Back

How to communicate the benefits of moving from CAPEX to OPEX to your clients

February 08, 2013  By Richard Tubb

Selling IT projects to Small and Medium Sized (SMB) clients has traditionally been seen as a laborious process. As the former owner of a Managed Service Provider (MSP) I know all too well the challenge of putting a lot of effort into defining the scope of the work for a client’s new server – understanding their requirements, taking into consideration their growth plans over the next 3-5 years, only for the client to hesitate when it came to the required investment cost.

The SMB client may need the benefits that a new or upgraded IT infrastructure will bring them, but when faced with the huge costs of making the project happen, they back away. The upfront capital expenditure required is off-putting.

This can be frustrating for the SMB who is forced to continue with their existing technology, and it is most certainly frustrating for the MSP who misses out on the sale and in many cases has to support an aging, creaking system.

Why clients love cloud solutions

But things are changing. More and more SMBs are looking to flexible cloud solutions to solve their challenges. Software-as-a-Service (SaaS) options mean that SMBs can quickly obtain and deploy cloud-based IT solutions without the need for large up front investments. 

SaaS services that are paid for on a monthly, quarterly or annual basis in this way make it easier for SMBs to consider what were once enterprise-only solutions that had to be paid for up-front (capital expenditure – or CAPEX) and effectively “rent” the solution on an on-going basis, redefining the costs as operating expenditure – or OPEX.

The benefits of OPEX

For any SMB, the benefits of buying a SaaS solution without up-front costs are obvious – but beyond this, OPEX offers SMBs flexibility – and it is the job of the MSP to help educate their clients on this.

As an MSP, how many times have you seen a client hesitant to invest in a solution that is “future proofed” for fear that the money spent on non-returnable licenses and more powerful hardware would no longer be needed if the company hit hard times and had to reduce their headcount?

SaaS solutions change this viewpoint. If the SMB grows – then they can increase the resources offered to them and the number of licenses they pay for each month. If business shrinks then the SMB isn’t tied in to non-returnable licenses or resources they won’t use.

This flexible OPEX arrangement means that SMBs aren’t committing to any long-term expenditure, they can adjust their course as they go. This makes IT costs that can be classified as OPEX very, very attractive to SMBs.

Conclusion

For MSPs, it is important to understand the benefits of offering SaaS services to their clients, helping SMBs embrace the enterprise-level features of SaaS solutions, while not breaking the bank with a hefty capital expenditure.

And for many MSPs, who have SMBs clients who simply don’t want to make such upfront investments, it could mean the difference between winning and losing their client’s business.

 

Richard Tubb
The former owner of on award winning IT MAnaged Service Provider, Richard Tubb now provides expert advice to help IT companies who want to grow.

Follow Richard Tubb on Google+ and for more news and advice for MSPs sign-up to Tubblog.

Trending Posts
Follow @Autotask Tweets