Best Practices for Avoiding Information Technology Mishaps and Pitfalls
Learn from their mistakes. That’s what IT management experts at dealers say, offering encouraging advice for others in the channel who want to offer information-technology services right in 2020. One major takeaway: making money from managed IT services takes time.
RJ Young, headquartered in Nashville, has grown into one of the largest, independent office equipment dealerships in the United States. Now in its seventh year of offering managed IT services, the dealership has experienced a growth spurt in this area over the past few months. According to Harris Delchamp, director of integrated solution sales, by focusing on revenue and resources, the company is growing monthly revenues and building a sales team.
Approximately 90% of RJ Young’s growth in the IT arena has developed organically, following an initial acquisition in 2012. This growth, however, has not come without its hard lessons, and the company has learned from its mistakes. Most importantly, RJ Young’s leadership team realized if it was going to buy a niche, managed IT provider to grow the business, its due-diligence process had to delve into the scope of a firm’s vision. If the target’s vision does not align with RJ Young’s, it can be a recipe for slow or no growth.
According to Steve Huff, RJ Young’s vice president of service, the best way to integrate this acquisition work from a service perspective was to manage more of the operation themselves and employ office-machine and copier service and sales tactics.
Expertise for Sale
For some dealers, adding managed IT services to the traditional copier business can seem too steep a hill to climb.
For Dave Moorman, president, managed IT services division, Novatech, it’s nearly impossible. Headquartered in Nashville, with locations in Georgia, Mississippi, Missouri, Tennessee, and Texas, the firm formerly known as NovaCopy offers document solutions in addition to selling and leasing copy/print devices, including 3D printers. In late March of 2019, Novatech acquired DynaSis, an Alpharetta, Georgia-based managed-service provider (MSP).
“It’s naïve to think you can hire a tech or IT guy to build a practice,” said Moorman, the former president of DynaSis. “When it comes to technical capabilities, often dealers don’t know what they don’t know. A new IT hire may be used to managing one environment, and now we’re asking him to manage 150, for example. It’s just not realistic. It would take too long.”
The DynaSis deal marks Novatech’s fourteenth merger or acquisition in its 21-year existence.
“It is difficult to grow managed IT organically,” explained Moorman, who has 27 years of tech industry experience. “With all the convergence over the past 10 to 15 years, the IT environment is complex today— from cybersecurity and cloud solutions to SANs [storage-area networks] and VoIP [voice-over internet protocol]. And I believe we will see more convergence in the next ten years.”
He also says providers cannot neglect the network-operations side of the business.
“Be proactive when it comes to monitoring, patching, updating security, managing back-up and deploying security technologies,” said Moorman.
Novatech built its own network operations center featuring call-center and tech support, as well as a professional services team that installs servers, switches, firewalls, and wireless devices.
“But we had 27 years to build it,” he quickly pointed out. “It takes years to do it right and perfect it.”
For newcomers to the managed IT services arena, it often can be easier to “outsource the heavy lifting,” advised Moorman. Instead of building net-ops, dealers can fast-track the process by collaborating with a managed-services firm such as All Covered or Great-America’s Collabrance.
Trevor Akervik, senior director of managed services for Marco Technologies LLC, added that poor vendor selection can be a painful experience for customers.
“We spend a considerable amount of time evaluating and vetting best-in-class vendors for remote-monitoring, antivirus and malware detection, email filtering, and network threat identification (SOCs),” reported Akervik, who spent eight of his 18-year industry career on the copier side of the business.
He reports that Marco prefers to partner with more sizable vendors for these services.
“We’ve been burned by startups,” Akervik stated. Marco, named for co-founders Gary Mardsen and Dave Marquardt, started in 1973 as a value-added reseller (VAR). Today, it serves customers nationally with core offices in Minnesota, Wisconsin, North Dakota, South Dakota, Iowa, Illinois, Nebraska, Missouri, Michigan, Pennsylvania, and Maryland. The firm, which began its managed services practice in 2005, understands the value of feeding vendor metrics back to customers.
“This is part of our value-added proposition and aids our retention efforts,” said Akervik.
A Different Type of Sale
“The sales side is different,” added RJ Young’s Huff regarding managed IT, particularly, the compensation model for sales representatives. “There is far less of a commission incentive and a higher base salary, with bonuses for client retention. We still ask, ‘When does the lease expire, and when can we turn it?’ And the [IT sales] cycle is drastically longer, sometimes taking three to six months.”
Plus, the hiring process entails identifying a different kind of salesperson.
“These accounts represent true partnerships,” said Huff. “We need to have our finger on the pulse of our clients and understand their goals. It’s more than speeds and feeds and service response. IT is a consultative type of sale that requires understanding what a prospect does not have today. These reps need to know how to handle uncertainty and doubt while gaining trust and rapport. Our people have to be more proactive to understand complex issues and interoperability between programs. One person does not wear both hats.”
Huff identified two different types of individuals required for the sales process. RJ Young’s structure employs IT sales specialists who “chase logos,” then turn it over to technical account managers to “farm” the account. Huff said this approach yields positive results for the dealership, with client retention rates dropping to around 5% over the past two years. (The industry average is between 12% and 15%, according to RJ Young’s Delchamp.)
The onboarding of processes is another area in which RJ Young stumbled initially.
“IT is such a different business,” said Delchamp. “There is project management, getting information from existing providers, setting up new things and support staffing, not to mention account management, procurement and help desk. You also have to ask yourself what existing infrastructure you are willing to take on.”
Getting IT right requires a long-term commitment from ownership and leadership, and “it takes an investment in resources,” said Huff, adding that you won’t be turning a profit at first is an adjustment a dealer must make.
“Dealers are used to making money, but the opportunities on the backside are awfully big,” said Huff, who believes patience and focus are the keys. “A lot can go wrong on this side of the business. When you add it all up, IT is a completely different business requiring new skill sets versus the copier model. This can be difficult to see if you have blinders on.”
For Delchamp, and many dealers who have successfully folded managed IT services into their offerings, the opportunity is only as good as the commitment to building a new strategy.
“Treating network services like you’re selling or leasing copy machines is like trying to force a square peg in a round hole,” concluded Delchamp. “A network going down is a lot different than a copier going down.”
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A Strategic Initiative
The first step to managed IT success, according to Novatech’s Dave Moorman, is to hire someone who has worked at a managed-service provider. Common dealer oversights are triage and support calls.
“Delivering a high level of service quality is imperative in these critical environments,” said Moorman.
He added that today’s clients, many of whom are accustomed to instant technology gratification, can have extremely high expectations. Moorman recommended that dealers view IT as a strategic initiative, rather than an essential offering.
“Traditional copier companies have to put thought into the IT customer experience,” added Marco’s Trevor Akervik. “A lot of people think hiring a technically competent individual to sit on their help desk is the answer to all their IT challenges.”
But for Marco, the key to IT success is less about technology and more about creating a positive user experience. What exactly does that mean? For starters, when customers call, Akervik said the dealership answers the phone “live” 98% of the time.
“For us, it all comes down to bedside manner,” explained Akervik. “No one enjoys getting trapped in voicemail holding patterns or having to re-explain a problem to multiple representatives until directed to the right person. The people calling us have experienced a technological disruption of some type. They don’t want to call us. They have to call us.”
If a “tier 1” technician is unable to resolve the problem, the client is “warm-call transferred” to a “tier 2” tech for assistance. According to Akervik, a warm transfer is a three-way call wherein the problem is articulated by the tier 1 tech and confirmed by his or her tier 2 counterpart. The customer-friendly strategy curbs confusion and reassures callers.
“It’s all about delivering more value,” said Akervik. “It costs us more to deliver, but it’s worth it.”
Novatech’s Moorman also cautions members of dealer management teams not to overcommit.
“You cannot let your customers dictate what equipment is procured and how they want it installed,” he stressed, emphasizing they are coming to you for your expertise. “As MSPs, dealers should be doing the directing and recommending the solutions, not the other way around. The customer typically does not know best-in-IT scenarios. A lot of customers think IT is just about firewalls and antivirus software, but with all the ransomware attacks and data breaches, there are 15 other layers of protection they’re not even aware of!”
In the end, customer-focused engagement has brought down costs for Marco.
“It has lowered our investment in people because we do not need to invest in as many highly technical individuals,” revealed Akervik.
Marco teaches and trains the tier 1 techs that typically are either right out of college or on their second jobs, providing them with a process to follow and a guide to help them navigate.
Marco’s methodology coaches these lower-level techs on how best to deal with customers in states of disruption, offering reassurance, “similar to how a nurse might reassure a medical patient,” said Akervik, “then, leading them to a conclusion.”
The structure provides a career path for many techs, who advance to second- and even third-tier levels. Some have become project technicians, as well, which has led to improved employee retention.
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