According to IDC, an IP packaged offer can generate up to 70% gross margin while reselling services only drives margins in the range of 5-20%. Despite such greater profitability, the idea of coming up with “productized” Intellectual Properties (IP) still sounds daunting to many Managed Service Providers (MSP), especially for those smaller shops.
However, many partners have found that they already had IP; it just wasn’t packaged up as an offer. For example, if you did something custom that was successful for one client, there may be more customers that would benefit from solving the same problem.
Your IP can be just a simple template or just a few lines of code that automate a particular function in a way your target market typically needs. If you don’t want to create your own IP, you can also look to the partner ecosystem for incremental solutions that can be bundled with current Microsoft’s offerings to round out your total solution.
Productizing IP and creating repeatable processes have been a very successful and profitable strategy for many partners. This guide will show you 4 simple steps to build an IP packaged offer that can add a striking differentiator amongst your competitors and expedite customer engagement in the buying journey.
1. Start with a familiar service
The foundation of your IP package can be as simple as reselling Microsoft’s services that are pertinent to your customers’ needs and requirements. Think about what kind of customers you have to deal with and the core services that you usually sell to them.
For example, if you are building a productivity package, your standard offer would start with Office 365 Business and other related Microsoft services, such as Office Pro Plus, Exchange Online, OneDrive for Business, and Skype for Business.
2. Round out your offer
There are two different ways to package your offer: leverage your existing expertise in consultancy, onboarding services, and workflow automation OR find a partnership that allows you to white-label a new solution and bundle it with existing services.
For example, after choosing the core Microsoft products for your productivity package, you can round out your offer by adding more services:
- Project-based offerings:
- Cloud readiness assessment
- Migration and configuration of mail and documents
- On-going managed services:
- 24/7 end-user helpdesk for Office 365
- Office 365 analytics
- User management, compliance, and auditing
You might also look to the Microsoft partner ecosystem and find an incremental solution for the productivity suite you’re developing. A good match in this scenario would be combining Office 365 and SharePoint Online with a full desktop or line of business application solution.
3. Verticalize the solution
Once you have developed a full packaged offer, it is recommended that you specialize by vertical, functional process, or by technology. Each vertical would require a different setup and a unique set of business applications and industry compliances.
Some examples of specialization include:
- Vertical specialization: healthcare, restaurant, banking, retail, manufacturing
- Functional process specialization: accounting, human resources, sales and marketing
- Technology specialization: system management, analytics, enterprise resource planning
Establish your company as an expert in certain areas. You can also focus on a specific technology or be known as an early adopter and technology leader. Then, adding IP to a vertical or business process makes that advantage even more powerful.
4. Adopt offer-based approach
The way businesses shop for IT solutions is changing dramatically in the last few years. In the past, companies would come directly to the MSP with a specific need, and you will customize the solution based on their needs. Now, most customers are shopping for IT solutions online and making significant decisions before they even talk to you.
To turn a lead into a qualified prospect, you must have a well-defined solution ready, or otherwise, the customer will keep searching and gravitate towards vendors that do provide an offer that meets his needs. Therefore, MSPs are facing a transition from demand-based approach to offer-based selling. By having your solution offer packaged in advance, you can meet your customers’ needs immediately or with minimal adjustment.