A must read for IT service providers, VARs, telephony and copier dealers.

WHITE PAPER

Adopt managed services and become an MSP…or be prepared to compete with one!

Winner Take All

www.avg.com/partnersWhatever your device, we’ve got you covered.

The New Competitive Reality for VARs Become a Managed Services provider or be prepared to compete with one

Whether you are a reseller, value added reseller (VAR), VoIP

provider or copier dealer that’s providing solutions for small

and medium sized businesses (SMBs) there is an urgent new

business reality in play:

Whoever owns the customer network controls the customer.The fundamental challenge and goal is to become your

customers’ total solution provider – a trusted advisor and

an extension of their team.

The key to creating the value desired by SMBs is through

managed services. The attractiveness of managed services

to office equipment dealers (OEDs) and VARs is not new.

What’s new is the realization by a growing number of

VARs – from copier companies to VoIP providers – that

managed services is not just the key to greater profitability

and growth – in many cases it will be the key to their very

business survival.

The stakes are high. Whoever adds the greatest value and becomes the trusted

advisor, owns the network and the customer relationship.

If that trusted advisor isn’t you, then you risk being

a provider of commodity hardware and software services:

if you’re lucky.

This paper will be invaluable if you are a VAR or OED

providing hardware and software based solutions to SMBs.

The central theme of this white paper is this:

If you don’t become a managed service provider, you must be prepared to compete with one.

Read this paper to discover:• How the SMB marketplace is changing

• Why managed services is the key to a trusted advisor relationship

• The ROI from adopting managed services

• Key features to look for in a managed services solution

• Why outsourcing is your best strategy

Winner Take All 2Sponsored by AVG Business

Your customers want moreThe SMB IT infrastructure is growing increasingly complex

and evolving. Even a relatively small business with fewer

than 200 employees likely find themselves dealing with

over a dozen providers to meet their IT infrastructure and

office equipment needs.

Try plotting the connections between systems, devices

and people on a flow chart and the resulting diagram will

look something like a plate of upturned spaghetti noodles.

Typical needs include:

• Desktop and laptop hardware, printers and copiers,

storage solutions, internet access, security, telephony

solutions, servers – to name a few.

• Mobile devices including tablets and smart phones.

THE MANAGED SERVICES OPPORTUNITYIncreasingly this complex patchwork of devices and

software is absolutely essential to an SMB’s ability to

deliver revenue generating services to their customers. Yet

few want the complication and entanglement that comes

managing this growing complexity internally.

The path to simplification for an SMB is to outsource

the maintenance and management of their network and

virtualize some or their entire IT infrastructure.

Outsourcing to a managed service provider eliminates the

need to train internal IT resources on ever changing and

complex technologies. A hosted, virtual solution – for cloud

and telephony solutions – eliminates a capital expenditure

in favor of an OPEX model with a predictable, monthly IT

spend to SMBs.

ONE SOLUTION PROVIDER. ONE INVOICE.“We’re now seeing companies with hundreds of employees go

with a completely hosted voice solution,” says Wade Hoffman,

CTO & VP of Business Development at EarthBend, a VAR and

a leading Mitel reseller in North America. “They’re telling us,

as their solution provider, ‘We don’t want to be in the PBX

business. We’re not a telephone company and building and

managing a voice solution is not core to our business.’”

Earthbend was an early adopter of managed solutions

as a way to help its customers to be more efficient and

to create greater value by assuming those customers’

management responsibilities for IT operations. While the

company continues to sell hosted and traditional on­

­premise data and voice solutions, managed services are

what really enable Earthbend to create breakthrough

customer value and ‘own the client relationship’.

“SMBs have to manage a data footprint that’s growing

beyond anyone’s imagination yet many are staff ­sized and

operate as they were 10­15 years ago”, says Hoffman. “Most

have to deal with compliance requirements. They all have

to deal with security concerns. Many are trying to address

those types of challenges, as well as an increasingly complex

technology environment, with a minimal IT team.” Earthbend

stepped into this vacuum and has never looked back. “What

is really important to us is how we can continue to create

value and capabilities that positions EarthBend as a trusted

advisor and an extension of the client’s team,” says Hoffman.

SMBs want to simplify and focus on their core business. This underscores the massive managed services opportunity for VARs.

Winner Take All 3Sponsored by AVG Business

Own the network. Own the customer.While inoculating an SMB from growing technology

complexity is a key driver for adopting managed services

there are other compelling factors for VARs and OEDs.

“We know the person that controls the network controls

the customer,” says Britt Siedentopf, Manager, Managed

Services at Leapfrog Managed Services by Muratec – an

organization helping traditional office equipment dealers

become managed services providers. “As a result, copier and

office equipment providers are losing market share to MSPs.

Not to mention, their customers want a total solution.”

A RACE TO ZERO Copier and equipment providers are also facing an eroding

hardware market and declining cost per copy. “It has

become more commoditized so they can’t hold margin,”

says Siedentopf. Several years ago sales reps who sold

copiers used to make 55 percent gross margin selling copy

machines. “Most reps were on 100 percent commission.

That just doesn’t happen today,” notes Siedentopf.

Now copier dealers have to pay plus salary because reps

can’t make the money they used to. In addition, major

manufacturers keep dropping prices. “They’re basically losing

money every time they sell a piece of hardware,” Siedentopf

says. “So where they have to make their money is on the

service side. It’s about selling on value. It’s about generating

recurring revenue. It’s about adopting managed services.”

MSPS ARE EVOLVING TOOThe opposite is also occurring: managed services providers

are applying their IT outsourcing to experience to the

VoIP space. This is exactly what David Johnson, cofounder

and VP of The Fulcrum Group, did with the expectation

that becoming a ‘VoIP MSP’ would be a key to helping

his company achieve a projected 15 percent growth rate.

Johnson says that SMBS “such as professional service

companies (e.g. CPAs, law firms, financial advisors) with

high capacity telephony needs are typically a good fit for

managed services because they lack IT staff.” 1

What it really came down to for us was how do we solidify ourselves as a trusted advisor and become an extension of the client’s team.Wade Hoffman, CTO & VP of Business Development, EarthBend

The bottom line:

The marketplace is rapidly changing: turf lines between equipment sellers and service providers are blurred at best.

There’s a convergence underway with the customer network and IT infrastructure at the center.

If you’re not a managed service provider or able to provide managed services, you risk being marginalized or completely snookered out.

1 Business Solutions, http://www.bsminfo.com/doc/ are ­voip ­managed ­services ­the ­new ­frontier­0003

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One trusted provider As a VARs or OED, you have one trump card to play in

the battle for your customer’s network: you have an

established relationship to leverage. Your customer wants

a single trusted provider. As a managed services provider,

that may mean becoming part of their research and

development arm, keeping them up to speed on the latest

features and capabilities that are now provided as a service.

In the new emerging paradigm, today’s VAR doesn’t

necessarily care whether their client opts for a traditional

capital expenditure or a hosted, virtual solution. While more

VARS and MSPs are seeing greater revenue growth coming

from hosted solutions, what they care about above all is

the relationship – and specifically, the ability to become

a trusted advisor. This highlights the critical importance

and role of managed services.

Many MSPs effectively become their customers’ virtual CIO.

In this role, you provide strategic recommendations on

and control their technology budget. “You’re helping them

from a business perspective,” says Siedentopf. “You’re

managing their technology budget for them and controlling

all the technology being driven into that account. And while

doing that, you’re selling more of your hardware services.

It’s a win/win.” In this respect, managed services become

the umbrella that covers everything else that is sold,

whether that is hardware or services.

You’re managing their technology budget for them and controlling all the technology being driven into that account. And while doing that, you’re selling more of your hardware services. It’s a win/win.Britt Siedentopf, Manager, Managed Services at Leapfrog

Benefits of Managed ServicesManaged services provide a strategic way for SMBs to outsource day ‑to ‑day management responsibilities of their IT infrastructure to a trusted provider with the goal of improving operations and cutting expenses.

BENEFITS TO SMBS• Simplified billing and invoicing

• Reduced mean time to resolution

• Uncovers ‘sleeping issues’

• Greater network reliability and security

• Improved employee productivity

• Expert communication and guidance

BENEFITS TO VARs• Own the customer network – and relationship

• Leverage existing customer relationships

• Generate new recurring revenue

• Create important new customer value for SMBs

• Become more competitive

Winner Take All 5Sponsored by AVG Business

What you’ll need in a managed services solutionGetting into managed services is a capital investment.

It’s a strategic business decision and in many respects,

it’s like starting a business within your business. Key

features to look for in an end ­to ­end solution for delivering

profitable managed services that generates recurring

revenue include:

• Centralized management – the foundation for

profitable managed services is a Remote Monitoring

and Management platform with a single dashboard

that reports in real ­time on all technologies residing in

customer locations. This ensures your technicians aren’t

toggling between different screens to access critical

network intelligence per device. They have a bird’s eye

view and can take control when necessary to avert

a problem and ensure excellent service delivery to end

clients.

• Flexible services – while you want a full suite of

IT services to provide what customers need, some

customers will need less. You want the flexibility to

provision individual services, such as antivirus and back­

­up, as a managed service using a centralized dashboard.

This enables you to provide what a customer needs today

while demonstrating the value of a managed service

relationship. You grow the business organically at your

own pace as individual SMB customers adopt more of your

services.

• Automation –automation is ultimately an efficiency

enabler and profit booster. You can provide more IT

services to more customers per technician by automating

routine IT tasks from initial onboarding to software

updates, patching, back up and others. Without

automation, a technician must manually provide all tasks

and may be able to manage roughly one hundred devices.

Equip that same technician with an RMM platform with

remote access and the ability to automate maintenance

tasks and they can manage 250 devices or more.

• NOC and Help Desk – one of the most important planks

in an end to end managed service solution for achieving

scalability and profitability is a NOC and Help Desk. For

every 100 endpoints under management, roughly 30

percent will call every month. This call volume alone

How to evaluate managed services optionsKey questions include:• What features can I build into my services?

• How do I make my services scalable?

• How will I differentiate my services from other MSPs and VoIP/copier MSPs?

• How can I ensure I am delivering on service level agreements?

Building a managed services offeringKey components to include:• Network support

• Back ­up support

• Consulting – CIO/CTO – support

• VoIP support

• Security support

• End user support

• Managed print

• Disaster recovery

• Managed mobile

Winner Take All 6Sponsored by AVG Business

points to the critical importance of having a scalable

NOC and Help Desk service that’s part of your overall

managed service offering. What you want is a proactive

NOC function that will work with you to eliminate the

majority of network and device issues before they occur.

In AVG’s experience, adding an efficient NOC operation

to a RMM solution with automation takes a technician

from managing 250 devices to 350 devices or more. By

simply adding NOC and Help Desk to an automated RMM

solution, you increase the net number of endpoints under

management without having to add new resources –

thereby increasing your profit and revenues.

The real key: ‘systems integrity’ As important as the features (above) are, in many respects

they are table stakes for a credible solution. To some degree

these are the bits and pieces of a technology solution. The

relationship that you have with your end customer and the

trust they place in you is what really counts. To build that

trust, you must be able to show systems integrity.

It means all services are provisioned through one seamless

solution that you – the MSP –own, lock stock and barrel.

“Think about systems integrity as a complete shield for

your customer,” says Marco La Vecchia, VP Channel Sales,

ROI from Managed Services – one company’s experiencePossibly the greatest reward from adopting managed services as a complement to your core business is the opportunity to add value to your SMBS – and profitable new recurring revenue to your bottom line.

However, in the case of Siedentopf’s experience, his team went from $ 18,000 per month in managed network services (MNS) recurring revenue to $ 90,000 per month in MNS recurring revenue – in less than 3 years. “The $ 90,000 per month recurring revenue generated another $2.5 million in hardware sales per year,” confirms Siedentopf. “So we grew our MNS division from $ 216,000 per year to $3.5 million per year in three years.”

Moreover, most of this revenue was net new business that wouldn’t have been generated without MNS. “So to quantify it further, I would have to say for every $ 1 million in MNS contracts per year you can expect another $ 2 million in additional hardware and services,” concludes Siedentopf based on his experience working with various office equipment dealers.

Winner Take All 7Sponsored by AVG Business

AVG Technologies USA, Inc. “If you’re missing something

or are dependent on outsourced relationships, your shield

lacks system integrity and you’re vulnerable,” he says. If

you can’t show integrity it’s is going to be more difficult

to become a trusted advisor and benefit from that flow of

recurring revenue.

The key to systems integrity is having an integrated

solution with tools and services that are purpose built

to work together. La Vecchia says systems integrity

must include content filtering, secure email, secure

remote access and alerting, automation, antivirus,

patch management, online back ­up and mobile device

management.

“When these services are part of an integrated umbrella

solution with the flexibility to deliver individual point

solutions to meet specific customer needs you have

systems integrity,” concludes La Vecchia. You have the

critical foundation for becoming a trusted advisor.

What are your options for adopting Managed Services? If you are an office equipment seller or telephony provider

who realizes adopting managed services is critical to your

business future, you really have three options:

• Outsource the monitoring and management of your

clients’ network to a local IT company

• Build your own custom RMM solution with individual

products, NOC + Help Desk capabilities

• Work with a RMM solution provider who provides

complete transition support and the flexibility to adopt

managed services at your own pace

OUTSOURCING TO AN IT PARTNER IS ‘HIGH RISK’Outsourcing the management of your customers’ network to

a local IT firm is potentially riskier than not adopting managed

services at all. With this approach, you have an IT delivery

partner who may give you leads – and you provide them leads.

“That’s okay, but again, the person who owns the network,

owns the customer,” comments Siedentopf, at Leapfrog.

“The person who owns the network is the IT firm that you

are handing your client off to. They’re going to dictate what

happens from a technology and equipment investment

standpoint. You may not be relevant, so it’s high risk.”

The person who owns the network is the IT firm that you are handing your client off to. They’re going to dictate what happens from a technology and equipment investment standpoint. You may not be relevant, so it’s high risk.Britt Siedentopf, Manager, Managed Services at Leapfrog

Winner Take All 8Sponsored by AVG Business

BUILDING YOUR OWN SOLUTION IS EXPENSIVE AND TIME CONSUMINGWhile you may have the technical know how to build your

own RMM solution, doing so will be a very time consuming

and expensive proposition. According to Siedentopf, you

can also expect high turnover because “you’re loading this

on your dime. You’re getting your sales reps frustrated,

your service people frustrated and your customers

frustrated because you’re trying to figure it out as you go

along. I’ve been there and it doesn’t work.”

Ironically, building and owning an RMM solution themselves

echoes the same considerations that a managed provider

uses to rationalize an outsourced hosted solution to end

SMB customers. Why invest the time and considerable

effort to design the hardware and software, and ramp up on

the various specialized technologies and skill sets required

to manage IT environments when all of that is available as

a turnkey outsourced managed workplace solution today?

“With our team’s skill sets, experience, and the tools

available on the market today, EarthBend could

theoretically, with enough time and money, go out

and build what AVG has built,” admits Hoffman. “But

it’s the same storyline there. Why would we when we

have a partner whose core business is providing those

capabilities? Providing valuable technology solutions and

skilled resources to our customers is our core business and

focus; building RMM, NOC, and other management systems

are not,” he adds.

“Our teams help our clients define, document, design, and

then ultimately deliver the right solution and the right vehicle

whether it’s hosted or not,” comments Hoffman. As a result,

Earthbend’s sales consultants are not tasked to be the 24×7

managed services organization or to build custom dashboard

reports to see how their end client systems are performing.

“That was why we made that decision”, says Hoffman.

“We chose not to go invest and build our own or purchase

our own and staff the team that would be accountable to

that round ­the ­clock effort. AVG does it very, very well.

They’re a leader in this industry in that respect, and they’ve

provided a lot of other valuable additive functions that

can go with it to make it an even more valuable service to

our customers. Functions like bare metal restores, backup,

antivirus and other components are offerings that we can

plug into those solutions. It’s the additional things that

make us more valuable to our customers while, at the same

time, freeing our consultants to spend more time on those

customers’ critical systems.”

We chose not to go invest and build our own [managed services solution] or purchase our own and staff the team that would be accountable to that round the clock effort. AVG does it very, very well.Wade Hoffman, CTO & VP of Business Development, EarthBend

Winner Take All 9Sponsored by AVG Business

SummaryWhether you’re selling telephony or office equipment

solutions, you really have two options:

• Add managed services to your core business or hope that

the market for hardware ­based solutions will change for

the better.

This paper points out:• The overriding risk you face by not adding managed

services as a complement to your core business is losing

control of your customer’s network to more aggressive

MSPs or VARs that have adopted managed services.

• Your customer’s network is the new battle ground – if you

own the network, you own the customer relationship.

• You must add managed services or find a strategy for

competing effectively against MSPs.

Most if not all SMBs:• Recognize the growing importance their IT infrastructure

has on their productivity if not their bottom line.

• Do not want to embrace the challenges of managing the

growing technical complexity of their network and IT

environment themselves.

• Want to simplify their vendor relationships, control their

capital costs, and focus on their core business.

• Want one trusted provider.

MSPs have a clear advantage because they are well positioned

from the outset to address any SMB’s IT infrastructure needs.

However, MSPs lack one key success factor in becoming

a solution provider to your customers today: they don’t yet

have a trusted relationship or a foot in the door.

This is your ‘ace in ­the ­hole’ for leveraging managed

services. Your customers already know and trust you. They

want more. Do not let them down.

With the right transition solution – and managed services

solution provider – you can deliver as many or as few

managed services as you want, and grow this new part of

your business organically.

Key requirements for delivering profitable managed services

include:

• An integrated, end ­to ­end RMM solution for remotely

monitoring and managing customer environments from

a single, centralized dashboard.

• Having the flexibility to deliver individual services, such

as antivirus and back ­up, as a managed service to meet

specific, individual customer needs.

• A 24×7, 365 day NOC and Help Desk operation to

support to your end customers and ensure service level

agreements are met.

THE AVG ADVANTAGE – ONE INTEGRATED MANAGED SERVICES SOLUTIONAVG Technologies offers a complete managed services

outsourcing solution that is backed by:

• AVG Managed Workplace® 9.0 and AVG Cloud Care –

the industry’s most comprehensive remote monitoring

and management platform with advanced automation

features for delivering on ­premise and cloud ­based

solutions built on one technology platform.

Winner Take All 10Sponsored by AVG Business

• North American NOC and Help Desk – provisioned

exclusively by knowledgeable AVG professionals. Small

and large MSPs alike trust these services to get the cost

effective support they need.

• One company solution – all technology, services and

support including first, second and third level tech

support come from AVG, so there’s no waiting – you get

answers and the support you need when you need it.

• Award winning technology – AVG Technologies has

won countless awards for our technology and support

including: 2014 Coolest Cloud Vendors, CRN Top 100 2014,

Computer Troubleshooters’ Vendor of the Year (Australia),

MSPWorld Cup Award 2013, 2014 ASCII Customer Support,

Best Channel Vendor by Business Solutions and many

others.

• Industry leading business enablement services – one­

­to one partner support for helping you develop a go­

­to ­market strategy for transitioning successfully to

managed services and offering a profitable suite of

revenue generating services in the shortest time possible.

There’s never been a better time to talk about managed services.If you like what you see, let’s talk!

Contact us to find out more: 855‑254‑6987 or email casales@avg.com

Winner Take All 11Sponsored by AVG Business