Our industry is changing; are you?

The break/fix business model will soon be a thing of the past – a dinosaur. Not only is the “wait till something goes wrong, then call for help” reactive approach very costly for customers, but it is a difficult business model to manage.

More and more, astute customers are demanding a managed service approach to keeping their IT infrastructure maintained. It simply makes better sense to pay to proactively avoid downtime and IT service interruption rather than pay to reactively correct problems that could have been avoided.

In the managed services model, both the customer and IT service provider’s motives are perfectly aligned. In the break/fix model, the IT services provider only brings in revenue when the customer has experienced a problem. In which of these business models does it seem most likely for the IT services provider to win “trusted advisor” status with the customer?

A recent in depth survey of CMIT’s business showed that the annual margin generated by one (1) average managed services customer was equal to the annual margin generated by twelve (12) average break/fix customers. The study only compared the margins produced by both types of customers. Not considered was the true cost of acquiring and managing 12 times as many customer relationships to achieve the same annual margin.