A little insight into who’s providing what can be all you need to drive down prices—a particularly appealing prospect for the SMBs providers are increasingly targeting, says Michael Vizard.
Over the last couple of years we’ve seen the emergence of managed services in the SMB segment largely in response to the general shortage of skilled IT professionals. As IT departments find it increasingly difficult to enlist the people they want for whatever reason, they are increasingly turning to IT services firms that will remotely manage some part of their IT operations. This allows the IT department to then focus its people on functions that make a real difference to the business as opposed to, for example, managing printers.
But as the whole category of managed services evolves, the companies that provide these services are starting to standardize on a few major platforms to provide those services. The companies that provide those platforms have names such as N-able Technologies, Level Platforms, Zenith Infotech and Kaseya.
None of them are exactly well-known brands, and most of the IT services companies that rely on these platforms to deliver services to SMB customers would probably prefer to keep it that way.
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But for customers of the IT services providers who rely on these platforms, understanding which platform your provider is using could have significant implications down the road. At some point, for any number of reasons, a customer may want to change their IT services provider. Each of these managed services providers makes heavy use of agent software to keep track of all the devices being managed by their service. So switching IT service providers could require a wholesale change to the agent infrastructure. But if the customer decides to switch to an IT services provider that uses the same managed services platform as the incumbent, then the relative cost of switching is not all that high. And with that knowledge then comes the ability to play one provider of managed services off against the other in order to drive down the price of the managed service.
Let’s face it: Managed IT services are becoming a product, just like a notebook. The amount of differentiation between one desktop management service, for example, and another is fairly minimal. As such, the price at which that service is offered becomes a bigger factor when determining which IT services provider should get the business. And the best way to maximize that pricing leverage is to have IT services companies using the same managed services platform compete for the business on an ongoing basis because the cost of switching providers should be minimal if all the providers are using the same managed services platform.
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We’re still in the early days when it comes to managed services in the SMB space. But as the trend continues to evolve, the providers of these services are going to increasingly wrestle with a product differentiation equation that is a recipe for commoditization. And as that plays out, the bargaining power of the IT customer is only going to get stronger.
Michael Vizard is Senior Vice President/Editorial Director for Ziff Davis Enterprise.
