During a discussion I had with a managed services provider, the MSP shared a story that reminded me of the stark contrast between the break-fix and managed services business models. Here’s the scenario: The MSP’s new customer had been working with a break-fix VAR and one of the customer’s computers became infected by a virus. After unsuccessfully removing the virus on its own, the customer contacted the VAR, who after many hours and much difficulty, was finally able to remove the virus — to the tune of an $1,800 invoice. Adding insult to injury was the fact that the computer was six years old, and it didn’t have any mission critical data on it (all the mission critical data was saved on the customer’s network already).
It’s no surprise why after begrudgingly paying the bill that the customer never called the VAR again. I realize this is an extreme example, but it illustrates a key point about why the managed services model is better for IT service providers and their customers. Consider this: in a break-fix model, you don’t get paid unless, well, something breaks. In a managed services environment, on the other hand, you’re incentivized to keep your customer’s computers, servers, and network running smoothly, so you can minimize truck rolls and minimize their downtime.
With the break-fix business model, there’s always the temptation that you don’t want to set up your customer’s network too well, or you could be harming your business in the long run. In a managed services environment, on the other hand, you’re more likely to proactively detect viruses before they cause too much damage. And, even if you do run into a serious problem that can’t be resolved remotely and you have to eat the cost of a new computer, your monthly recurring revenue should easily cover it and the best part is that you don’t have to feel hamstrung into patching up legacy equipment — at all costs and against all reason — that’s well beyond its usefulness.