Tap Into A Whole New Budget Line – Selling Managed Services

Every vendor, partner and customer in the IT world is talking money, especially as we approach budgeting and forecasting season. Yes, technology is still important. But cost, cash flow, financing and budget planning are major hurdles at every company, regardless of size.

Mid-market companies are growing and they need expert IT operations and updated data center equipment, yet new equipment and software purchases face intense scrutiny. This is especially true when customers have to justify immediate cash outlays for hard assets like servers, VoIP phones, networking gear, software licenses or networking appliances.  Those purchases can be justified a little easier when your end client’s IT staff can communicate a more compelling return on that investment.

Solution providers can help.  First, you can present options that allow your customers to divide their IT spend into capital expenditures (CAPEX) and operational expenditures (OPEX). You’ve probably dabbled in CAPEX vs. OPEX discussions before. It’s now more relevant than ever because of the “cloud computing” context. Complex management scenarios with differing IT environments coupled with cloud-based applications also pose challenges.

Sell Cloud Solutions and Be Your Customer’s IT Operations Back Office

Generally speaking, your customers are using their OPEX budgets to buy software as a service (SaaS), Infrastructure as a Service (IaaS), or Platform as a Service (PaaS) in a subscription format, as opposed to a capital outlay that needs to be financed and depreciated over the life of the equipment.  These solutions require more management and operational support to ensure they are always on, secure and reliable.

When customers use cloud services, they not only treat the expense as operational, they avoid burdensome costs like:

    • Equipment upgrades


    • Power, cooling and physical space costs


    • Employee time spent managing and maintaining on-premise IT


    • Employee time spent managing network and storage infrastructures


    • Under-utilization costs (e.g. an under-utilized on-premise server costs more than a cloud-based, pay-as-you-consume service)

Advances in virtualization and “as a service” offerings are rapidly shifting expenditures away from hardware and into the cloud. In fact, companies like Microsoft are expecting 40% of their new small and medium business revenue to come from the cloud by 2014.

Bottom line, we believe you can tap into this growing market by delivering solutions that free your customers from legacy investments, and by positioning your company as their service provider.  In fact research shows if you don’t move up this value chain, you may start to see some of your deals go away.

Not All or Nothing

Let’s back up a second, though. This isn’t an “all or nothing,” doomsday scenario. No matter what your customers see on TV, and no matter what Microsoft, Cisco, CA, Sun and Oracle are pushing these days, the reality on the ground is that customers will maintain a mix of on-premise and cloud-based solutions.

Businesses large and small are still making capital expenditures on IT. And they’ve got all kinds of cloud and subscription-style services they’re considering. It’s going to be a muddled mix that changes from customer to customer.

As the solution provider, your strategy should be to identify customer needs and processes so you can recommend the right approach for their business.

Keep Focused on the Changing Game

The game is definitely changing, and the forces at play are changing the nature of the way you sell and market your solutions. Leads come in a little differently. Customers are switching up their perceptions about your role in their business, and they’re starting to “get it” conceptually.

This changes your sales process and offers opportunities to engage customers on a more strategic level. Lots of controllers and CFOs are ready to embrace any initiative that eliminates burdensome capital investments and introduces fixed monthly costs. Many companies have already pushed other functions (HR, legal and admin) out of their HQ because outsourcing providers offer fixed costs, transparency and flexibility.  So, with that said, be sure to sell your services and the benefits of cloud computing to the C-level contacts, just as much as you’re talking with the IT management whom you typically serve.