Ambition Mission

I hear the footsteps of the 800 lb gorilla!

One of the partners I work with in South Florida sent me a link to a CRN about DELL getting closer and closer to offering what will appear to be directly competing with the small IT provider.

Take a look!

Re:  Dell’s recent aquisition:

Among its products are … an IT Support Services package, which the company bills as a comprehensive offering of remote, desktop management solutions.

Dell executives say the company is working to announce a new, comprehensive channel program by year’s end.

So maybe DELL is just looking to offer more services THROUGH partners in a “Microsoft like” partner program???

Or maybe not…

A Dell spokesman said the … company would continue to provide … technology to managed service providers and resellers through its upcoming channel program, but that Dell would also deliver the products and technology directly.

Here’s what I say, Bring it on DELL!  An IT provider who delivers proactive services can protect themselves with a packaged set of offerings and a trusted advisor relationship with the clients.  As for those providers who may not have yet adopted a proactive approach to services by the time DELL (and others) offer proactive IT services directly to end clients, be very afraid.

As for the rest of us who get it and know that our success (and survival) depends upon our adapting to offer proactive services, I say I hear the footsteps of the gorilla approaching and I am not afraid.  The gorilla will have more than enough to do picking off the low hanging fruit - the clients of break/fix T&M/block of hour providers.

if you haven’t yet read “Who Moved My Cheese” it may be time to pick that book up, because the cheese is moving!

click this link to see the full article: http://www.crn.com/managed-services/203101109

(Thanks to Richard Blanco from Miami for bringing this article to my attention)

At the TS2 event today in West Palm Beach, several attendees were scribbling furiously when we went through a scenario to help convert a break/fix customer to a managed services contract.  Here is the example, and it’s just one of many methods to help the client make that jump… Susie = Office Manager & IT designee; Joe = Business Owner, last year Joe spent $4,000 on his IT support and now we are proposing a full service, comprehensive managed services offering for $1,000/mo.  It is an $8,000 increase in what he paid last year.  Or is it?

Salesperson: “Joe, how many hours per day does Susie spend working on IT problems?”

Joe: “I wouldn’t say it’s every day, but probably about 2 or 3 hours per week.”

Salesperson: “and how much do you pay Susie?”

Joe: “$40,000 per year.”

40,000 x 1.35 = $54,000 (35% is for payroll taxes, heath benefits, etc… that reflect costs of having an employee), $54,000 divided by 52 weeks in a year and then divided by 40 hours in a week is just about $26/hr.  Susie spends 2.5 hrs per week times 52 weeks = 130 hours.  130 x $26 = $3,380.  (do math with customer)

Salesperson: “So Joe, it costs you (the company) $26/hr for every hour that Susie works and based on the time she typically spends on IT issues, it actually cost you $7,380 for IT support last year, because we’ll have to add the $3,380 to the $4,000 that shows up on your P&L.”

Joe: “Wow!”

Salesperson: “it get’s better.  What’s your company revenue and how many total employees do you have?”

Joe: “$20 million with 20 employees.”

Salesperson: “So, it is fair to say that since everyone’s roll is vital to the success of the company, each employee is effectively responsible for $100,000 in revenue for the company.”

“$100,000 divided by 52 weeks, divided by 40 hours = just about $48/hr - that’s what Susie makes your company for every hour she works, which is great because she only costs you $26/hr.”

“but since she was working on IT issues for 130 hours, the company lost $6,240 in revenue.  Add that to the total we had before, and IT support last year ACTUALLY cost your company close to $14,000!” 

Joe: “Holy *&%!” 

Salesperson: “and I’m not even adding in the amount of time Susie spent managing vendors, other employees downtime when Susie was “fixing” their issues, etc… so you see, the $1,000/mo is ACTUALLY saving you money.  Plus you’ll have less downtime, more reliability, more productivity, more efficiency - and you get all of Susie back!  It will be like you just hired a PT person.”

Joe: “I’ll take it!”

P.S.  I have always done this type of analysis “on the fly” with a prospect as if it something I just thought of doing with them at that time.  That technique has always proved very effective for me.  If you like to have it more formalized and structured, then Erick Simpson and MSPU developed a fantastic Excel Spreadsheet that helps illustrate this point and more for presentation to the client.  The spreadsheet is available on the CD-Rom of his first book and as a member of MSPU.

Lesson for today:  Don’t underestimate the power of a free t-shirt!

So, at the Miami TS2 event this afternoon, there were lots of attendees who wanted to grow their businesses.  We had “ah-ha” moments all over the place and the feedback was awesome. 

Something blog worthy occured at the end of the event.  Set the scene—at the end of the event, I waited at my table for the last few people who wanted to buy my book and sign up with Ambition Mission Community.  I shared the table with the Miami user group that was giving away free t-shirts at the end of the event.  So after partners announced thier successes after reading my book and attending my seminars (activities that I promote as being worth $100K or more), where do you think the line was at the end of the event? 

The clamoring and agressiveness shown to get a t-shirt and passing by my table, to me puts the value of the t-shirts around $100,000. 

I will be at the TS2 events in Miami and West Palm Beach tomorrow and Thursday.  If you’re in the area, stop by and learn how to grow your business.  Register at www.ts2seminrs.com

My firend Erick Simpson (www.mspu.us) brought a DELL magazine ad to my attention and blogged about it yesterday.  Think Dell won’t attract any customers for support?  Of course they will.  Think they won’t have competative prices?  Of course they will.  Is it time for the small business focused IT provider to fold up the tents and pack it in?  Of course NOT!!!

There are two things that will keep a customer loyal to you.  First, is your relationship.  Second is a general mistrust of the 800 lb gorilla.  To survive this game, keep and continue to win customers, you must pay attention and focus upon both.