Archives For Dell

windowsWindows 10 Is Here – So How Will This Affect Your Managed Services Business Over the Next 12 Months?

Resellers – I’m talking about the SMB VAR that has converted most of the business to managed services.

There are many; if you’re a VAR, it’s you and your competition. Since the late 1980’s, when Microsoft Windows first appeared as a viable business choice, beating out OS/2 for the majority market share, Window’s problems have dominated IT’s time.  This operating system has never really worked – not like other operating systems. If you don’t agree – you may not have experienced the amazing capabilities and stability of IBM Mainframe technology, the OS/400 and it’s System 36 predecessors, and of course many flavors of UNIX. These computers run circles around Windows. But that’s another subject for another day.

The point is, Managed Services has been sold as a way to even out the expense associated with the support nightmares small businesses face every day. And I have to believe that 90% of them, based on many VAR interactions, are Windows problems. What happens to your manage services business if this version actually works?

I Use Mac and Don’t Really Need An IT Group

I started with Apple back in 1984.  In 1987, taking a job with what is now Bank of America, I was forced to move to DOS (which was also extremely stable and easy to use,) and eventually Windows 3.0 (The First real Windows look and feel). Windows 3.0 was not an operating system – it was an overlay that ran on DOS.  Eventually Microsoft turned this thing into a complete operating system – NT.

Remember Vista? Many revisions after the original NT operating system…It was supposed to be the silver bullet. I bought my a new laptop from Dell around that time, with Vista installed. By the time Windows 7 came out I was ready to convert!  I did – I moved back to Apple.  I rarely need any support, and have no regrets. It’s been over seven years now.

Mac People Converting? It’s a Sign.

When Microsoft Windows 7 came out, many of the problems were said to be corrected. And they were. I had one Windows desktop remaining in my office, and immediately upgraded it to the new Windows OS.  Running 4 Macs and one Windows 7 computer was interesting. In case you haven’t guessed, the Windows box was the only system that required frequent rebooting, laborious updates, and periodic wiping and reloading. 

So I was surprised when I read last week in the Wall Street Journal about a Mac follower converting to Windows 10! Something about 10 must be really good!  I guess we’ll see – but what happens to your business if Window’s users suddenly don’t need much in the way of support?

Sure, there will always be a need for some support. The entire city of Charlotte, NC and surrounding 100 mile radius is supported by about 2 Apple Stores. There might be a third.  This is actually good. I mean, computers should be getting better, and software should be more stable over time. This technology is maturing. But what’s you’re next move.

The Point Is, VARs Must Change

I’ve written about this before, but it needs to be written again. I just got off the phone with a long time customer and friend. His business has been very successful over the years – he sells managed services. This year growth is flat. I know many resellers are making money – they’ve built substantial recurring revenue through managed programs. It was the smart thing to do. Those who didn’t do it are probably in trouble right now.

But there’s always a next move. The technology business won’t stand still. And it’s about that time. Regardless of when you made the transition, it was 2003 when the early adopters did it.

You have two choices, the way I see it.  Security or Software. Either help companies make the digital transformation with customer software (a competitive advantage sell) or move to security – intelligent, predictive security. The  technologies are new, but now’s the time to jump onboard.  If not, you might find your Windows 10 customers don’t really need you. After all, it’s moving to the cloud…like just about everything.

© 2015, David Stelzl

P.S. Not related to this post really, but there are some interesting and concerning security issues emerging with the release of Windows 10.  Your team might want to be up on these – might create some new business opportunities.

Advertisements

Photo taken by David Stelzl

A couple of attendees emailed questions regarding competitive advantage…following Wednesday’s Cisco sponsored webinar.  I thought it might be helpful to address this here:

(Q) Why is Operational Efficiency or Risk Mitigation easier to sell than Competitive advantage?

First, it’s important to note, I did not say you can’t sell using competitive advantage as your value proposition, but rather, operational efficiency and risk mitigation are preferable; at least to the average sales person.  Here’s why…

Companies can use technology to compete, however this type of advantage is often short lived unless the company deploys some type of unique patented technology; something their competition can’t go out and buy tomorrow.  More often than not, technology driven competitive advantage is really an operational efficiency gained by the perfection or automation of some process.  So in the end, it’s really an operational efficiency sale, that in-part, delivers competitive advantage, in addition to delivering cost efficiencies (which their competition will either adopt or find another way to accomplish).  The technology sales person’s ability to foresee such an advantage in a complex manufacturing situation (for instance) is not so likely.  (Again, speaking of the average rep calling across many verticals).

True competitive advantages are seen when a larger company has more buying power, putting others out of business by squeezing their margins such as is the case with the Home Depot stores competing with smaller hardware stores.  Wal*Mart does this by putting highly efficient distribution processes in place that are unaffordable by the average mom and pop store in your local area.  While Wal*Mart may have some unique applications in place, their infrastructure isn’t really unique, just unaffordable to smaller companies.  The process itself is key, and unique as it is cost prohibitive to the smaller company.

Operational efficiency in itself may offer competitive advantage as seen above, and the seller can use this to gain momentum on the purchase, but the efficiency is more easily articulated by the seller.  To go down the competitive advantage road with technology sales may require a deep understanding of the vertical’s market pressures.  Perhaps if the sales person has come out of that industry, they’ll have success with this.

Competitive advantages not tied to operational efficiency, which stand alone as a true advantage that cannot be duplicated, may come in the form of location such as the best corner owned by McDonalds, exclusive distribution of a product, or patented technology such as the iPad and Mac OS.  These advantages are not easily matched.  Will Dell come out with a better laptop than Mac?  Probably not (in my opinion), however they certainly have a less expensive one.   Note how first to market has earned Apple 90% of the market on tablet computers!  This won’t be easy to steal.  This is hard to match when selling commodity goods which are largely over distributed in the VAR/Reseller world.

© 2011, David Stelzl

Several people commented privately on yesterday’s blog post featuring the iPad…the writing is on the wall.  People like iPad, they like Apple, they like simple, mobile, easy to use, and the status of being an Apple user.  It’s cool to have an Apple…and as I attend sales  meetings and conferences as a speaker, those in the Apple club often let me know when they see me pulling out my MacBook Pro..,”You’re an Apple guy, huh?  Me too.”

On the other hand, those who resell technology at the SMB and consumer level are in trouble, even after Apple just finished selling 14 million units to individuals (and some companies).  Lack of innovation and a lack of Google thinking…The brick and mortar book stores and technology stores are in trouble.  Best Buy’s report in the Wall Street Journal was telling – their value proposition has to do with technical expertise, but apparently buyers are more concerned with price than the future need for service.

But there’s more here.  Apple, at least my Apple workstation and laptop require very little support.  When I bought my Dell laptop two years ago, it came with Vista.  Now there’s a support nightmare.  So much so that after two years I just couldn’t take it any more.  So I put it in the closet and bought a Mac.  Up, running, and no problems. I’ve never had a support call.  With the Dell/Windows systems, not only did the software not work, but I had multiple hardware problems as well.

If you look at high-tech resellers over the past few years, many have built their business on the assumption that profit could be made on support – supporting systems that don’t work, which in turn allows them to sell hardware at a discount.  What happens when someone like Apple starts producing something that does work?  Or they announce something so simple and inexpensive that the user will throw it away and buy a new one – online at a discount.  All of the sudden, the reseller’s new sales model begins to break down. Many of the resellers I know are making most of their profits on problems users shouldn’t be experiencing!  This is destined to fail.  Especially with companies like Apple gaining market share.

© 2011, David Stelzl

 

What allows a company or individual to command higher fees?  I’ve written various posts over the past few weeks on fees, and yesterday, I commented on setting higher fixed fees vs. totaling your projected hours and presenting a fixed amount (this generally leads to underestimating and a decrease in project GP).  But what allows a company to propose higher fees without the competition coming in to win the deal on lower pricing?  Commodity sales compete on price…high-value sales don’t.  Here is a list of category offerings I use when considering how to go to market.

1. Product

2. Staffing

3. Projects

4. Strategy

5. Vision

The order builds from pure commodity to greater intellectual capital.  On the low end, companies like Dell are selling low priced desktop systems online.  Nothing unique here, but they are fulfilling a market demand; consumers want inexpensive computers, in fact they demand them.  Dell can fulfill this market demand by finding more efficient ways in manufacturing and distribution.  What was once a $5000 entry point in the early 80’s (and 5K back then was something to talk about), is now a few hundred dollars.  Netbooks and IPads may further change the game here.

Staffing follows with various skills that set apart individuals.  Projects help companies move forward with initiatives that change the business.  This is where value pricing really starts to make sense.

An interesting question arises with my model at this point.  What about a utility such as SaaS like Salesforce.com?  Cloud computing should fit in here somewhere…but we’ll come back to that another day.

As we move up, start thinking about Accenture or PWC.  Strategy commands big dollars.  In a prior life I referred to our growing company as, The Andersen Alternative (Back before the days of the Accenture brand).  The message was clear; we were consultants, working up the model toward higher value consulting, while selling the technology to implement those things we recommended doing.

Finally we have people who create vision.  People like Geoffrey Moore (Author of Inside the Tornado) come to mind.  Consultants working at the top with large high-tech companies, helping them figure out where to go next.

Most resellers are not built to reach vision creation; their sweet spot is probably in the project area.  Larger integrators are beginning to build business process, ITIL consulting, and other forms of business consulting into their model to offset the commoditization of product.  If you don’t start thinking about this now, you may find yourself without profits next year, and perhaps out of business in the near future.  But let me point out, the problem is not with the area you play in, rather it is in the model you’ve built.  Resellers are built to sell projects, Dell was built to sell hardware.  Both have high profit potential…but building one model and selling another is destined for failure.

© 2010, David Stelzl

Love him or hate him – you’re forced to make a choice.  Even the bad press gives the seller pictured here more fame and reputation.  He wins from both sides.  Remember what Seth Godin says, “Obscurity is your biggest enemy.”

When you present the obvious,  lack any differentiating opinions, and look to please everyone, you end up standing in a crowd among millions.  You are not a leader, you stand for nothing, and you bring no value.  All you can do is represent another choice but not one that stands out.  Perhaps you’ll win on price if you are a large reseller with big discounts, but your life is limited.  Eventually Dell or CDW will pass you with with an online sale.  In their world, the high-involvement salesperson is not needed.

So look again at your presentation!  Is it interesting? If not, change it…this is the hardest part of selling.  Once your message is great, begin working it, make it perfect, and learn to deliver it with confidence.  This has made the man pictured above one of the most well known figures in American radio; like him or not.

© 2010, David Stelzl

They all say they’ve got it covered…no one does!  Here is a summary article from one of my contacts at DiData…great info, thanks Matt.

http://www.msnbc.msn.com/id/37115813/ns/technology_and_science-security/#storyContinued

Summary:

  • “Our systems are probed thousands of times a day and scanned millions of times a day,” – speaking of government defense systems…
  • “We are experiencing damaging penetrations — damaging in the sense of loss of information. And we don’t fully understand our vulnerabilities,” – Now I feel safe!
  • Hackers have already penetrated the U.S. electrical grid and have stolen intellectual property, corporate secrets and money, according to the FBI’s cybercrime unit. In one incident, a bank lost $10 million in cash in a day. (Yet your clients all have it covered!)
  • “We’re talking about terabytes of data, equivalent to multiple libraries of Congress.” – (But those in the SMB don’t need to worry – right!)
  • United States military would need to prepare for fallout from a cyber attack, which could leave cities in the dark or disrupt communications. – (If you don’t offer DR planning, you might reconsider)

When your clients say, “We’ve got it covered”, remember, most are just ignorant, some are lying.  Don’t take no for an answer – instead educate them on what is really going on, and drive forward with the sale.  Take advantage of my latest ebook on selling through assessments… it’s free!  http://www.stelzl.us/training/CreatingSales.pdf

© David Stelzl, 2010

Share

Whether it\’s LPI, Zenith, Nable, or one of the many platforms available out there, it\’s really your technical knowhow and your ability to lower the impact and likelihood issues your client may face.  Yesterday was just one more example of total incompetence with the big players.  Heading out on a four day trip, I opened up my laptop in the airport in hopes of getting some work done between flights.  All of the sudden my wireless broadband card will not connect.

Verizon tests my connection and says everything is ok on their side and then actually takes a proactive step and gets Dell on the line (something I never expected).  Then after the usual computer troubleshooting 101 drills, the Dell tech decides we need to reinstall my entire system from the disks sent with the laptop.  That\’s right, not reinstall the driver for this wireless card, but actually rebuild the entire system.  I\’ve already told him I am sitting in the airport, but he actually asks if I have the disks and can save my data to a thumb drive!  How hard is it to beat this kind of competition?