How office technology dealers can shift to managed IT services to gain back momentum
There’s been a lot of talk in the managed services industry about office technology (OT) dealers and their evolving role as service providers. Even pre-COVID when the majority of folks were still working in the office, printing and copying experienced a modest but steady decline. But there is an opportunity for OT dealers to find success and growth in these changing times. In fact, at ConnectWise, we’ve seen our OT customers experience the greatest growth among our clients during COVID, which is an encouraging demonstration of the endless possibilities even in the face of economic setbacks.
Without abandoning opportunities within traditional equipment sales, OT dealers can transition to a services model or rethink their business model as a whole. The path to managed services for OT dealers is quite a natural one due to their often-robust sales departments and ability to build and maintain strong client relationships.
Turning Challenges into Opportunities
The declining volume of print has only been accelerated over the last year by COVID. Add the marrying of many virtual technologies that make printing an often unnecessary activity, and we see a huge hurdle facing the OT industry. Another challenge we’re seeing in the OT world is the call from customers to work with a single point of contact for all of their IT and technical needs. In this realm, OT dealers have to be able to claim their seat at the digital transformation table.
Partnerships and relationship building is a huge part of a dealership’s DNA, which makes managed services a logical next step in this time of large-scale digital transformation. The OT dealer’s existing core competencies help them capture market opportunity in a very natural way. They have a history of educating clients and prospects on business improvement opportunities and delivering the relevant technology at the appropriate time. OT dealers have great sales and marketing capabilities, arguably more so than traditional MSPs. Paired with the financial stability and pure scale of the typical OT dealer, customers are naturally going to gravitate toward their OT dealers for IT services. Essentially, if a customer likes working with a dealer on the copy and print side, chances are they’d also like to purchase IT services from them provided they can do so with confidence.
In contrast with the printer world, technology provides virtually endless opportunities for upselling, optimization and adding on services for customers. Instead of a once or twice a year check-in with a client, OT dealers will find that managed services means constant opportunities for increasing recurring revenue.
Remote monitoring and management (RMM) deployment, for instance, is a great starting point for upsell conversations around integrated backup and disaster recovery, help desk, cloud products and other technology services.
Consider a dealership with 4,000 customers. The top half, or approximately 2,000 customers, is likely to have the greatest need for managed IT services. If the OT dealer is able to win over just 10% of those top customers over a three-year period, it could see an average of $3 million in net profits. By diversifying their portfolio, expanding their breadth of knowledge and expertise, and offering managed IT services to their customers, OT dealers can begin to further solidify existing relationships, bring on new clientele and add some impressive recurring revenue streams.
Plotting the right first move
So why haven’t more dealerships begun to make this transition? For many, it’s not knowing where to start. The simplest route, and one we see our customers take a lot, is partnering with a technology services provider to accelerate entry into managed services. Practically, we see a lot of businesses begin with an RMM partner. RMM allows technology services providers to install small software agents on client devices that feed information about machine health and status back to the provider. This is a seamless way for dealers to gain insights into client networks that can help them keep machines maintained and up-to-date, proactively stay ahead of issues and resolve problems remotely.
Another challenge lies in learning how to sell these new technology products and services. Without proper technical expertise and know-how, even veteran sales teams will struggle. Going from selling physical printers and copiers with specific features and talking points to selling different types of services is a difficult transition. OT salespeople are talented relationship builders, so they can capitalize on that fact. They’ll need to understand the way their customers are currently handling IT support and pinpoint certain areas and gaps in service that can be filled. OT sales professionals have focused on business outcomes for years, but managed services brings that discussion to a much more meaningful level.
Finally, an area that we refer to as a “blue ocean” for service providers today is cybersecurity. In fact, 91% of SMBs would consider using or moving to a new IT service provider if they offered the “right” cybersecurity solution. Those who would consider moving to a new IT service provider reported that they’d be willing to pay 30% more for it. So, not only are there huge opportunities for growth within general managed services, but there’s even more growth to be had in managed cybersecurity.
OT dealers are faced with a pivotal moment in time in the face of declining print needs and the unpredictable future of remote work. However, the opportunity is ripe for dealers to enter the services space. With smart partnerships, savvy and adaptable sales teams and the right approach to cybersecurity, wise dealerships can come out on top without having to sacrifice their existing bread and butter. We have yet to see an OT dealer that developed their managed services offering in a meaningful way at the expense of their core document imaging business.