Managed Services seems to be the latest fandango title applied to IT Support companies who offer their services to Small & Medium Sized Businesses who can’t really afford their own internal IT staff.

Just to be clear, I’d suggest that Managed Services is a very distinct risk model from the standard break/fix (or professional services) hourly billing norm.

In Managed Services your IT Support Company takes on the risk.  It does the work to keep IT systems running well and provides an account management layer on top of the work it does.  Essentially, it takes the problem off your ‘customer’s desk’ in return for a fixed fee.

We speak to thousands of IT Support companies who tell us they are very interested in this model but they’re not sure how to do this. They’re unsure about packaging this, promoting this, pricing this, selling this & how to deliver this service profitably.

So our Building Blocks program helps them do this – grow recurring revenue service’s – which is great if you can.

However… Managed Services as defined above doesn’t suit every customer or every customer relationship IT Support companies have.  And it doesn’t suit every IT Company either.

Dead Within 3 Years?

I hear a lot of hype such as ‘if you’re not a managed service provider within 3 years, you’ll be history’.  I think it’s nonsense.

Most IT companies I speak to run a hybrid model (Break Fix + Managed Services) because that’s what their customers demand (and I speak to a lot).

I read stats like only 10% of IT Support companies in the US are ‘true’ Managed Service Providers and I shake my head…. My take on it is that’s because some of the end customers prefer it that way (just now).

I’ve myself proposed and sold both break/fix and managed service relationships and I once tried telling a lawyer who clearly understood hourly billing that I proposed billing him the same fee every month regardless of how much/little work our company did.  He raised an eyebrow, I got the message.

So, do what your customers need you to do.  That’s what’s important.

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