via an automated framework, providers can ensure all machines under management are always running at peak efficiency.
Managing by policy in this way to improve the quality and timeliness of core service tasks, will significantly improve service levels.
Not only will this minimise the expensive and time consuming engineer call outs but, critically, customers receive the quality of service and uptime traditionally experience only by blue chip companies that have made a significant investment in technology.
New Model, Sustainable Growth
The implications for the managed service providers business model are significant.
Taking this approach, engineer productivity rises to over 80%, since engineers can manage the majority of customer issues remotely, removing the need for time consuming travel. Furthermore, any engineer that is required on site can feel confident that the routine tasks have been completed and configuration is consistent.
Engineers can work in teams remotely to support multiple customers simultaneously. This ensures new customers can be added without requiring an immediate increase in engineering resource. Suddenly the business scales, creating profitable, sustainable growth.
And the billing method changes. Rather than enduring the peaks and troughs of the break/fix model, with its annual end of contract flurry of activity in a bid to entice the customer to re-sign, organisations can offer a monthly subscription service. In addition to stabilising the cash flow, this approach enables customers to pick and choose service levels to reflect specific business needs mixing high and medium system availability for different systems.
It also enables providers to introduce new services, such as back up and disaster recovery, to the portfolio, leveraging the lower cost of delivery to expand the business and get quantifiable competitive differentiation.
Of course, not all customers will be ready and willing to shift over to a subscription approach. Indeed, providers face a serious education challenge in ensuring customers understand that fewer on site visits does not mean lower service. However, even if customers remain on an annual contract, the provider will immediately gain from the lower cost of service delivery achieved via the proactive, off site model.
Regular information updates combined with proactive visits from engineers taking on an account management role will be key to enable the customer transformation. Using the information collected by the remote monitoring tools, providers can track trends in system performance and predict possible failures ahead of time. Taking this approach both customer and provider can plan and budget for replacements and upgrades, rather than enduring an unpleasant surprise, hefty bill and costly downtime after a failure.
As experience in the US demonstrates, customers rapidly acclimatise to the shift in service delivery model, enjoying the far higher service quality and proactive approach. For the provider keen to achieve business expansion and improve productivity and profitability, consigning the resource heavy break/fix model to history is essential. It is only by embracing a remote model with high levels of automation that providers can achieve a scalable, profitable business model that delivers the increase in service quality required by an increasingly demanding customer base.