Adding alternative connectivity solutions to your managed service portfolio

Martin Saunders, Product Director at Highlight offers guidance to resellers and MSPs on how to add to their portfolios.

Evaluate your current portfolio

Whilst it is easier said than done, resellers and MSPs need to keep in touch with customers to understand what their problems are now and what they might be in the future. This will enable them to evaluate how their existing portfolio is performing and spot any potential future gaps.

Understanding and solving customers’ problems is the key role of a portfolio or product manager. And whilst a customer is not always able to articulate exactly what they want; they will be able to identify the issues that keep them awake at night and the key problems that they need solving. Many service providers will claim, or think, they have this ‘keep in touch’ approach, but most actually don’t: building the level of relationship where customers will actually open up to you, takes real time and effort. Having a monthly “How’s it going?” call doesn’t cut it.

When evaluating a portfolio, it is essential to keep a close eye on revenues coming in and costs going out. A six-month review after a service has been launched provides a useful check to ensure that assumptions were correct and identify any new support problems that have arisen.

It is also important not to get distracted away from customers by looking at what competitors are doing or by being too inwardly focused such as over analysing financial performance or putting too much attention on internal systems and automation.

I would highly recommend the training courses by Product Focus.¹ I’ve found their online courses are great at explaining how to assess a portfolio or a new business case and ensuring a product team or individual has the right level of skills, knowledge and experience to do their job properly.

Emerging opportunities

The biggest opportunity going forward is for resellers and MSPs to specialise and become experts in a few services rather than opting for a wide portfolio and being masters of none.

Offering a proper managed service is a huge opportunity for providers to make a difference.  Again, many claim to do this, in practice most actually don’t. Those that understand a product and go deep into it, rather than having a shallow and wide portfolio, will find lots of opportunities in the networking area to differentiate over those who only offer generic connectivity.

When selling networking services, the temptation to widen a portfolio has been based on the mistaken belief that the network is commoditised with very little opportunity to differentiate and add value. But this is untrue. SPs need to remember that there are two sides to their business. There is the technology and networking part which is all about ensuring the network runs – and this area of the industry has lots of competition.  And then there is the service side.

Services are the human element of looking after a customer, understanding their problems, how they use their technology, and how a failure can result in lost business or poor satisfaction for their end customers. Ultimately, most customers want their providers to understand their business and their issues, act as a virtual member of their IT department and really look after them.

For example, providers can sell broadband services that incorporate a range of guarantees, not just on availability and time to fix but also on the speed of connection – this is common in the residential market and will soon be a major feature in the business sector.  It is also possible to offer guarantees around the performance of a network connection, particularly useful for customers using UC applications that are very sensitive to network performance issues.  Providers can run performance tests on these networks, troubleshoot and run diagnostics to identify problems and offer reassurance to customers that they are getting a high-quality network connection.

With a new high-level managed service, there is an opportunity for providers to achieve a 30 or 40 per cent margin, or even higher when adding genuine value to a network technology service. This compares to selling a generic vanilla service that offers as little as a 5 per cent margin.

Vendor support for resellers and MSPs

In most cases, technology vendors need to improve their understanding of what service providers do and deliver the services that providers’ need for their businesses.

Typically, vendors tend to think of an MSP as a distributor of their products and services, adding little value and believing that the end customer is their customer – which is completely wrong and often leads to them being unwilling to devote time and resources to the MSP.  Alternatively, the vendor may believe that the service provider is consuming their technology like an enterprise.  This can cause major problems for providers with a large customer base that need to itemise services delivered to different customers.

Service Providers have a unique business environment, assembling an overall service from multiple hard and soft elements and selling it on against continuous performance and service measurement. Vendors need to recognise this, by ensuring their products are flexible with multitenancy capabilities so MSPs can manage a large customer base. They also need to deliver suitable commercial models for MSPs, with usage and costs that are tightly aligned with revenues being charged to customers. Cash flow is vital for most service providers, so vendors need to allow for a couple of months between the customer being charged and the vendor being paid.

It is also important that vendors do not tie MSPs into long terms contracts on an individual customer basis. Problems arise when a service is contracted for a year, but this goes out of sync with the provider’s contract with their end customer.  Long-term agreements on a big purchasing contract are necessary, but there needs to be flexibility on a customer-by-customer basis, so MSPs can scale up and down when needed.

¹ product focus