First, don’t miss today’s podcast at http://dstelzl.podbean.com/ – critical information on justification you need to provide before your projects can be approved. This applies well to the topic of managed services and how you should go about creating the ongoing justification needed to maintain long term managed agreements. A couple of key points made in yesterday’s teleseminar that deserve repeating:
- Managed services is a necessary part of building your company going forward. Without it, further commoditization of your product set only produces less margin, and service billing rates for most companies have not increased much over the past 20 years. We were paying $150 in 1988 for network engineers in the southeast; the same fees we’re charging right now in many cases.
- Valuation numbers for resellers depend on recurring revenue contracts. Ten years ago you might have sold you company for a multiple of revenue – today you might consider a small multiple of EBIT in most cases. Most acquisitions today are fire sales. Only recurring contracts or narrow highly specialized offerings can reverse this trend.
- Educational based marketing is the number one way to sell this type of program. Most clients are not aware of the risks they are operating with today. Without education, you’ll never come to agreement over the value you’re providing.
In addition we covered how to build it, how to price, what products to use, who should sell it, how to sell it, and how to maintain it and grow it. If you missed this program – make sure you catch the next one. You can’t succeed in this economy without changing your game to compete.