Managed services is today’s second most popular business model. Yet despite that popularity, it can still be challenging to market these services in ways that demonstrate the strategic value and benefits to drive business growth. This post addresses how managed services is perceived and valued by different IT buyers, and offers insights into overcoming objections and successfully changing limiting mindsets.
According to research conducted by CompTIA, the adoption of cloud solutions continues to change how companies buy and consume technology. Organizations are demanding more sophisticated managed services for mission-critical business applications, IT and cloud infrastructure management, and data analytics. And as the market for these offerings matures, service providers are offering deeper and more specialized expertise that’s difficult to replicate in-house.
For some IT buyers, managed services is simply a way to reap initial cost savings and potentially reduce operational costs. Their prime concern is comparing the current cost of doing business with the cost of outsourcing services. Similarly, when current technology reaches the end of its useful life, organizations must decide whether it’s more cost effective to install the latest version of the existing technology or move to a managed services or cloud offering.
Service vendors need to address this monetary bias in the buying decision process and offer a more compelling value proposition than short-term cost savings. By presenting a framework that evaluates the dollars and clear business sense of managed IT services, vendors can initiate a broader discussion that includes additional benefits and business value. Using value selling tools is key to turning cost-based analyses into strategic business decisions.
The Compelling Case for Cost Savings
There’s no denying that financial considerations are a strong motivator for shifting to an outsourced environment. Traditional CapEx and OpEx comparisons help buyers evaluate potential expense reductions and understand Total Cost of Ownership (TCO). But a true cost comparison doesn’t stop there.
For example, the cost of downtime extends beyond the IT resources required to investigate and remediate the cause, and includes hits to employee productivity and customer experiences. A persuasive value selling tool quantifies this dynamic and clarifies the true value of managed IT services to win over the data-driven buyer.
Additionally, this type of service environment reduces infrastructure costs using cloud services, and simplifies budgeting with fixed monthly expenses. This nuance eliminates fluctuations in IT expenses and helps contain costs. This too can be captured and quantified in a value calculator.
The Transformative Value of Managed Services
The real value of managed services is its ability to transform an organization’s operations. Service vendors need to emphasize this higher level value while respecting the buyer mindset that prioritizes traditional TCO comparisons.
As a global provider of contact center and unified communications technologies, Avaya uses an online calculator to help buyers evaluate the financial and operational impacts of their cloud-based services. Through their ROI selling tool, they make it clear that IT transformation is the core value of their service:
- Faster and easier provisioning and startup;
- Increased productivity; and the
- Flexibility and scalability to meet changing business needs.
By realizing these strategic benefits of managed services, buyers achieve cost savings and improved TCO, not the other way around.
It’s easy to quantify and sell the value of 99.99% network availability and faster problem resolution through 24/7 support. But how does one measure the more intangible benefits of outsourced services, such as improving customer experience and freeing staff to engage in customer and revenue building activities? It’s not as difficult as you think.
Let Your Value Selling Tools Do the Talking
Because your value proposition is both comprehensive and nuanced, you can use a variety of value selling tools to produce accurate, believable financial metrics that advance the conversation. Different tools have different purposes and used together, help create a compelling value proposition.
Sales teams know the issues facing their customers, internally and within their industry, and how to persuade them that managed services will solve their business concerns. All it takes is building these factors into the appropriate tool, and populating it with appropriate measurements. Sources could include analyst and industry reports, business research, and direct conversations with the customer.
In addition to calculating TCO and financial ROI, value selling tools can:
- Assess the scope and magnitude of problems by comparing outcomes to industry benchmarks
- Calculate lost productivity and revenue caused by network downtime
- Determine inefficiency costs managing multiple IT vendors
- Compare the costs and benefits of your solution to another vendor
- Uncover opportunities to decrease costs and increase sales performance
- Calculate how quickly your services will provide ROI
Value selling tools can help you build a data-driven value proposition based on reliable, insightful calculations. Your goal is to create confidence in the short- and long-term value of your managed services solution, thus persuading and reassuring potential buyers of its financial, operational, and strategic benefits to close the sale. By addressing specific business issues in your calculations, you will create a compelling, cost-justified business case for purchasing and deploying your solution.