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Published on April 18, 2008

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How to Succeed in Managed Services Part 3 – Pricing Managed Services for Maximum Profit:  How to Succeed in Managed Services Part 3 – Pricing Managed Services for Maximum Profit Sameer Jayakar Sr. Manager, Network Management Cisco Systems (sjayakar@cisco.com) October 30th, 2007 Agenda:  Agenda Pricing your Managed Services for Maximum Profit Identifying your Target Market Tailoring Deliverables to your Market Market-specific Managed Services Pricing Models What’s New in Cisco Monitor Director 1.1.2 How to use Cisco MD to … Enhance Customer Loyalty Reduce Operational Costs Increase Recurring Revenue Offer to sign up for free training on SELLING Cisco MD-based Services and making immediate income with Agent Purchase Raffle Giveaway (You have to be present to win) Q&A Today’s Guest Presenter Erick Simpson Vice President/CIO Intelligent Enterprise/MSP University :  Today’s Guest Presenter Erick Simpson Vice President/CIO Intelligent Enterprise/MSP University Who is Intelligent Enterprise?:  Who is Intelligent Enterprise? Intelligent Enterprise’s Move to Managed Services :  Intelligent Enterprise’s Move to Managed Services We Used to Operate under a Break-Fix/Block Time Model And Were Always Under Constant Demand To Recruit New Clients Sell New Solutions each and every Month in order to meet our Receivables Goals Fight the Cycle of Feast Or Famine! We Successfully Migrated all Clients To an Annuity-Based Managed Services Model in January 2005 (After 3 Years of R&D – Time and $$$) Intelligent Enterprise’s Move to Managed Services:  Intelligent Enterprise’s Move to Managed Services Why Did We Move To Managed Services? We Needed to Increase Utilization and Billing, Without Increasing Staff We Were Traveling for Most Service Calls – The Utilization Killer We Were Trading Time for Money We Could Not Forecast our Revenue Further than 60 to 90 Days Out We Wanted to increase our value to Clients as a Trusted Advisor Managed Services Pricing Models:  Managed Services Pricing Models Target Market:  Target Market SMB Mid/Enterprise Different Deliverables Different Marketing/Sales Techniques Different Pricing Models Target Market - Deliverables:  SMB - Outsourced IT Dept Network Monitoring Help Desk Vendor Management Project Work Sales Cycle can be relatively short Low barrier to Decision-Maker access Target Market - Deliverables Target Market - Deliverables:  SMB - Outsourced IT Dept Network Monitoring Help Desk Vendor Management Project Work Sales Cycle can be relatively short Low barrier to Decision-Maker access Target Market - Deliverables Mid/Enterprise – In-house IT Dept Network Monitoring Possible Help Desk Overflow/Vacation Support Vendor Management not likely Possible Project Work Sales Cycle is longer Overcome perception of threat to existing IT Staff Lengthier approval process Buy-In from IT Staff More Gatekeepers between you and CIO/CFO/CEO (Decision Maker) Target Market – Marketing/Sales Technique:  SMB Traditional Marketing Works Well Word of Mouth Direct Mail Email Newsletters Postcards Telemarketing Target Market – Marketing/Sales Technique Target Market – Marketing/Sales Technique:  SMB Traditional Marketing Works Well Word of Mouth Direct Mail Email Newsletters Postcards Telemarketing Target Market – Marketing/Sales Technique Mid/Enterprise Consultative Approach works best Word of Mouth Trade Shows/Vendor Events/Industry Functions Certifications/References Key “Buddy-up” to existing IT Staff Target Market – Pricing Models:  Target Market – Pricing Models Value Pricing Flat-Fee/All Inclusive Very Consultative – Benefit-Based Approach Not Device-Specific Very Flexible – easy to customize Easy to illustrate cost savings with the Client Provides highest profit potential of all models Need to use Cost Savings Analysis (ROI Tool) www.nquest.com Target Market – Pricing Models:  Target Market – Pricing Models Target Market – Pricing Models:  Target Market – Pricing Models Per-Device Pricing Flat-Fee per Device Popular Pricing Model for Managed Services Very Simple to Quote Easy to Modify as Client Environment Changes Caution – Easy to Commoditize Services, Allowing for Price-Based Selling, Rather than Benefit-Based Consultative Selling www.acesiowa.com Target Market – Pricing Models:  Target Market – Pricing Models Target Market – Pricing Models:  Target Market – Pricing Models Gold/Silver/Bronze Pricing Flat-Fee Bundled Packages of Services Most Popular Pricing Model for Managed Services Each Successive Package Providing More Services at Higher Expense Very Simple to Quote Easy to Modify as Client Environment Changes Additional Services to Round Out a Full Offering are Usually Offered A La Carte. www.directpointe.com Target Market – Pricing Models:  Target Market – Pricing Models Target Market – Pricing Models:  Target Market – Pricing Models “Pick 5” Pricing Combination Gold/Silver/Bronze With an A La Carte Twist Client Chooses Tier Each Tier Contains Multiple A La Carte Services Each Successive Tier Contains More A La Carte Services to choose from at Higher Expense Caution - Carefully Choose Minimum Required Services in Each Tier www.bhconsulting.ca Target Market – Pricing Models:  Target Market – Pricing Models Target Market – Pricing Models:  Target Market – Pricing Models A La Carte Pricing Most Difficult Model to Maintain Least Popular Pricing Model Client Chooses All Services From Menu Each Service Individually Priced Caution - Offers Client Too Many Choices, Slows Sales Cycle and Allows Client the Opportunity to Miss Critical Services www.catharsis-it.com Target Market – Pricing Models:  Target Market – Pricing Models Target Market – Pricing Models:  Target Market – Pricing Models Monitoring - Only Pricing Normally More Likely to be found in Mid/Enterprise Engagements Provides Monitoring/Alerting either to Service Provider or to Client’s In-House IT Staff Several Different Service Levels Can Be Employed Alert Only to In-House IT Staff Incident Resolution by Service Provider Only As Specified Incident Resolution by Service Provider – Additional Billing Can Also Be Re-Sold as a Stand-Alone Solution Service Provider Has no Further Responsibility After Sale www.syseng.com Target Market – Pricing Models:  Target Market – Pricing Models Choosing your Pricing Model:  Choosing your Pricing Model Determine your TCSD:  Determine your TCSD Determine your Margin:  Determine your Margin Utilization and its effect on the cost of service delivery:  Utilization and its effect on the cost of service delivery Increase utilization with Cisco CMD Lower your Total Cost of Service Delivery! Increase Net Profits! Pricing your Managed Services Deliverables by Profitability Target:  Pricing your Managed Services Deliverables by Profitability Target Can be applied to all pricing models EXCEPT Value Pricing! Pricing Cisco CMD as a Flat Monthly Fee:  Pricing Cisco CMD as a Flat Monthly Fee Use this formula to plug in your specific data… Slide31:  Value Pricing with the Cost/Savings Analysis Slide32:  12 $35.00 20 1 4 4 2 10 120 $30,000.00 12 12 $45.00 $600,000.00 2,080 41,600 $14.42 $1,000000.00 $6,480.00 $5,040.00 $34,615.38 Slide33:  $24.04 $57,692.31 $10,000.00 Included Included Included Included Included Included Included Included Included Included Included Included Included Included Included Slide34:  How Do We Sell Managed Services? A Client Savings of Over $6,000 Per Month! $6,480.00 $34,615.38 $10,000.00 $36,000.00 $113,827.69 $77,827.69 $5,040.00 $57,692.31 Start With Cisco Monitor Director!:  Start With Cisco Monitor Director! Slide36:  Utilization = 75% 10 Techs Reactive Break/Fix Utilization Utilization Comparison Slide37:  Utilization = 75% 10 Techs Reactive Break/Fix Utilization Utilization Comparison Slide38:  Proactive MSP Utilization with Cisco Monitor Director Utilization = 75% Utilization = 125% 10 Techs 6 Techs Reactive Break/Fix Utilization Utilization Comparison Slide39:  Proactive MSP Utilization with Cisco Monitor Director Utilization = 75% Utilization = 125% 10 Techs 6 Techs Reactive Break/Fix Utilization Utilization Comparison How I-Enterprise Makes money with Cisco’s Monitor Director:  How I-Enterprise Makes money with Cisco’s Monitor Director Using Cisco Monitor Director, you can receive Superior monitoring and alerting services Create or maintain SLA’s and Response time More revenue per client We charge an additional monthly premium of $100US to $150US for CMD-monitored networks (50% to 70% margin) Client benefits from faster response and resolution time! Two Steps to start using Monitor Director:  Two Steps to start using Monitor Director Step 1 (Now! Even if you don’t provide MSP Services!) Use CMD now with your existing reactive customers purely to reduce your Customer support and operations costs Remotely monitor and detect faults VPN in to Client environments to fix problems remotely AND BILL for remediation GUI enables leveraging lower-cost technicians for problem resolution and maintenance Save on site visits Capitalize on Up-sell Opportunities through the use of Monthly Summary Reports Slide42:  Step 2: (Now plus ~ 1 month) Based on value shown to customer in Step #1, move them to a monthly flat-fee monitoring service for SNMP & IP Devices Improve Service Delivery – Troubleshoot problems faster Increase Recurring Revenue Show value as a Trusted Advisor Two Steps to start using Monitor Director For MSPs that don’t have a Generic MSP Platform:  For MSPs that don’t have a Generic MSP Platform Using Monitor Director you can provide Basic Services for monitoring any SNMP or IP enabled Device Premium SLA services for Cisco device monitoring – over and above what you can provide for Generic Device Monitoring For MSPs that do have a Generic MSP Platform:  Augment your Basic Network Monitoring Service with Premium Service for Cisco Devices today Open up additional Revenue Opportunities not possible with Generic MSP Platforms For MSPs that do have a Generic MSP Platform Slide45:  @ Hosting Facility Lower Initial Investment Faster Speed to Market Highest Availability Cisco Monitor Director: Two Hosting Options Slide46:  @ Partner Site Slightly Higher ROI, Profits over time @ Hosting Facility Lower Initial Investment Faster Speed to Market Highest Availability Cisco Monitor Director: Two Hosting Options Slide47:  Cisco Monitor Director: Hosted Option The “Hosted Cisco Monitor Director Solution”:  Offered by Intelligent Enterprise The “Hosted Cisco Monitor Director Solution” The “Hosted Cisco Monitor Director Solution”:  Offered by Intelligent Enterprise The “Hosted Cisco Monitor Director Solution” Slide50:  Partner Help Desk Console IE’s Hosted CMD Infrastructure Slide51:  Partner Help Desk Console Cisco Monitor Director Servers Hardware IE’s Hosted CMD Infrastructure I-Enterprise Datacenter Redundant Power, Bandwidth, Fire Suppression, Climate Control, Multi-Site Replication, Backup, DR Slide52:  Partner Client Location 1 Client Location 2 Client Location 3 Help Desk Console Cisco Monitor Director Servers Hardware IE’s Hosted CMD Infrastructure I-Enterprise Datacenter Cisco Monitor Agent Cisco Monitor Agent Cisco Monitor Agent Redundant Power, Bandwidth, Fire Suppression, Climate Control, Multi-Site Replication, Backup, DR Slide53:  Partner Client Location 1 Client Location 2 Client Location 3 Help Desk Console Cisco Monitor Director Servers Hardware IE’s Hosted CMD Infrastructure I-Enterprise Datacenter Cisco Monitor Agent Cisco Monitor Agent Cisco Monitor Agent Redundant Power, Bandwidth, Fire Suppression, Climate Control, Multi-Site Replication, Backup, DR The “Hosted Cisco Monitor Director Solution”:  The “Hosted Cisco Monitor Director Solution” Offered by Intelligent Enterprise Price of hosted service: $350 setup fee $175 per month (includes CMD and base installation!) Partner provides Cisco Agent & Owns client Relationship Includes FREE Training & Support 3 Webinars to help you sell CMD and Managed Services 2 Group Q&A Calls to help you CLOSE business Benefits to Partner who Hosts @ I-Enterprise:  Benefits to Partner who Hosts @ I-Enterprise Low Setup Fee Monthly Cost for IE’s service: Only $175/mo. Expected monthly revenue to Partner assuming 10 Clients: $1,000 - $3,000+ over time Follow-on profits from Up-Sell Opportunities: $$$ Scale your services easily Pay as you grow… Pricing Example for Partner who has signed up for Hosted Monitor Director for a MONITORING ONLY AGREEMENT with Client:  Pricing Example for Partner who has signed up for Hosted Monitor Director for a MONITORING ONLY AGREEMENT with Client 10 clients AVERAGE MONTHLY PROFIT POTENTIAL FOR 10 clients $2,590.00 for Monitoring and Reviewing Reports 10Hrs/Wk! ADDITIONAL BILLING OCCURS FOR REMEDIATION IN A MONITORING-ONLY SERVICE AGREEMENT Pricing Example for Partner who has signed up for Hosted Monitor Director – ADDITIONAL BILLING OPPORTUNITIES with Clients:  Pricing Example for Partner who has signed up for Hosted Monitor Director – ADDITIONAL BILLING OPPORTUNITIES with Clients 10 clients @ 2hrs/mo. Add’l Billing ADDITIONAL MONTHLY PROFIT POTENTIAL FOR 10 clients $1,170.00 for Remediation 5Hrs/Wk! UNCOVER ADDITIONAL UP-SELL OPPORTUNITIES 10 Steps to start making money with Hosted CMD Immediately!:  10 Steps to start making money with Hosted CMD Immediately! Purchase CMD Agent (MON-1.1-MSP-25-K9: $480 minus Discounts) Get Trained with 3 MSPU Webinars focused on selling CMD (Training included with CMD Agent Purchase) Schedule Client Appointment Submit Client Profile (no identifying information) to qualify for 2 Consulting Calls with MSPU Schedule follow-up Consulting Call with MSPU after appointment Close the Deal – collect setup and 1st month’s service fee from Client (example: $500 Setup Fee, $200 1st Month’s Service Fee) Sign up for I-Enterprise Hosted CMD Program ($350 One-Time Setup Fee, $175/Mo.) Conduct final configuration of Hosted CMD Server Install CMD Agent in Client’s environment (available PC or Server) and establish communication with Hosted CMD Server Begin delivering Service and earning Recurring Revenue! How to take advantage of Hosted CMD Training and Service Program:  How to take advantage of Hosted CMD Training and Service Program Email: ask-cmd@cisco.com Slide60:  Cisco Monitor Director @ Partner Site Slide61:  Cost of Hardware @ Client site - ~ $500 for Dedicated Box for Agent Minimum hardware requirements P4 1.2GHz, 2GB RAM, 10GB Free Hard Drive Space Windows XP SP2 or Windows 2000 SP4 CMD Agent can co-reside on existing equipment – saving $$ Cost of Hardware @ VAR site - ~ $1,000 Minimum hardware requirements P4 3.0GHz, 2GB RAM, 10GB Free Hard Drive Space Windows XP SP2 or Windows 2000 SP4 or Windows Server 2003 Cost of Installing and Using Monitor Director at your own Partner Site Cisco Monitor Director Licensing Very affordable:  Cisco Monitor Director Licensing Very affordable Your Recurring cost @ 30% discount through distribution is as low as … ~ $28 per “Small” end-customer per month ~ $52 per “Medium” end-customer per month Two-Part Pricing One time purchase price for console (for use up to 100 customers): $500 List Annual License fee per End-Customer Pricing is based on Customer size Cisco Monitor Director Automated Remote Monitoring for SMB-focused IT-Service Providers:  Cisco Monitor Director Automated Remote Monitoring for SMB-focused IT-Service Providers Cisco Monitor Director Remote Monitoring of Multi-vendor SMB Networks by Partner:  Automatic Discovery of multi-vendor SMB Networks 24 x 7 Real-Time Remote VoIP & Data Monitoring from Partner Office Color-coded Network Maps showing Real-Time Network Status Proactive Alert Notifications Comprehensive Automated Reporting Back-end Integration with Trouble-Ticketing Systems … ConnectWise, AutoTask, etc. Can be hosted at Partner facility or outsourced to a Data Center Recurring Revenue and Profit to Partners from Remote Monitoring Services Cisco Monitor Director Remote Monitoring of Multi-vendor SMB Networks by Partner What’s New in Release 1.1.2:  What’s New in Release 1.1.2 Support for all SNMP & IP capable devices Web based Cisco Monitor Director Multiple roles for Admin, Network Engineers and End-customers Scalability to 100 managed customers Simplified Naming – Cisco Monitor Director Simplified Packaging and Pricing Monitoring of Cisco and non-Cisco devices:  Monitoring of Cisco and non-Cisco devices Cisco’s Unique Differentiation Premium Managed Services possible with In-Depth Monitoring:  Cisco’s Unique Differentiation Premium Managed Services possible with In-Depth Monitoring Color-coded Network Topo map showing … Routers, Switches, PIX/ASA, APs, Servers, Printers … Detailed Inventory to the Card/Port/Interface Level CPU, Memory, Interface Utilization Discover and Monitor IPsec VPN Tunnels Monitor VoIP, DSP & Trunk Utilization Back-up and Restore Cisco Device Configurations End of Life/End of Sale Notifications “Smart-Alert” -- triggered Topo Snapshots Easily Locate problem IP or a MAC address CMD – “Smart Alerts”:  CMD – “Smart Alerts” Alert Details contains Client Info Device Info Severity Message Alert data and time Topology Perf. Graphs Alert History Summary of Benefits to Partner:  Summary of Benefits to Partner Increase customer loyalty Early detection of problems using CMD’s Proactive Notifications Quicker response to your customers Minimize downtime in customer networks Provide more strategic direction on IT Lower Operational Costs Low initial investment and training support Less time spent in Troubleshooting and Problem Resolution Savings of up to 1 Full-Time Engineer = +$80k/year Increase Recurring Revenue, Margins, & Profitability Partner sets margin for service Obtain recurring revenue by selling renewable contracts Complement current product and service offerings Take Action: Increase your monthly recurring revenue TODAY!:  Take Action: Increase your monthly recurring revenue TODAY! If you are ready to provide Remote Monitoring Services … Purchase through Distribution DIR-1.1-MSP-SW-K9 CMD Console $500 (one time purchase) MON-1.1-MSP-25-K9 End-Client License, $480/yr for 25 devices, 48 Phones MON-1.1-MSP-70-K9 End-Client License, $880/yr for 70 devices, 250 Phones If you want to receive FREE Sales Training from MSPU on Selling CMD and host Monitor Director at an outsourced Data Center… Purchase your End –Client License TODAY: MON-1.1-MSP-25-K9 Send Email to: ask-cmd@cisco.com If you want an extended trial for on-going demos, etc … Purchase an NFR copy ($145) today by clicking on… http://www.cisco.com/go/cmdnfr Partner Call to Action:  Partner Call to Action Fill out our webcast survey … http://www.surveymonkey.com/s.aspx?sm=wagEk_2bjVWwtFiOpUfCYsSg_3d_3d and receive a free copy of Erick Simpson’s book: “The Best I.T. Sales & Marketing BOOK EVER!” Join us for our January Free MSP Training webinar from Erick Simpson, CIO of Intelligent Enterprise (Date to be announced) For more information on Cisco Monitor Director www.cisco.com/go/cmd * Starts Shipping November 12th 2007 Q&A:  Q&A Cisco Monitor Director Giveaway:  Cisco Monitor Director Giveaway Back up Slides:  Back up Slides How Cisco Monitor Director works:  How Cisco Monitor Director works Deploy Agent at the SMB Site Agent begins monitoring the client network 24 x 7 Agent notices a network condition (e.g. device unreachable) Agent initiates an on-demand SSL connection to CMD and delivers the alert 1 2 3 100 1. Deploy 2.Discover Topo Map Monitor 3. Alert SSL Cisco Monitor Director @ MSP CMD Agent @ SMB 4 Real Time Alert Notifications: Email, Pager, Trouble-Ticketing Systems CMD Alert Alert Email ConnectWise Service Ticket:  Real Time Alert Notifications: Email, Pager, Trouble-Ticketing Systems CMD Alert Alert Email ConnectWise Service Ticket 1. Real Time, Color-coded Network Topo Map:  1. Real Time, Color-coded Network Topo Map “At-a-glance” view of Client Topology aids in identification of problems 2. Detailed Inventory to the Module level:  2. Detailed Inventory to the Module level Cisco Non-Cisco 3. Real-Time & Historical CPU, Mem & Interface Stats:  3. Real-Time & Historical CPU, Mem & Interface Stats Allows you to pro-actively identify & avoid problems for your Client before they occur 4. Cisco IPsec VPN Support:  4. Cisco IPsec VPN Support Show your Client you have complete visibility into their secure branch-office connections 5a. Monitor Cisco SMB VoIP Application Configurations:  5a. Monitor Cisco SMB VoIP Application Configurations Be alerted in real-time on potential Configuration problems in your client’s VoIP deployment 5b. Monitoring of Cisco SMB VoIP Applications Performance:  5b. Monitoring of Cisco SMB VoIP Applications Performance Be alerted in real-time on potential Performance problems in your client’s VoIP deployment 5c. Voice Trunk, DSP Utilization:  5c. Voice Trunk, DSP Utilization Remain on top of your Client’s VoIP Utilization and open up upgrade revenue sources 6. Back up and Restore Cisco Device Configs:  6. Back up and Restore Cisco Device Configs Allows faster recovery from Device failures, lost configs, etc. 7. End-of-Life, End-of-Sale Reports:  7. End-of-Life, End-of-Sale Reports Enable upgrade revenue opportunities 8. Alerts include details of Network Topo at time of Fault (Like hidden camera at the crime scene!):  8. Alerts include details of Network Topo at time of Fault (Like hidden camera at the crime scene!) 9. Search for IP/MAC address:  9. Search for IP/MAC address Easily locate a device/interface that is causing a problem Monthly Summary Report: From VAR-MSP to Client:  Monthly Summary Report: From VAR-MSP to Client Shows you take care of Client network 24x7x365 “Premium” Support for Cisco SMB Class Devices:  “Premium” Support for Cisco SMB Class Devices

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