Many of your customers today view technology as an operating expense on their income statements. They’re categorizing your managed services under selling, general and administrative expenses (SG&A). What does this mean? It’s simple: Your customers are grouping your managed services with office supplies, utilities, rent and cleaning services.
Can This Really Be True?
Yes, unfortunately, it is. TruMethods CTO Bob Penland and I have spent hours thinking about this very topic. Do you want to know how we came to the conclusion that many of your customers are categorizing your managed services under SG&A? Think about it this way: Your customers sure care a lot about whether you charge them $4,000 a month or $3,500 a month, don’t they? I mean, who wants to pay more on an expense item, right?
Do you know that many of the people you meet with — customers or prospects — spend as much money on cleaning services and indoor plant maintenance as they do with you? Yes, this surprised me, too, but it’s true. There are many of you who’ve told me this: "These business owners, Gary, they don't want to meet with us on a quarterly basis." Honestly, don't feel bad — they're not meeting with their cleaning guys quarterly either.
The Times They Are A-Changin'
IT providers providing strategic value in today’s market are onto something. Think about it this way: When I first started out in business, CEOs came from finance. Then, we went through a period where sales and marketing became more strategic in businesses, so what did we see as a result? We witnessed CEOs coming from revenue, right? Today, what we’re seeing is CEOs coming from technology; CTOs are being promoted to CEOs.
Oh, and this phenomenon isn’t only happening with technology companies. We’re seeing this mindset shift in industries across the board, too. Why? Well, it’s good news for us, really. Technology not only supports business functions tactically but also strategically.
Be The Accounting Firm, Not The Cleaning Service
Every company has a relationship with an outside accounting firm. Even a large company with a CFO, an accounting department and a tax department has a relationship and pays a bunch of money to a top accounting firm. Why? In addition to conducting the company's audit, the accounting firm deals with many customers, so it’s able to provide a different perspective and strategic advice on tax planning and other accounting areas. The company does the tactical work, but it needs help from an outside account firm on the strategic initiatives; the same thing works for our customers around technology.
As to how MSPs can be like accounting firms, that’s a conversation for another day; the transition begins with a new adventure. For now, consider how customers and prospects are viewing your role in their organizations. Are you a business function or an expense?