Many MSPs are beginning to run out of the original Payroll Protection Program funds they received in the second quarter 2020. It’s time for you to plan what’s next for tech firms. It’s time to start thinking about your managed service provider (MSP), business model as the second half of 2020 approaches. Many MSPs are beginning to run out of the original Payroll Protection Program funds they received in the second quarter 2020. It’s time for you to plan what’s next for your tech company.
Third-party maintenance (TPM) is a proven revenue-generating opportunity that should be considered. TPM is a continuing hardware support for technology equipment. It acts as an alternative to and enhancement of original equipment manufacturer (OEM).
Here’s an example: A data centre may have a portfolio (server, storage, and networking) of aging equipment that was sold with a 3-year warranty and support agreement. The support ends after the third year. TPM service providers will extend support for equipment for a fee. Service level agreements (SLAs) outline important support functions like response times (e.g., same-day or next-day) and specify minimum certification levels of support engineers, among other things.
TPMs are important because they allow customers to avoid hardware refreshes while still maintaining the same operational quality. TPMs can also be used to delay or manage OEM-forced upgrades.
Why MSPs Should Consider TPM
The economic challenges of mid-2020 and the foreseeable future will force us to prolong the useful life of our hardware assets. This will allow us to avoid having to replace it. This is similar to fixing your older car rather than buying a new one. MSPs can also make a new income stream by creating a TPM practice of their own or working with a TPM organization (such a reputable distributor).
Portfolio Protection Program for MSPs
MSPs must also be able to innovate in the “new norm” and TPM is low-hanging fruit. This is your chance to diversify your service offering and provide an in-demand service offering that protects your portfolio. Customers and IT managers are looking for ways to reduce costs, i.e. protecting the customer’s portfolio. TPM is one option and has been proven to be a winner for all. TPM is not a popular model among MSPs. This counter-cyclical offering can help protect your business from revenue declines caused by recessions.
As a result of continued consolidation and increased private equity investments in large providers, the TPM market is changing. This has led to mergers and acquisitions. Gartner senior analyst Rob Schafer says that solution providers and enterprise leaders who want to implement hybrid maintenance coverage with a mix of OEM and TPM support need to evaluate the benefits and risks of TPM.
Software and hardware vendors may sometimes enforce end-of life and end-of support deadlines for their products. This is to ensure that customers upgrade to the latest versions and generate a consistent revenue stream. These “deadlines”, and the ability to extend the useful lives of IT assets, can be bridged by TPMs. It’s easy to present it to your customer.
Part 2 will cover the risks and threats of the TPM market and give context to help you confidently offer this solution to your business and create new income streams.
Harry Brelsford founded SMB Nation, a publishing company and events company that focuses on the SMB technology channel community.
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