I have to remind myself from time to time that although the majority of IT service providers I speak with on the phone or at trade shows are already well into selling managed services, the reality for the channel as a whole is much different. The latest research from CompTIA reveals that roughly 4 in 10 IT service providers characterize themselves as “skilled experts” in managed services today, while just more than half claim to be “competent and getting better.”
IDC predicts that the business process outsourcing (BPO) market (of which managed services is a subset) will grow at a five-year CAGR of 5.3%, reaching nearly $203 billion by 2016. If you’re a VAR/reseller that’s still earning 100% of your revenue from project based IT sales and services, these statistics should provide some encouragement that the opportunity to earn monthly recurring revenue is far from saturated.
If this is a business change you’re still interested in considering, I’d suggest bookmarking the following article from Business Solutions Chief Editor Mike Monocello: “Retail VARs: How Did It Come To This?” Even if retail is a vertical you currently don’t do business in (and have no plans to change that), this is a must read because it gets to the heart of the issue that break-fix IT companies want to know before seriously consider any business changes: “How much money can I make selling managed services compared to what I’m currently doing?” The stats he shares line up well with what several MSPs who are deep into selling managed services (i.e. recurring revenue accounts for more than 50% of their overall revenue) have shared with me.
If the first article gets you interested in exploring this topic further, the next step I’d highly recommend is the following white paper written by ConnectWise, titled: “The Ultimate Guide To As-A-Service.” This paper isn’t some high-level puff piece promoting a specific vendor’s product; rather, it’s a down-to-earth, step-by-step guide to making this difficult-but-rewarding transition.
Here are the seven parts to this 40-page guide:
Part 1: Why Change Your Business Model?
Part 2: How to Plan for the Big Transition
Part 3: Managing Cash Flow
Part 4: Adapting Your Sales Strategy
Part 5: Transitioning Your Existing Clients
Part 6: Business Process Automation
Part 7: How to Retain Clients
Check out these resources today and make monthly recurring revenue a reality for your business in 2014.