Much like the current SARS-CoV-2 virus is affecting age groups differently, the business impact of this pandemic is also being felt differently across different segments of the technology industry. Companies that supply technology solutions for heavily impacted verticals like retail, travel, entertainment, and hospitality, are seeing dramatically negative impacts, while businesses that supply services for remote worker solutions are seeing the exact opposite effect.
COVID-19 Managed Services Rapid Research Response Poll Data
While over half of recent survey respondents indicate that overall quarterly technology bookings are down vs. the same period one year ago and over two-thirds indicate that on-site technology services have declined, less than one-third report a decline for remotely delivered services:
(Remotely Delivered Services includes data labels)
In fact, forecast demand for remotely delivered services is up for over 50% of survey respondents.
Early sentiment for Managed Services business is also decidedly less grim than Professional Services (PS) and Education Services (ES), which typically rely on a heavy on-site component for their businesses:
(Managed Services include data labels)
In fact, two-thirds of Managed Services businesses are NOT projecting a decrease in revenue due to this crisis. This is true for only 15% of Professional Services businesses and 10% of Education Services businesses.
This sentiment on MS revenue and bookings is also reflected in the self-reported impact of this crisis on the MS Value Proposition. In answer to the survey question, “Does the current emergency enhance or detract from your Managed Services value proposition?”, over three-quarters of survey respondents indicate that the current emergency actually enhances the MS Value Proposition:
That’s a whopping 76% of respondents indicating that this crisis may actually help open the door for customers that are looking for solutions that are subscription-based, scalable, reliable, and expertly managed, to help them focus on their core business – which now, in most cases, also includes crisis management.
We are seeing an increase in the volume of self-reported MS contract cancellations, but certainly nowhere near a majority impact right now:
As a result, at the time this blog was published, survey results indicate that only 20% of Managed Services business are currently planning for a decrease in headcount, while about the same number are actually planning for an increase:
From our Managed Services benchmark database, we know that MS businesses report that 80% of their services are delivered remotely vs. 20% on-site Even with such a high amount of remotely delivered services, almost half of respondents are reporting that they now plan to increase spending on remote work solutions in response to this crisis:
- On average, Managed Services businesses are seeing less of a negative impact than most other sectors of the tech economy.
- Overall, Managed Services value propositions are actually enhanced during this crisis.
- Contract cancelations and headcount reductions exist in MS business, but are still a minority impact at the moment.
- Even with an existing heavily remote-centric delivery model, MS businesses are looking to invest even more in remote worker solutions, which will make them more resilient in the turbulent times ahead.
Where Do We Go From Here?
As a Managed Services leader in your organization right now, what should you do with this information? There is no one-size fits all approach to handling this crisis and your customers. Supported technologies and existing capabilities are going to influence your path differently than other businesses. But, in general, I see two major themes emerging for Managed Services businesses: Revving and Retooling.
Ladies and gentlemen, start your engines. If your Managed Services operations are supporting verticals or technologies that are seeing increased demand, there has historically been no better time than now to get your message in front of your sales team, your partners, and your customers. Your core message, value proposition, and delivery structure are dialed in right now to acutely service the needs of a dramatically more receptive audience. Can you help influence your organization to Make the Move to Outcome-Based Selling? Can you work with sales to convince them that It’s Time to Update Your Selling Model? Have you developed the Must-Have Characteristics of a Successful Managed Services Sales Associate?
I’ve been in the Managed Services arena for over 25 years now and over that time (especially within technology manufacturing businesses), Managed Services is often seen as an afterthought in the portfolio that companies have often leaned towards providing lip service rather than jet fuel. MS sales have often been driven by a push vs. pull marketing and sales strategy, trying to convince businesses of the need and necessity of having a trusted and proven third party to take over the complexity and risk of managing critical technologies. In all that time, I’ve never seen any period in which the MS value proposition is more relevant and urgent than right now. Getting your messaging in the right hands with the right volume is crucially important right now, especially if your technologies and verticals are aligned to help in this crisis.
Now is the time to invest in marketing and sales capabilities to help your company reframe its go-to- market approach around Managed Services and use it as a leading, and not a trailing, part of your portfolio. TSIA has resources to help in both Subscription Sales and Managed Services research practices. In addition, we have free resources available to any TSIA member in each practice.
While some sectors of the market have ground to a screeching halt, other sectors are scrambling to increase capacity like never before. Unfortunately, many executives find themselves reacting to the constant stream of urgent challenges rather than proactively working toward resolving them during the crisis and thinking about their business beyond the next few months
If your supported technologies and verticals are suffering, rather than thriving during this crisis, now is the time to take a pause and reassess next steps.
At TSIA, we’ve come up with an analogy of a pitstop: COVID-19 has caused a “yellow flag” on the “economic racetrack” forcing companies to take a “pitstop.” We believe that this pitstop actually provides an opportunity for teams to bring in their “race cars” to fill up with gas, change the tires, tune the engine, etc. so that when the “green flag” goes up, they’ll be ready to win. In other words, now is a unique time for your organization to focus on adding and optimizing capabilities that you wouldn’t have time for otherwise so you can set yourself up for success.
What will you do during your pitstop? Whether it’s improving processes, creating new offers, building out managed services and capabilities, accelerating digital transformation, giving your team time to hone their skills, or whatever business challenge you’ve been meaning to attack for your organization.
We’ve recently published a number of fantastic supporting resources under our Rapid Research Response Initiative to help guide you through crisis management and reassess your capabilities going forward. I’d counsel you to focus especially on these resources, which can help start you down the path:
TSIA is Here for You
We understand that our member companies, the technology industry, and the world at large have been impacted by COVID-19. Whether you are prepared for Revving or Retooling, now, more than ever, we need to work together to get through these challenging times. TSIA is committed to providing visibility as quickly as possible into the changing industry trends and practices that come as a result of COVID-19. Visit our Rapid Research Response Initiative resource page for more information.
If you have any questions related to how COVID-19 is impacting your organization, we’re here to help.