Tips for Growing Your IT Services Business

Cultivate new opportunities with cybersecurity, network services, remote monitoring, and more.

How can dealers grow their IT services business? The short answer is simple, according to Trevor Akervik, chief operating officer of Marco Technologies. “Take care of anything in the customer’s network infrastructure… Expand into phones, IT data structure, peripheral devices, etc.”

The concept may sound easy, but of course, it’s not. Marco has been offering information technology for the past 38 years. The Minnesota-based mega dealer now employs 1,200 people serving some 20,000 customers. Akervik’s advice is to look for technology that fills in gaps.

“Many enterprise customers seek technical depth and aptitude,” he noted. On a smaller scale, he added, “SMBs often are fearful of their challenges and need counsel on issues such as security. They want to feel safe without over-spending.”

Marco is not shy about touting its security team’s expertise. “We host cyber workshops every other month or so across our 12-state area,” said Akervik. Supported by aggressive marketing efforts, a late February session drew business owners and IT leaders from five states.

Diversifying existing IT client bases is another successful strategy implemented by many dealerships. In the traditional infrastructure space, managed service provider (MSP) programs, such as those from All Covered, can assist with this initiative. All Covered is the IT services division of Konica Minolta Business Solutions, U.S.A.

But many larger dealers choose to bypass OEM support and go it alone. Some 53% of Impact Networking’s annual revenue—an estimated $180 million—is generated by IT and cybersecurity services. With northeastern Illinois roots planted in copier machines, the dealership dates back to 1999. Impact Networking is now focused less on hardware and more on managed IT and cloud computing services. Today, the company’s reach extends across the Midwest and West Coast, with over 700 employees and some 14,000 clients.

Targeting the C Level

Based in suburban Lake Forest, Illinois, north of Chicago, Impact Networking’s management team sets its sights on the so-called C-suite upper echelon of corporate senior executives and managers: the chief executive officer (CEO), chief financial officer (CFO), chief operating officer (COO) and chief information officer (CIO). “Our customers realize that they are doing business today on a connected Internet,” explained Patrick Layton, partner and vice president of managed IT services at Impact Networking.

The key to success, Layton said, is identifying the right customers, which can be a meticulous process. If done well, however, win rates increase dramatically. The average, one-time cost of an Impact Networking assessment is $25,000. By better qualifying leads, “the number of assessments we’ve converted into recurring business has leaped from 55% to about 75%,” he reported.

A big part of this success is cultivating true partner relationships. “Don’t just be a vendor,” Layton strongly suggested. “We don’t do anything less than a three-year contract for managed IT services and 95% of our contracts are five-year deals.” In addition, dealer cross-selling efforts may benefit, too, because partners are more open to discussing other solutions, such as managed marketing.

To guide its sales teams in the right direction, Impact Networking has created an “Ideal Client Profile:”

• The dealer targets mature companies with a minimum of $5 million in annual revenue. “We are not looking for SMBs,” Layton explained. “Actually, the ideal range is $20 million to $200 million.
• The prospect should have somewhere between 50 and 1,000 employees.
• The prospect needs to have in place security awareness training for employees, a good cloud-computing platform, and backup systems.

Mitigating Risk

As far as the types of service offerings that are most popular to add, Impact Networking has had success in three areas: managed risk mitigation programs, VoIP, and audiovisual (A/V) services.

1. In late 2021, the dealer spun off its cyber offering into a separate entity called DOT Security. “Security is one part of the risk-reduction process,” said Layton. “We follow guidelines established by the Center for Internet Security.” The nonprofit organization focuses on the way companies operate in a security conscious context and stresses documenting operating procedures. “In crisis mode, do you actually operate the way you say or think you do?” asked Layton.
2. VoIP is another area of growth. Impact Networking dropped its VoIP broadband partner and now uses Microsoft Teams as its voice platform for business communication. “Teams works great for data storage, data sharing, and other collaborations,” noted Layton. “Let’s be honest: Sharepoint is kind of ugly out of the box,” he opined about the Microsoft web-based document management and storage system.
3. A/V-as-a-service saw exponential growth during the COVID-19 pandemic. “Be creative when it comes to conference room add-ons,” encouraged Layton. “Pricing for visual video walls is down 80% over three years, so think about products such as high-end microphones and cameras for former hybrid employees who are back in the office.”

Cody Walton, national manager of strategic solutions, dealer sales, for Konica Minolta, agreed that expanded network security offerings can be a boon for dealers. “These days it’s all about building better [fire] walls and protection.” Offensive depth security has become a popular method of exposing vulnerabilities.

“A third-party can come in, without biased opinions, to find the holes and gaps that real hackers seek,” added Walton. These so-called “red” teams attempt to breach computer networks via proactive penetration testing that includes social engineering and phishing schemes.

The health care vertical market represents another golden opportunity for dealers looking to extend IT services. Tread carefully, Walton cautioned, because the complex compliance and regulations—especially the Health Insurance Portability and Accountability Act (HIPAA)—can be tricky to navigate.

Additional opportunities may come from application development. Konica Minolta works with Microsoft’s Power BI business analytics service, which allows dealers to visualize data and share insights. It converts data from different sources to build interactive dashboards and business-intelligence (BI) reports.

Upping IT Services Spend

How can dealers increase revenue within their existing IT accounts? Third-party OEMs can provide guidance in scaling operations for customers who already are in the info-tech game. “Exploring specialty, niche markets is one approach,” said Konica Minolta’s Walton. Another popular tactic is to make service bundles more enticing. “Augmenting remote monitoring is a big opportunity right now,” he noted, citing as a prime example public school districts whose students use Chromebooks, iPads, or laptops.

Beyond procuring hardware, Walton estimated that offering related project services, dealers can expect an additional 20% in revenue. Back-end lifecycle management opportunities, such as asset tagging, software readiness, installation, and deployment, can help to gain a larger share of customer IT budgets, he noted.

Success rates trend higher when the proposed services fit the customer. “Enterprise services don’t work in the SMB market,” said Walton. Konica Minolta uses cohort mapping to help dealers pinpoint customers based on technical acumen, type of infrastructure, and specific business challenges.

The end game for growing any IT services business is to reach profitability faster by reducing operating expenses. “We understand the importance of maintaining that the dealer is the service provider,” noted Walton, adding that Konica Minolta and All Covered are happy to provide back-end support and white-label options.

To support customer digital transformation (DX) efforts, Impact Networking dived deeper by forming an applications team that takes a holistic approach to business evaluations. “Technology changes so fast,” said Layton. “We look at the big picture, beyond software and electronics. After all, fixing a website is easy.”

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