Managed Network Services "The New Holy Grail for Office Equipment Dealers"?

A few months we had a thread started on the Print4Pay Hotel forums titled "Managed Services Are You In or Out".  Since then we've had 15 replies and over 150 page views with many different opinions.  I'd like to back up a step and state that most of the Print4Pay Hotel members that actively post responses, ask questions and see answers are probably some of the most knowledgeable reps and work for some of the more progressive dealers that I know in the industry.  All of the threads stated that in some way, shape or form, these reps and dealers are embracing Managed Network Services.

I'll post some of the replies here and then give a few of my own points at the end of the blog.  I encourage you to go here or go here if you need to register (it's free), view the threads and to add your perspective of how you or your company is either moving forward, or already selling Managed Network Services.  It's a good discussion for all of us since this is something new  and we could all learn from each other.

Here's a few of the responses:

We just partnered with an IT services company as another addition to our portfolio. Managing the network is very critical moving forward. We are just in the infancy stage but can see the opportunity and growth opportunities. from Larry

I believe this is the future of our industry. Forget MPS, that's a failure. In the near future a single vendor will manage all of an office's computer hardware. From switches, routers, PCs, printers and MFPs. Its already heading that way. At the very least we all need to partner up with the best IT companies in our territories and work together and share leads. Remember the IT guy's opinion will almost always carry a ton of weight when the customer is choosing an MFP or vendor to connect hardware to the network. from fisher

We have had good results selling IT services to small to medium companies that "dedicated" IT companies don't want to mess with. I'm talking about something in the neighborhood of 3-15 stations. Unfortunately, we now have a problem...customer IT issues are often urgent where getting our MFP's connected seldom is so us copier reps have become less of a priority. We might have to wait a week sometimes to get IT install support from our own people. They see our request as being non-revenue generating even though our dept pays their dept for every install but that is just a revenue shuffle and not net new incremental revenue. However, I'm a firm believer that "A rising tide lifts all boats" Any profitable revenue coming into this company helps us all. from Old Glory

Yes from Jason R

I agree with 'fisher' that "this is the future of our industry" and Managed IT Services would be a logical step for Independent Dealers to take as soon as possible. In fact, it could be necessary in the future, to help protect your base and gain net new business, with this offering. from GMAN

The route where we are finding a lot of interest is speaking to our ability to provide complementary services (remote monitoring, endpoint security, data recovery, etc.) to their current I.T. offerings, whether internal or outsourced. Our goal isn't to replace their existing I.T. (unless they're looking for that) but rather to help them do more with less. A lot of companies that had multiple I.T. people a few years ago are now rolling with a single individual who is overwhelmed. Adding MNS to that equation for $2k-$4k per month is substantially less than adding another full-time person, and you get much more than you would get just by adding another body. from txeagle

These are just a few of the responses that were posted.  Again you can read the rest on the Print4Pay Hotel forums.

But, I'd like to add this. In the last response from txeagle he stated "Adding MNS to that equation for $2K - $4k per month is substantially less than adding another full-time person, and you get much more than you would get just by adding another body".  Wow, that was an awesome response I never thought of it that way. 

But, here's a few thoughts of my own, let's say that the cost cover each PC each month is $30, and the cost to cover a server is $150 per month. How many PC's and Servers would need to be covered to generate a monthly MNS contract in the $2-$4K monthly cost?  One hundred PC's would be $3k per month and maybe 70 PC's and 10 servers would be $3,600 per month.  Let's just say that to generate this type of revenue off of one account it would have to be a size able account.

I'm aware of my own comp plan and the commissions for selling MNS, I've had the opportunity to reach out to a few Print4Pay Hotel members to discuss what their commission (pay) is when they sell and MNS plan.  Pretty much the numbers are all over the place, some dealerships offer as a commission the first two months of billing, while other will pay a percentage of the billing on a quarterly or monthly basis.  The lowest comp plan I saw was for a rep to make 6% per month of the billing.

Now 6% for one account that is averaging $3K per month would net a commission of $180 per month and $2,160 per year.  Based on the yearly that's very acceptable, however you'll also have to figure how long did it take to close that deal.  You see the problem that I see with this is what happens with the smaller accounts like  the 5-25 employees range with anywhere from 5 pc's and a server to 25 pc's and maybe a couple of servers.  Is this really going to pay off for the time that it takes to prospect, research, quote and close the deal, especially of the MNS contract is for 10 pc's and a one server?  A monthly billing of $450 and a commission based on the lowest monthly rate of 6% would generate $27 in commission to the rep per month and $324 per year! BTW, I did ask about the contract term for MNS and no one was locking in contracts for more than one year.

You can also look at this another way, lets say we found and imaging deal (selling an MFP) and the monthly lease rate was $450 per month.  That sale would generate $22,727 in hardware and a good estimate of commission would be about $1,600 and I'm thinking this might be on the low side. 

Right away, I'm thinking that it would be practical to not offer MNS for companies that have less than 25 employees or less than 15 networked PC's and servers. 

There's so much more to MNS, you could also generate additional billing hours for professional services, of course you would "own" the network, but as a rep who will be selling these services we need to find out where our time is best spent.  Please fell free to comment!

-=Good Selling=-