New tricks for old dogs

By *Paul Berger
Monday, 28 March, 2011

We’re all familiar with the old ‘break-fix’ model of service - it’s been the way of life for many years. It works well; it generates revenue and keeps you in business alongside hardware sales. The problem is that it’s a short-term solution for a long-term user.

There is a new kid on the block. Well, maybe more like a cheeky teenager that has a new name. It’s called ‘managed services’ and it’s a buzzword being used in a number of industries that are service and job based.

We are seeing widespread adoption of managed services in the many different technology sectors of Australia now. In fact, any industry that has elements of recurring billing and regular maintenance contracts is perfectly suited to adopt managed services.

Radio communications, with its inherently service-oriented approach, is also a prime candidate to take on managed services as a business model. There are a number of advantages to both you and users by offering this service.

Firstly, the customer receives better service. We’re talking proactive service here, not reactive. Your customers will now be on a regular call-out schedule and you’ll be able to prevent most dramas before they occur.

It also gives you a chance to talk about hardware upgrades and new equipment with them, leading to possible sales now or down the track. Once a customer is on contract with you, they will also receive priority treatment; in effect, they become your ‘VIP clients’.

Benefits to you as a radio communications business are huge. You receive your revenue upfront - creating improved cashflow and revenue ‘smoothing’. Managed services provides a recurring service income stream for the next 12 months with reasonable accuracy.

Another added benefit is that it actually qualifies your customer, ie, businesses willing to go on managed services contracts are better payers and they also trust you implicitly to manage their maintenance. They’re not just calling you when they’re desperate; they’re almost completely reliant on you to keep their operations running.

As a blended business of hardware sales and service revenue, moving towards managed services also allows you to include clauses in your contracts to ‘force’ hardware sales. You can write into the contract that certain equipment must be replaced according to an agreed schedule. Again, you get the hardware sale, the customer gets upgraded and there’s much less chance of downtime - this is a win-win situation.

So how do you start offering managed services? Well, at a very basic level, you can offer it based on a regular monthly fee; alternatively, you can offer ‘pre-paid’ hours - essentially your customer is paying you upfront for future services. In both cases, these customers get priority service and you get your money upfront.

Some consideration to your back-end administration is required when thinking about moving to managed services, as it can be beyond the scope of a lot of business management systems. How will you handle the scheduling? How will you handle the recurring billing accurately? How will you manage the pre-paid hours? How can you see that a contract, customer or price of hardware under contract is profitable?

There have been some amazing developments in the area of handling managed services and sales and service in general. ‘Email ticketing’ is one such development. It is now possible to receive emails into your business system and have a job created automatically, then allocated to a technician’s task list with absolutely no human intervention.

Additionally, you can also set rules for a sales email address to automatically create a customer card file and allocate a salesperson to contact and/or fulfil the order.

This is a fantastic example of improved workflow through technology. If you are considering taking on managed services as an offering for your business, it’s worth considering automating these processes.

Even though it represents a fundamental mindset change for the owner of a radio communications business, offering managed services can have a really positive effect on cashflow and, just as importantly, it has the benefit of being able to service your customer better than your competition.

In a nutshell, managed services is a long-term view to improving the bottom line of your business and ensuring your customers’ satisfaction.

*Paul Berger is managing director of Happen Business, developers of Jim2 Business Engine. He has been directly involved in the Australian IT and Technology industry since the late 1970s. Paul can be credited with the design and development of one of the IT industry’s first 68000 processor-based computer systems, used extensively through the Australian CSIRO. In 1989 he also founded P2, one of Sydney’s premier component-level services and support companies. Paul is not shy about being an avid amateur radio enthusiast during his youth either!

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