Top Three Reasons Every CEO Needs Managed Services
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Find out why every CEO must pay attention to, and establish a managed service business if they want to increase revenue and profits, move toward the cloud, and reduce risk with existing customers. Visit www.tsia.com/ms.
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Top Three Reasons Every CEO Needs Managed Services
- 1. www.tsia.com Top Three Reasons Every CEO Needs Managed Services
- 2. www.tsia.com What are the facts? Traditional tech companies are shrinking Product revenues are declining CEOs are worried
- 3. www.tsia.com The data doesn’t lie. 2015 = $372B 2015 = $411B Tech Service RevTech Product Rev 2016 = $436B 2014 = $412B 2014 = $430B Source: TSIA Technology & Service 50 Index 3 2016 = $349B
- 4. www.tsia.com Which CEO are you? “We don’t have an MS business, and are not thinking about it.” “We’re thinking about MS but haven’t pulled the trigger.” “We have an MS business, but it’s not producing yet.” “We’re doing it, and it’s growing like crazy. It’s profitable. We’re excited!”
- 5. www.tsia.com Creates stickiness & reduces risk CEOs must pay attention to, and establish a managed services business. 5 1 3 Why? High growth & profitability 2 First step to the cloud
- 6. www.tsia.com Managed services is a high growth business that is also highly profitable. 6 1 Reason
- 7. www.tsia.com In 2017, 59% of tech companies saw flat or declining services revenues. However, MS revenues have jumped from 6% of all services revenue to 23% since 2013. This is a huge opportunity for tech companies that don’t currently have an MS business. Source: TSIA Managed Services Benchmark 7
- 8. www.tsia.com 8 MS is growing faster than any other service line. MS Benchmark Service Revenue
- 9. www.tsia.com And… MS is the second most profitable! 9 Service Line Financial Performance 27%
- 10. www.tsia.com 10 Impact of MS Reporting Structure on Growth Rates 33% C-Level Exec 49% Global Service Exec 18% Other
- 11. www.tsia.com Winning Play #1 If you haven’t already, hire a Head of Managed Services and have them report into your C-suite or Global Services. Fact: 33% of MS execs now report to C-level.
- 12. www.tsia.com Managed services is a stepping stone to the cloud, and allows companies to make money as they move in that direction. 12 2 Reason
- 13. www.tsia.com The cloud is disrupting the world… 13 Traditional Tech Company SaaS Company CHAOS … and it’s affecting everybody! Managed vs. Unmanaged Continuum
- 14. www.tsia.com Traditional tech companies are moving to SaaS. 14 Traditional Tech Company SaaS Company CHAOS Customer On-Premise Unmanaged Customer Prem (CapEx) Managed Customer Prem Managed (OpEx) Managed vs. Unmanaged Continuum
- 15. www.tsia.com SaaS companies are moving to hybrid. 15 Traditional Tech Company SaaS Company CHAOS Customer On-Premise Unmanaged Customer Prem (CapEx) Managed Customer Prem Managed (OpEx) Cloud Unmanaged Cloud Managed Hybrid-Cloud Managed Managed vs. Unmanaged Continuum
- 16. www.tsia.com Despite disruption, managed XaaS is at the epicenter of revenue generation.
- 17. www.tsia.com 17 MS Revenue Breakdown 50% Remote Managed 29% Managed XaaS 19% On-Site Staff Aug
- 18. www.tsia.com Before diving head-first into the cloud, use managed XaaS offers to make money while you figure out how your business fits into the subscription economy. 18 Winning Play #2 Fact: 29% of MS revenues are now managed XaaS.
- 19. www.tsia.com Managed services creates stickiness with your customers and reduces risk for you and your customer. 19 3 Reason
- 20. www.tsia.com 20 Managed services stickiness at its finest! 95% MS Revenue Retention Rate 90% MS Client Renewal Rate
- 21. www.tsia.com Sticky offers keep the money train rolling. Managed services contracts are typically 3-5 years long Premium services capabilities can be made available as easy upsells, like: – Adoption Services – Optimization Services – Best Practice Consulting 21 – Migration/Transformation Services – Enhanced Reporting – Business Continuity Services How?
- 22. www.tsia.com Managed services reduces risk. Managed services removes the customer risk for solution performance to a vendor that is much more skilled at operations. 22 For CustomersFor Vendors Managed services can convert spikey CAPEX sales into long-term OPEX sales that are easier to forecast.
- 23. www.tsia.com Create long-term managed services contracts. Offer premium services on top of basic packages for easy upselling opportunities. 23 Winning Play #3
- 24. www.tsia.com George Humphrey Vice President Research and Advisory, Managed Services george.humphrey@tsia.com Meet the Expert
- 25. www.tsia.com Make your first winning play today. Sources: TSIA Managed Services Benchmark TSIA 2017 Service Organization and Structure Survey Talk to us about Managed Services
Editor's Notes
- Dedicated Delivery
- Dedicated MS Client Management
- We organize our best practices research and other membership programs around eight major service disciplines. It’s through these service discipline memberships that companies engage with TSIA. For all TSIA members, regardless of which service discipline membership they join, we provide foundational research that cuts across all service disciplines in the areas of Service Technology. Analytics, and Industry-level analysis that looks at things like the overall financial performance for several key peer groups. This includes a quarterly analysis of the performance of the 50 largest tech companies, a bi-annual analysis of the top 20 cloud providers, and focused semi-annual analysis around the healthcare and industrial equipment sectors. Looking at the service disciplines, the first area is Service Revenue Generation. This is where we help companies benchmark and optimize their service business for things like attaching and renewing support services, and how to develop and price new service offers. We also cover sales topics including the evolving customer engagement models to expand revenues with existing customers. Customer Success & Support is our largest, most mature discipline. This is where we cover traditional technical support, customer support, and the emerging and rapidly growing area of customer success that is focused on helping customers achieve desired business outcomes. Field Service - This discipline covers break-fix hardware service. Includes depot maintenance, parts and logistics management and dispatch. Managed Services is one of the fastest growing service business sectors, and the growth in our MS discipline memberships are also growing quickly. This area covers typical MS models like paid to operate” a specific application or an environment on or off premises. Professional Services covers traditional PS areas such as Implementation or integration services. Moving from one platform to another or integrating your solution into a customer’s environment. Education Services is focused on educating customers, not internal training. Key areas of focus include movement from instructor led training to e-learning and Learning-As-A Service applications.