"The major value we give clients is the ability to approach a situation in three different ways and help them on that path. We don’t realise how much we know." - Michael van Zoggel, ComputerCorp
GARY O’SULLIVAN, VASCO (GOS): From a vendor’s perspective, the resellers here are the ones selling managed services to end users. It’s your service offering that’s important. So we look at what we can do to attach ourselves to your service offering to support your model, not ‘we have a managed services model and that’s the way we’ll cookie cut it’. You are offering a service your competitor is not, so customers are going to benchmark against that.
CH: The consistent thing is to be able to say you’ve made the investment to use certain tools, and in a certifi ed manner. All of us have spent the bucks internally in getting the systems. And that differentiates us from the rest of the market place.
TD: The other thing that really drives SMBs is trialling the service. They have been burnt in the past, their service levels have been very low.
GM: And they don’t just want to hear what you have to say – they want reports, or to hear what your other clients are saying and how they are using your tools. There need to be checks and measures regarding ongoing performance and delivery. An auditing process needs to exist. NC: What is the biggest challenge getting customers on-board?
CB: It’s a good question. Credit crunch is the buzzword this year, there’s an economic downturn, and people are watching what they’re doing with their money. What they’re doing is collectively investing in technology, and smart technology at that. The dilemma in selling is sometimes they see the credit crunch and have the attitude of ‘how do I know you won’t go into receivership if I invest in you as my technology partner?’.
DW: How much are you seeing more uptake from people wanting to use OpEx instead of CapEx? Also from a vendor’s perspective, how does that kick in?
JS: We do financial modelling in a way and have some clients with a propensity to do zero builds upfront. We also have 10 software companies under service provider pricing models. We have been big advocates from day one. Some of the software vendors are atrocious at it – it’s very hard to get any business to suddenly change when they’ve been used to selling in a certain way. I don’t want to have a leasing discussion either.
CH: I disagree from the point of view that a lot of companies up until December or January, were happy to pass on fi nancing from HP, Microsoft and Cisco. I do have to admit the wheels fell off in January and February, when they started to push back on the software and services component. What we’re also finding is we do a lot of telco, and anything to do with OpEx, is really picking up. People who were against managed services for love or money are now not so against it. They want to see an OpEx-based service.
JS: I’m not selling products, licences and technology as such, and that’s part of the problem with just wrapping up a fi nancial lease. That’s the IT integration of old, not the managed services model. Our clients defi nitely have more pressure on CapEx. The challenge though with fi nancing some of the things is typically when you finance, you have to use the hardware or assets within the technology you’re selling. But as a managed services provider, we own the hardware and sell services on that back to the clients.
CB: Part of this is the vendor has to be as nimble as we are to work in this model.
GM: Vendors are faced with a traditionalist model. Especially in the security space, it’s very much appliance driven and from a vendor’s perspective, they are driven by analysts who say how much tin they move each month. It’s all unit based and delivery. The model doesn’t exist in vendor land to pay for this over a period of time.
KH: It’s very challenging. A lot of vendors like us recognise revenue upfront when you sign the contract and that’s the model existing today. We do offer multiple types of licensing, some more flexible than others, but it comes down to the fi nancing model you put around it and the payments stream to support that. The model doesn’t allow you not to get that upfront commitment for the investment.
SA: Why do you need that? It’s software, you just download it from somewhere.
MVZ: IBM, CA and Microsoft are sold on an annuity payment – it’s a yearly payment, or a quarterly payment. All you’re doing [with managed services] is pulling that annuity down to an nth degree. In essence, it should give you better visibility in your business because you also get the ability to pull cash flows up and down as per your wants and needs.
