Hourly based IT services  and a crisis

A Lot of industries are suffering in the current lockdown crisis but in most of the cases, not the IT companies.

Everybody needs to work from home. So at once, the demand for laptops, printers and screens went through the rooftop. And with the hardware, came the cloud-based solutions like Office365 with Teams, or Zoom. And security solutions to provide secure access to the new remote workforce.

There was, and still is, supplier stress with the Managed Solution Provider (MSP) who offer these remote workplace solutions.

Short term stability

So, in the short term of the crisis, the MSP’s value proposition is all about delivering operational continuity and stability. There was no need to reach out or drive a lead generation campaign for this; customers reached out themselves. They were aware of their problems and needed to the full fill their exact needs. Now, for the mid-term, the situation will differ a bit.

To further explain this, we need to distinguish two types of MSP’s here:

  1. Packaged Solutions Providers
    MSP’s that build their solution on a monthly based package. These include hardware, software and support.
  2. Resell Solutions Providers
    MSP’s that offer a workstation solution too, but product-based. So, with a one-time charge for a laptop, monthly for solutions like Office365 (because Microsoft doesn’t have another model) and hourly based support charges.

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

During this crisis, we call our customers and relations and hear their current situation. One is that their service desk is…. silent. There is a drop in the need for support requests. And, a lot of local installations are either done or postponed.

The IT Crisis is coming

The service provider with an hourly based income model will have the challenge to keep their income level at the same height as before the crisis. Companies have invested in new hardware and licenses, and it seems hardly likely that they will support more. You would think that in the mid-term, it will be corrected. Well, maybe.

I think, there will be a small crisis ahead for the Resell MSP’s. For sure, IT was the game-changer in this crisis, and companies did spend a tremendous amount of money on new IT systems and solutions. And this is what will lead to the lagged effect of the crisis for IT companies. Securing cash and cutting costs will be the focus of a lot of companies in the mid-term. As IT spending is over budget due to the crisis, we believe companies will try to save on their IT spending after the initial phase of the situation is over.

Investments in new equipment will drop, and wherever they can reduce costs, they will. So, if you are a more product and hourly based service provider, you will face this reduction in income.

Rethink your model now!

It is time to rethink your model! Next to building a packaged based solution. It might prove valuable to help your customers with their business efficiency. For sure, you deliver operational supporting systems and not specific business solutions. Still, you could tell them how their spending on new IT systems and solutions can be of more effect. Integrate more systems within the workplace. Deliver more scaling in the number of systems or applications. Create efficiency in how teams can cooperate. Become a business advisor as opposed to being a system provider.

Rethinking your income model isn’t done overnight. There are a lot of aspects, technical, cultural, cost-wise to consider. Want to learn how we approach this together with you? Reach out and contact us.

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