Get your support act together

Stringent service level agreements (SLAs) are spurring growth of the support services sector. Gareth Kershaw reports

The impossibility of trying to prime a steam engine with no coal should be an all too familiar one for the average reseller.
After all, they have been trying to solve the perennial poser of how to pay the bills, the rent, the wages and the taxman out of two or three measly hardware margin points for quite some time.
Now though, an interesting, but as yet relatively low-profile answer, appears to be stoking up its boilers, working up quite a head of steam and preparing to offer the channel some welcome light at the end of that long dark tunnel.
The manna comes in the form of support services and the idea is so engagingly simple that one has to wonders why it has not gained greater traction before now.
It goes like this. The reseller, struggling to deliver on its support,
management and maintenance promises, simply outsources them to somebody else ­ a support servi-ces provider.
Depending on the circumstances and who is asked, the reseller can make anything from 10 to 40 margin points on such a deal, which makes attractive reading whatever markets a firm operates in. But it’s sure to be particularly appealing for the product-based channel player looking for some extra bunce.
“Any reseller that sells products and services but lacks an in-house capability should consider engaging support services,” says Toby Strauss, chairman of support services provider OrderWork.
“Also, those that offer particular services already, but are receiving requests from end customers outside their areas of core competence should look into it.”
Earlier this year, John Carter, managing director of distributor DMSL, launched FixITlocal ­ a nationwide network of small, independent resellers that provide services on a local basis. It claims to give smaller locally focused resellers a way of fighting back against the big-name, big-budget behemoths now trying to compete for their business. Almost 300 resellers have signed up so far.
Carter tells CRN: “Every reseller focused on meeting the requirements of local businesses needs to offer a wide range of services and support on a flexible basis ­ it’s the only way they can meet the needs of the many diverse businesses that are out there and need to use IT solutions. That diversity and the need for flexibility is also why big corporations will never be able to meet all the needs of SMEs in the UK ­ the business community needs service-focused resellers; it depends on them.”
As such, says Carter, service is, or should be, a reseller’s business. “Talk to resellers and you’ll find that it’s part of their everyday bread and butter business. It’s what keeps them alive and what the customer values most. (But) that business is now under threat from big firms such
as PC World, who are trying to eat the smaller reseller’s lunch by tempting small businesses with low-cost service contracts.”

Local service
“The fact of the matter, though, is that small, locally based resellers ­ most of whom have many years’ experience in servicing and supporting IT systems and solutions ­ are those best placed to provide good, honest, locally based services. Service always has been, and remains, a massive opportunity for resellers.”
The problem, however, is exploiting it, which is where third-party support services come in useful.
According to Pat O’Keefe, operations director of support services specialist HTT, it is a fairly straightforward sell. The customer typically will not have the resources or the expertise to conduct operations such as in-depth maintenance and testing in-house, so they look to the reseller to provide it.
“It is well known that there is a skills gap in the comms sector. Outsourced partners can plug that gap at a fraction of the cost of a dedicated resource and react quicker,” he says. “By commissioning support services from a third party provider, the reseller can add value and margin without the overhead of hiring people directly.”

All sorts covered
Strauss is equally evangelistic about the support sector’s value as a genuine and growing adjunct to reseller offerings. “The [support services] marketplace covers all sorts from desktop installation and support, networking and comms installation and support, to installing and upgrading systems and adding handsets and training. It also ranges from one-off wireless network and voice over IP (VoIP) installs to significant installations, involving hundreds or thousands of seats.”
In essence, support services deliver a fully supported, end-to-end solution for the customer and improved margin with better, deeper customer relationships for the reseller ­ together with a reduced likelihood of losing custom to competitors.
This is all very well in theory, but how do such deals work in practice?
In FixITlocal’s case, resellers come to a mutually convenient arrangement with their customers, says Carter. “That might be full payment up front, a quarterly or monthly fee, or some kind of pay-as-you-go arrangement where a small fee is charged for the call-out, with parts and labour on top.
The key for small business customers is flexibility. It is about meeting needs and not trying to convince them that the one-size service package offered by a third party will fit their business.”
The reputable outsourced service provider will also provide detailed SLAs, which will ensure the reseller can deliver on promises to the
customer.
Typically, explains Strauss, the model works so well because the price charged by the third party allows for a good reseller mark-up while providing value for money for the customer. Because the reseller is saving the support service provider sales and marketing expense by bringing the lead or sale to them, the provider can price their services at a more attractive level.

Not-so-new model
In some ways, says Scott Yates, managing director of Comms-care, while the model is a recent one, the idea really is not new at all. Many vendors have been offering their own proprietary versions for years.
“Historically, this space has been dominated by manufacturer offerings, which are by their very nature proprietary. In effect, where the reseller sold such a product, it was really a box shift, only with no box. But companies are emerging that are trying to offer something more independent and to add value,” says Yates.
He thinks that this is being driven in part by the fact that end users are waking up, coming to their senses and moving away from single manufacturer offerings.
“Calling out engineers from three or more big-name expensive vendors for what may be a problem caused by just one user is neither efficient, nor financially prudent. Support services companies fill that gap.”
It comes down to common sense, says Yates. “End users don’t have single-vendor IT environments, so why should they buy into single-vendor maintenance solutions? Why retain one services contract for maintaining servers, one for applications, one for communications? It is good business sense to centralise it ­ one contract, one service level agreement (SLA), one point of contact, one telephone number.”
Such simplicity also makes the idea attractive for players operating in crossover areas such as the
converged networking space, he says, as whichever side of the
networking fence you are from ­ voice or data ­ it is a great way to shore up the offering.
So where else might support services apply? Are they limited largely to installation, maintenance, health checks and such, or are there wider possibilities?
Mike Morrison, service delivery manager at Networks First believes that the spectrum is definitely
broadening.
“Support services now include consultancy and managed services such as remote network management from which the reseller can make money because there are fewer overheads from a more focused customer base. Some support service providers are able to offer increased discounts thereby maintaining the reseller’s margins for the delivery of the services.”

Emerging services
That makes it ideal for resellers limited to product sales, and for those who wish to broaden their skills and offerings into new areas.
Other emerging support services markets include testing, commissioning and ongoing management; first- and second-line maintenance; and network support.
Specific to the communications market there is everything from network testing and maintenance to fibre and cellular network management. Testing itself includes quality of service, hardware management and more, to support any critical communications application.
Some believe that demand for support services may even extend to areas such as corporate social responsibility and carbon neutrality.
“The opportunity is to install and maintain pretty much any hardware or software product or system that a reseller sells,” argues Strauss.
“This might include anything from remote assistance, training, moves and changes and additions to configurations. It also includes the installation and set-up of standard application software packages such as Microsoft CRM, Sharepoint and Sage Line 50, as well as server-side products such as anti-virus and Microsoft SBS.”
Yates agrees, albeit with reservations. “In theory the model could be applied to just about any service. But VARs should be aware of the provider claiming to offer all servi-ces to all resellers. It stands to reason that the broader the offering, the more thinly spread and logistically geared it is likely to be.
“In essence, support services providers that offer everything
will likely be sub-contracting a great deal of it out themselves. How do you know that some of it is not
being outsourced to one or more
of your rivals?”
As such, he says, honesty is vital from all parties concerned. “Service providers have to be completely open with resellers and vice versa.”
This is a view echoed by Allan Tyrrell, UK managing director at distributor CDG Europe, who says that resellers have to tread carefully if they are to avoid the same pitfalls they fall foul of today; specifically spreading themselves too thinly and becoming the dreaded jack of all trades and master of none.
“The difficulty is in knowing what skills to invest in, both now and in the future,” he says. “Getting this wrong could potentially leave a hole in your services.”
As could focusing too pointedly on technologies with a strong brand awareness, which could leave gaps in both your technology stack and your value proposition.
These are not the only potential problems, says Morrison, citing the issue of resellers wanting to sell the services, but not wanting to get involved in their delivery. Here, he says, many resellers do not understand what is involved in the service delivery because they consider themselves sales-only organisations.
The opposite such as resellers being too involved and offering only one point of contact to the end user, can be equally problematic, especially when the reseller logs a fault and then passes the call onto the support services provider.

Involved resellers
“Invariably the reseller passes on the support service organisation SLA fix time of, for example, four hours, but does not allow for any management time,” explains Morrison. “In other words, there’s a delay in passing on information and the SLA becomes much harder to meet.”
Phil Sansom, senior vice president at Kaseya UK, says that resellers must also pick and choose the kinds of services they decide to deliver via third-party contracts.
“Resellers need to look at support services that automate routine tasks,” he suggests.
“Only by using automated solutions can resellers properly ensure that patch and security updates are always carried out; anti-spyware is up to date; and anti-virus software is correctly configured. Furthermore, alerts raised by monitoring software can be acted on by an automated solution that can repair and reboot machines remotely, not by an engineer on standby.”
“Using the traditional, resource-heavy model, each new customer win prompts a flurry of technical staff recruitment simply to keep pace with demand. Yet these engineers are, at best, only productive 30 per cent of the time. The rest is spent either travelling to and from customer sites or on emergency stand-by. What business can afford to have a highly skilled, high-cost workforce unproductive for the majority of the working day?”
Managing expectations is key, says Strauss. “Sometimes it is difficult to define the work required and therefore the customer’s expectation can be different from what they receive. And, of course, a reseller needs to find one or more support service providers that have the necessary skills and experience to help define their end-customer need, and to ensure that the work is completed successfully.”
The ideal situation is a tri-party business relationship, says Morrison. In other words all three parties are actively involved in the delivery of the service with an open and honest three-party, three-way dialogue.
“Channel-only providers are the best bet,” says Yates, “as there is no threat of them taking business from the VAR.”
Comms Care has no marked cars, no uniforms and blank stationery. Why? “Because to all intents and purposes it then looks like a reseller is delivering the service.”
Channel players should opt for partners that concentrate on offering strong reseller SLAs and let the reseller worry about the end user SLAs. They should also look for providers keen to work in genuine partnership through joint investment; and not just in client negotiations, but in areas such as marketing. The best support services partners are those willing to roll up their sleeves and not just wait for quotes to roll in.

Channel players
Also, while many support service provision companies claim to be channel only, in reality this is not true, warns Yates. Many such providers often become subject to serious conflicts of interest as they acquire or team up with other service providers, many of which are themselves resellers.
“You could end up dealing with a company that has a vested interest in the end user’s business and is looking to get their hands on the end user’s details. Many big names are doing this and are, therefore, by definition not channel only.”
Resellers have to be careful who they get into bed with, and Yates says that it is crucial to do your homework and appropriate due diligence.
“Check out any potential partners carefully. Make sure they really do have the number of engineers that they say they have. Look at their accounts. Visit their premises. You’ll soon get a feel for who can be trusted. Go with your instincts.”
Other resellers will be tempted to take on the challenge and do it for themselves of course. But Yates cautions against this unless a company has the resources and wherewithal to withstand a tough time, especially early on.
“You have to have the headcount, the feet on the street, decent breadth and depth in terms of spares, and the critical mass to set it all off.
“As such, most resellers that try to do it all themselves make little or no margin in the first two or
three years.”
Networks First issues support services warning