How IT providers can meet customer demands to put it all on one bill

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This article appeared in the April 2017 issue of CRN magazine.

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How IT providers can meet customer demands to put it all on one bill

When Catherine Power, Baby Bunting’s general manager of IT, was looking to transition her company’s data centre to a managed service provider, she had a lot of suppliers to choose from. But she needed something more than just a data centre manager.

While Baby Bunting has quickly grown to become Australia’s largest specialty retailer for baby goods – with plans to grow much larger – Power’s entire internal IT team numbers just five people. Hence, she was keen to see a lot more than just hosting included on her future service provider’s bill.

“I met with three companies who were all very good and were able to provide what we needed from a data centre perspective,” Power says, “but what I needed in addition to that was a fully managed service offering. It was important to have someone who could not only host our infrastructure, but also provide what we don’t have internally – the management around the security, the service delivery, project management, network and design, and architecture services.”

Power selected Melbourne-headquartered managed service provider Interactive. “And they were very impressive in their response when we were looking for a support partner in this space,” Power says.

“They took the time to understand the business and they came back to us with some recommendations. And from day one, they have never let us down.”

While Power’s requirements might have been too much for many service providers, they are in line with a growing trend for clients to increasingly want to ‘stick it all on the same bill’. The pressure IT managers face to streamline their internal IT teams is combining with their desire for easier vendor management and fewer ‘throats to choke’, putting more pressure on service providers to invest in a broadening range of capabilities.

The number of providers stepping up to the challenge is also growing. One of the first has been Ethan Group, whose founder and executive director, Tony Geagea, says it is no longer possible to separate telecoms from technology applications and services.

Geagea says that for customers, it means a single throat to choke, with one organisation accountable for the entire outcome of what they require, from the technology applications and infrastructure through to communications.

“And that brings a lot of peace of mind to businesses,” Geagea says. “You no longer have multiple parties pointing the finger at one another. In recent times, the applications have been designed in a way where you can be billed and provisioned on a consumption-type model. And if you look at the applications themselves, you can’t really separate them – an app without telecoms is pointless.

“Our angle has always been that customers prioritise the application. Regardless of where we source the telecoms, we take that on as our problem and we wrap it all up with a service level that is acceptable to the client, and something they no longer have to worry about. The trick is bringing it down to a billing mechanism that is acceptable by the client, so that they feel like they are only really paying for the services they are consuming.”

Geagea says that Ethan Group has made significant investments in looking and acting like a service provider, including investments in
compliance, teams for provisioning and billing, and support.

“We need support teams that can support not only the infrastructure communication links, but also the technology, and diagnose where the problems are in a fashion which is better than the way that the clients used to be able to do it,” Geagea says.

That is not the end of the investment for Ethan Group, however. While the client might want everything from day one, they are paying for it over an extended period.

“It is a phenomenal investment,” Geagea says. “We are taking on the entire budget for clients that they ordinarily would have had to finance themselves. The trick is to not take on more than you can chew. Because we got in early, we’ve managed to build up that infrastructure and a portfolio of services which has been available to customers for a number of years. We have had customers renew contracts multiple times – up to 10 years – and we are now moving into their third or fourth contract renewal.”

How vendors can help

Vendors have not been ignorant to the trend, nor to the issues facing would-be service providers that are striving to put everything on the one bill. Hitachi Data Systems, for instance, has created a global cloud service provider program that helps MSPs plan what services they can put together using HDS technology.

“That includes working on the go-to-market and where the risks are, and effectively putting a financial mode in place that is going to work for the partner,” says Hitachi’s strategic partner manager Mark Edwards. “We can put some measurements together around consumption to look at how they are using the infrastructure. And if we can measure it, we can do the modelling and come up with a financial model that is going to work.”

That may see Hitachi implementing anything from a leasing arrangement to a full managed service.

“And the risk could be more with Hitachi or more with the partner depending on how they want to structure it,” Edwards says. “It depends a lot on the maturity of the partner and their own balance sheet. A lot of vendors are hesitant to take any risk, but if we are developing a relationship where we are putting a combined service out to market with a partner, it strengthens the relationship because we are not just talking about selling them something – we are developing a joint go-to-market with them.”

Dell EMC’s enterprise general manager for service providers and alliances for ANZ, Phill Patton, says that for his firm, these arrangements are also becoming more common.

“That is all converging and coming together under IT transformation,” he says. “They are looking at the different models, whether that be capex or opex, and they are tending to align a lot more to opex models as they go forward.”

In response, Dell EMC has created its own cloud provider, Virtustream, and is also using its financial services capability to create a variety of utility options, from no commitment to percentages of commitment.

“We have a lot of flexibility in that area, and acknowledge that to work with our providers in that space, we have to provide that sort of service,” Patton says. “It’s really about allowing the service provider community the ability to develop solutions with Dell EMC across our whole stack.”

But making the model work takes more than just financial prowess.

“The key is the programs you have with those service providers,” Patton says. “How do you work with them around enablement and training, and how do you bring them some of the latest trends in technology? How can you ensure that you’re able to give confidence to their customers? It is important for us and the customers that they see the provider as having been through that training, and being recognised by Dell EMC as having the skills to deliver those services.”

The trend towards a single bill has also been noted deep in the infrastructure layers, all the way down to power management. Schneider Electric’s general manager for channel and alliances, Muralee Kanagaratnam, says that his company is looking at different options to provide an as-a-service model for its hardware.

“Power-as-a-service is, potentially, something we will be able to bring to market,” Kanagaratnam says. “What we are looking at right now is the mechanism behind how that will happen, and the logistics. We want to disrupt before being disrupted. When you are the market leader, it is really important that you want to be the one that comes to market with this, because I am very confident that if we don’t, someone else will. And we need to make sure we are ahead of the curve on this.”

For Geagea, the future is likely to involve a number of different models, as vendors, partners and customers mix and match appetites for risk and responsibility. 

“It is very different from the past, where there was heavy competition between resellers, integrators and services providers,” Geagea says. “These days, there is more of an ecosystem, where you are seeing parties working together to deliver a solution for the client. We have worked aggressively on a brokerage and an aggregation-type model, where both the partners and customers can enjoy services from us, regardless of whether they are direct from us or indirect.

“We have had to move with the times. To be successful, we have had to adapt very quickly, accept the changing models and transform our business, so that we are thinking and behaving more like a service provider with all the right governance.” 

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