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IT services on an hourly basis and a crisis

Many industries are suffering from the current lockdown, but IT companies, in many cases, are not yet.

Everyone has to work from home. So at most IT companies, demand for laptops, printers and screens went through the roof. And with the hardware, came the cloud-based solutions such as the online workplace and Office365 with Teams, or Zoom. And, of course, security solutions to provide secure access for all personnel who suddenly had to work remotely.

Most Managed Solution Provider (MSP) offering these remote workplace solutions have to pull out all the stops to properly process all the requests.

Short-term stability

So at the beginning of this crisis, MSP’s value proposition revolved around providing operational continuity and stability for its customers. There was no need to start or run a lead generation campaign for this. Customers naturally came to the MSPs with their questions. The customers were aware of their problems and had to fill their explicit needs directly. Howeveru, for the medium term, the situation will be a bit different.

To explain this further, we need to distinguish between two types of MSPs:

  1. Packaged Solutions Providers
    MSPs building their own solutions within a monthly package. This package includes hardware, software and support.
  2. Resell Solutions Providers
    MSPs that also offer a workplace solution, but product-based. So, with a one-time fee for a laptop, monthly for solutions like Office365 (because Microsoft does not have another model) and service in an hours-based model.

The Resell MSP still offers its services piecemeal because of customer demand, margins or simply from habits.

The Resell MSP still offers their services piecemeal because of customer demand, income margins or merely history or habits if you will.

During this crisis , we call our clients and associates and ask about their current situation. One is that their service desk…. silent. There is a decrease in the need for support requests. And, many local installations are either done or postponed.

The IT crisis is coming

The IT Service Provider with an hourly income model will have the challenge of maintaining its income level at the same level as before the crisis. Companies have invested in new hardware and licenses, and it seems unlikely that they will invest more. One would think that this will be corrected in the medium term. Well, maybe.

I think there is a small crisis ahead for Resell MSPs. Certainly, IT was the game chancer in this sudden crisis situation, and companies spent a huge amount of money on new IT systems and solutions. And this is what will lead to the delayed effect of the crisis for IT companies. Securing cash and cutting costs will be the focus of many companies in the medium term. As IT spending has gone over budget due to the crisis. We believe that companies will try to cut back on their IT spending after the onset of the crisis is over.

Investment in new equipment will decrease, and where they can reduce costs, they will. So if you are a more product- and hour-based service provider, you will face this contraction in revenue.

Reconsider your model now!

This is the time to rethink your model! In addition to building a subscription portfolio, helping your customers with their business efficiency can be valuable. You probably provide operational support systems, not specific business solutions. Yet you can tell them how their spending on new IT systems and solutions can be more impactful. Integrate more systems within a workplace. Deliver more scalability in the number of systems or applications. Create efficiencies in how teams can work together. Become a business consultant as an IT Service Provider.

Redefining your income model is not done overnight. There are many aspects, technical, cultural and financial that you need to consider. Would you like to learn how we will work with you to do this? If so, please contact us.


Do you want to know more or have a talk? Plan a call with Thijs van Hofwegen, the founder of Force21.

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