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Around 40% of the respondents were small T service providers managing less than 250 computer
systems (desktops, notebooks and servers). Almost 50% of the companies manage between 251 and
5,000 systems, with the remaining 10% providing T services to over 5,000 endpoints.
Who is this report for?
This report is primarily aimed at those people who own, run or work within the T service provider sector,
serving a small to medium-sized enterprise (SME) customer base. Channel players such as distributors
and resellers may also find this guide beneficial in enabling their companies to introduce value-added
services and increase profitability, at a time when resale margins are being tightly squeezed.
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http://stats.berr.gov.uk/ed/sme/smestats2008-ukspr.pdf
Market overview
Never before has technology been so integral to the way we do business.
The internet is breaking down global barriers, enabling companies to work and collaborate with anyone,
at any time, from any location. The age old desktop PC has been replaced by a plethora of devices such
as laptops, netbooks and smart phones, which are driving the increase in mobile and remote, working.
Windows is no longer the dominant software it once was with Macintosh and Google gaining market
share and available on more devices than ever. Add to this the way we access and use a growing
number of applications and services is being strongly influenced by developments such as cloud
computing and virtualisation and it is not hard to see how reliant we have become on technology.
Analyst predictions that T spend is on the rise, despite the challenging economic conditions experienced
in 2009, only serve to emphasise the growing reliance on technology in the workplace. Forrester
Research expects European spending on T goods and services to start growing from Q1 2010, while
Gartner estimates global spending on T will grow 3.3% to $3.3 trillion in 2010, reversing the worst slump
the industry has ever seen.
The market opportunity
But what does this mean for T service providers?
Worldwide, the overwhelming majority of companies fall into the small to medium-sized enterprise (SME)
category and this is no different in the UK, where SMEs account for 99.9% of all businesses
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market is growing too, with these companies employing an estimated 13.7 million people in 2008 (2.1%
more than in 2007) and turnover estimated at 1,500 billion per year over 60 billion higher in 2008 than
in 2007.
SMEs are keen to take advantage of the latest technology tends, new internet applications and delivery
models such as software-as-a-service after all, these promise the ability to compete on a global scale
and drive efficiencies and profitability into their businesses. But while SMEs understand the now critical
role that T is playing in their business, the majority simply don't have the internal T department or
dedicated resource to support, maintain and manage increasingly complex networks, devices and
infrastructure.
SMEs just want their T to work all the time and therein lies the opportunity for T service providers.
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Market chaIIenges
So on the face of it the SME market seems to offer rich pickings for T service providers, with a potentially
huge customer base that needs the help of experts to keep the cogs turning and make sure they keep up
with T developments. With margins on hardware and software sales declining, an increased emphasis
on delivering high value services could also be just the ticket for channel players to increase profitability.
But if that's the case then why are T service providers still struggling with limited resource, eroding
margins and a ratio between turnover and profitability that just doesn't add up?
Quite simply, the traditional break/fix model for T service delivery that is adopted by so many service
providers just doesn't stack up. When something goes wrong, the customer calls in the T service
provider to fix it, and then pays by the hour for a technician to visit their site and resolve the problem or
uses pre-purchased hours on a maintenance contract. n practice, this reliance on 'problems' occurring
on customer sites can lead to strongly fluctuating turnover and problems with resource planning.
But perhaps the biggest limitation to this 'break/fix' methodology is the inability to grow profit margins. A
technician can only do a certain number of hours in a day, and that means the T service provider can
only charge for that many hours. As a result, however much the customer base increases, more resource
is always needed to meet that demand, and profit margins will never grow.
So the challenge faced by T service providers is twofold. Firstly, the present services they deliver must
be set up as efficiently as possible in order to reduce the 'cost' of the service and thus recover some of its
profit margin. And secondly, they must look to new models that avoid a reactive approach to solving
problems and instead focus on proactive management and support of customer T systems.
IT services provided
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The chaIIenges facing IT service providers
The vast majority of UK T service providers stated profitability as their key challenge. One in five (20%)
also stated differentiation from the competition as a challenge, which comes as no surprise considering
the services offered are very similar across all the companies we questioned.
Diagram 6:
Diagram 7:
When we look at the steps that T service providers are currently taking to maintain their profitability,
overwhelmingly, they are increasing their emphasis on generating sales and acquiring new customers. t
is however interesting to note that 37% of respondents have adopted some form of Automation of T
tasks in their quest to maintain profitability.
Summary
Ineffective business modeIs - the "break/fix model is used by around a third of UK T service
providers, but this means the majority are paid for the hours they spend solving a problem. This reactive
approach means revenues are inextricably linked to the amount of technicians that are available to
handle customer problems, which in practice can result in problems with personnel planning, strongly
fluctuating turnover and is guaranteed to cap the ability to grow profit margins.
Lack of market differentiation - T service providers across the UK largely offer the same services,
making it extremely difficult to differentiate their company from the competition. As a result, the focus
needs to be on the quality of those services offered to SME customers. A positive, ongoing relationship
with customers will be achieved if T service providers can, for example, actively demonstrate the value
they are delivering to their clients, such as meeting service level agreements (SLAs), reducing the
number of attacks on the network or increasing network uptime.
PartiaI tooIs rather than a centraI framework - T service providers typically use tools to make work
scalable, reproducible and verifiable, and the research shows the majority use partial solutions that
simplify a specific management activity, for example patch management. Few have embraced the use of
an T automation platform, so it comes as no surprise one of their key challenges remains profitability.
Using an overarching framework to automate tasks and control and manage every client network from a
central integrated system, can pay dividends in freeing up technicians and increasing that all important
profit margin.
Key chaIIenges - Profitability is the over-riding challenge facing most UK T service providers, followed
by market differentiation and then completing the volume of work with a limited number of staff. However,
the key steps that T service providers are taking to address the profitability challenge is to increase their
sales efforts.
Future expectations - Despite a challenging economic situation, the majority of T service providers
have positive expectations for the future with respect to turnover. Only around a third expect billing levels
to decrease in 2010 and it is interesting to note that it is the T service providers that largely depend on a
reactive, 'break/fix' business model who are much less positive about future growth.
Recommendations
Moving from a break/fix model to a Managed Service Provider (MSP) approach will enable your business
to enjoy recurring monthly revenues, with higher profit margins, lower overheads and an unlimited
freedom to grow.
Here are some key elements to success:
CentraIise controI - use a single, integrated web-based system to manage all your clients'
systems centrally, so standard roll-outs, upgrades and updates can be rolled out simultaneously
to save valuable time, and to ensure you have a complete overview of all your clients' systems at
your finger tips
Adopt an automated approach - set up automated tasks and processes to run across your
clients' networks, such as patch management, end point security and auditing. Their exposure to
security threats will be minimised, systems continuously updated, and will reduce your man hours
significantly by managing by exception
Define and impIement best practices - create and implement best practices based upon your
knowledge and experience, as it is your technical abilities and knowledge that set you apart from
your competitors
Integrated heIpdesk - Track and respond to your customer issues and requests automatically
and provide an end-user portal for easy access for your customers to create and view their own
tickets.
Define your SLAs - Define account templates for various Service Level Agreements (SLA) so
clients know exactly what to expect for the package they opt for.
Comprehensive reporting - One of the most important aspects of managed services is
communication to the client, so make sure you have reporting in place that will inform your clients
on what you have been doing and why their systems are highly available
The Kaseya IT Automation PIatform for MSPs
Kaseya's platform provides a unified set of tools that proactively monitor, manage and control T assets
remotely, easily and efficiently from one integrated Web-based platform. The Kaseya Managed Services
Edition software is an integrated T Automation framework specifically designed to enable MSPs to
manage multiple customers, install and configure systems, collect system status data, protect critical data
and system resources, and provide a robust set of managed services for their customers - without the
need for additional staffing resources.
For a free, 30 day trial visit http://www.kaseya.co.uk/forms/free-trial.aspx
About Kaseya
Kaseya is the leading global provider of T automation software for T Service Providers and Public and
Private Sector T organisations. Kaseya's T Automation Framework allows T Professionals to proactively
monitor, manage and maintain distributed T infrastructure remotely, easily and efficiently with one
integrated Web-based platform. Kaseya's technology is licensed on over three million machines
worldwide.
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