Learn How to Pitch TCO and Cloud Computing

Managed service providers (MSPs) use a range of tactics to get customers interested in their wares. Savvis Inc. has found a couple of ways to engage customers in managed services discussions: bring up TCO (total cost of ownership) and cloud computing.

Those conversation topics are important to the St. Louis-based outsourcing provider, which has been working to interest more of its customers in its managed service offerings. That effort has been ongoing since 2004, when Savvis purchased the assets of Cable & Wireless USA. That move combined Savvis’ customer base in managed hosting and wide-area networking and Cable & Wireless’ colocation services and Internet backbone.

“There was always a desire to take the colocation customers and move them up the stack to higher value services,” said David Shacochis, vice president, research and development at Savvis.

Think TCO

But Shacochis said few customers approach Savvis already convinced that they need a managed solution for a given project. So Savvis’ approach is less about selling a product and more about selling a transformation, asking customers to rethink the way they do their business, he explained. And the best way to make a case for a holistic transformation, he said, is helping customers understand the TCO of their current solution and how managed services can save them money

“We have to … help them prove internally that it is a positive return on investment,” Shacochis said.

To that end, representatives from the company’s professional services and finance teams run a Savvis Transformation Methodology workshop for customers. Savvis sits down with a customer and uses a series of questionnaires to determine how the organization operates today and establish its cost base, Shacochis said. With that baseline set, Savvis can show how the customer can trim costs by moving to managed services.

Talking Cloud

In Savvis’ experience, cloud computing also has a way of getting the customer’s attention. The company in February 2009 launched its cloud computer offering.

“Cloud computing services are … opening the kinds of managed services and outsourcing discussions with colocation customers [that] we haven’t had recently,” Shacochis said.

Savvis provides a customer portal with its cloud solution.  The resulting level of user control over cloud services appeals to colocation customers, according to Shacochis. Customers, he added, are talking to Savvis about cloud deployments that can augment existing colocation environments.

Development and test environments represent one common cloud compute use case. Such settings lend themselves to a managed solution since organizations tend to segment development and test environments from production networks anyway. Shacochis pointed out that those environments are also bursty; cloud computing provides flexibility in resource provisioning.

Colocation: Outsourcing Onramp

While Savvis branches into cloud computing, colocation remains a major focus at the company.

Jim Kozlowski, VP of product management,said colocation provides a starting point for companies stepping into IT infrastructure outsourcing for the first time. From an industry standpoint, Kozlowski said he sees demand from the financial services customers looking to cut costs. He cited media/entertainment as another growing area and said he sees potential in healthcare as well.

“We are … seeing some momentum given the political environment for digitizing health records and becoming more efficient,” he said.

In summary: bring customers into outsourcing via colocation and migrate them to managed services and via TCO analysis and cloud computing. Clues to how this is working out may surface soon in Savvis second quarter earnings call, slated for July 29.

Contributing blogger John Moore covers Master MSPs, Web hosts and emerging opportunities. Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center.