[August 15, 2011]

Study Finds Opportunity Exists to Educate Small and Middle Market Businesses on the Benefits of Managed Services

Technology value-added resellers (VARs) are increasingly focused on selling managed services to help small- and middle market businesses (SMBs) monitor, manage, and maintain their IT networks and equipment. However, according to a new study released by CIT Group Inc. (NYSE:CIT), a leading provider of global vendor financing solutions, the benefits of offloading IT services - lower costs, increased available resources, and reduced IT headcount - are not fully understood by many SMBs. This lack of understanding serves as the biggest barrier to VARs as they look to sell managed services to SMBs. Managed services offer third-party monitoring, managing and maintaining of computers, networks, software, and other IT.

The research report, "Technology Channel Outlook: Are SMBs Ready to Embrace Managed Services," prepared in association with Forbes Insights, gathered the views of more than 100 executives at technology value-added resellers and technology channel partners that sell to SMBs.

"The findings of this study are consistent with our experience in financing managed service contracts," said Ron Arrington, Global President of Vendor Finance at CIT. "We have found that the most successful managed services programs are those in which the VAR clearly articulates the offering and quantifies the impact for the SMB. Likewise, when an SMB is committed to implementing a managed services solution, it soon realizes that it can play an important role in the growth plans and expense management of the company."

Key Findings from the Report:

• OPPORTUNITY TO EDUCATE: Nearly two-thirds (62%) of respondents agreed (54%) or strongly agreed (8%) that their customers do not understand the benefits of managed services.As a result, nearly half (49%) of those surveyed believed this lack of understanding is the leading barrier they face in trying to sell the benefits of managed services to SMBs. This was followed by overall cost (37%) and the desire of SMBs to maintain their own infrastructure (37%).
• BENEFITS OF MANAGED SERVICES: Understanding that many smaller companies see technology as a necessary expense, as opposed to a strategic investment, respondents cited reduced costs (43%) as the most compelling benefit of managed services for SMBs, followed by the ability to free up resources to focus on other aspects of the business (37%) and reduced IT headcount (33%).
• CLOUD POPULARITY = MORE SALES: Cloud computing solutions are smoothing the way for VARs to sell managed services to SMBs. In fact, nearly two-thirds (63%) of respondents agreed that the popularity of cloud has made it easier for them to sell managed services to SMBs as customers become more familiar with the concept of software as a service.
• LOOKING TOWARDS THE FUTURE: When asked to discuss which technologies would have the greatest impact among SMBs over the next two years, more than half (51%) of respondents said cloud computing would have the greatest impact, followed by tablets (21%) and smart phones (15%). Fifty-two percent (52%) of respondents also believed that tablets will take the place of laptops for most executives, while nearly a quarter (24%) believed that all applications and data storage will migrate to the cloud.
• KEY GENERATOR OF REVENUE FOR VARs: More than a quarter (27%) of respondents indicated that managed services will likely account for more than half of their 2011 revenues. Looking ahead to 2012, nearly two-thirds (64%) said they expect their revenue from managed services to increase, with a sizable number (16%) saying it will increase by 20% or more.

Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com

About the Report

The report is based on the results of a survey of 104 executives at technology value-added resellers that sell to small- and middle market businesses. Nearly half (45%) of respondents were either owners of their business or a C-level executive (including CEO, COO, or CFO). All respondents worked for companies that have annual revenues of between $1 million and $100 million. The survey took place in July 2011.

About Forbes Insights

Forbes Insights is the strategic research practice of Forbes Media, publisher of Forbes Magazine and Forbes.com, whose combined media properties reach nearly 40 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights' research covers a wide range of vital business issues, including talent management, corporate social responsibility, financial benchmarking, risk and regulation, and doing business in emerging markets. www.forbes.com/forbesinsights

About CIT Vendor Finance

CIT Vendor Finance is a global leader in developing business solutions for manufacturers, distributors, and product resellers, and financial solutions for their customers. CIT maintains relationships and develops financing programs with leading manufacturing companies that can enable increased sales while providing equipment financing and value-added services from invoicing to asset disposition to small and middle market businesses across all industries that facilitate the purchase of equipment according to their needs. www.cit.com/vendorfinance

About CIT

Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in finance and leasing assets. A member of the Fortune 500, it provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com

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