One of the hot topics in the bootcamp was a typical MSP issue - managing client agreements. The problem gets verbalized in different ways: "I have many new services I would like to sell to existing clients" or "I have to re-onboard all of our customers because the agreement is very old" or "I want to increase our prices to reflect the improvements and additional tools we introduced" or "I barely make any money and I need to renegotiate our prices". Sound familiar? We’d like to introduce a systematic approach to solve this problem for now and the future.
We just finished our first ever live 3 day Managed Service Productization boot-camp in Banff, Canada. With 25 participants we worked to crack the code in scaling up the managed services. Jam-packed with real work, the workshop groups created amazing content and generated ideas that have been sparkling. I wanted to capture some of the more intriguing ideas the MSPs came up with.
I’ll be elaborating on these topics in upcoming weeks, since I see each topic as worthy of more than a blog post, but here are the main ideas. These are my personal Ah-ha! moments.
If you’re running a successful, growing and modern MSP practice, you either have solid Account Management / Technical Account Management practice in place, or you’re still doing it ad-hoc, and plan to develop a clear structure as soon as possible. In both cases calculating the ROI of the new role is critical, as well as setting goals and realistic expectations for the employees. Check out this ROI calculation and the huge potential of proper Account Management to growing your business.
Here’s a mystery you all know all too well - pricing your stand-alone vCIO services so you’re not robbing your clients nor yourself...that trepidation when you’re putting together the proposal, or trying to ballpark a figure in a meeting. It’s always been a gamble. There’s a way to find the proper middle ground, following a simple process to help you to close more deals without risking a critical over or underestimation, of your client’s expectation or your services. Here is the formula...
In our design of the new Quarterly Business Review tool we wanted to ensure that MSPs can find business opportunities with existing clients, enhance the quality of their engagement, become a business partner and demonstrate the value they provide all at once. Achieving those multiple goals in the midst of commoditization of traditional infrastructure management services requires finding a balance among five different strategies. Let's check those success factors to make sure you deliver timely and engaging QBRs.
The Managed Services business was created from the traditional suite of desktop management, backup, network and server support. Most MSPs now are offering various services outside the traditional managed infrastructure scope: application management, additional security or virtual CIO services. This is the evolution of managed services, and the right way, however many MSPs have just reactively added some of these services to stay relevant to their customers and protect the core MSP services. They might call themselves "your IT department." Let's check out why it’s a problem and what to do about it.
Carrie Simpson, Founder and CEO of Managed Sales Pros talked with Denes Purnhauser, CEO of ReframeYourClients, and shared the most common mistakes IT managed services providers make when it comes to building their vCIO offerings, and how you can increase your MRR with the correct approach.
All our accolades to the development people in the Connectwise Team and the super beta users; after three months of development we’re happy to announce the Connectwise integration is live.
I know integration is a boring subject and I don’t intend to explain the details of the features here. But the development process and the results have been prompting many to wonder where the software industry and specifically the MSP servicing software industry is going.
Ours was not just a simple data based integration. Our tool is actually running inside Connectwise with customized screens. One doesn’t even need to log in to our native tool to use all the features inside Connectwise, like execute Account Management, vCIO activities and running discovery workshops with prospects.
The question I am raising is: are we actually heading to where we have only one application that runs our MSP, and all the vendors create “modules” for that application?
As we have been talking with hundreds of Managed Services around the world we have been able to identify several common beliefs, and even myths shaping their thoughts.
The biggest problem here is that these beliefs were valid in the past. The times when the MSP model founded and spread across the world, these concepts were helping people to sell and execute services. However as the market went forward with the tectonic shift of consumerization, cloud, mobile and the overall maturity of IT, these beliefs are no longer valid.
I just watched a hilarious 2 minute Youtube video where a comedian recounted the tale of someone righteously indignant over the atrocious inconvenience of the wi-fi breaking up during his trans-Atlantic flight. It made me ponder the trend of setting unrealistic expectations when it comes to technology. We have a short memory for problems fixed, take progress for granted and miss the chance to revel in our achievements.
Then I was thinking that perhaps this reminds you of a type of client of yours who is spoiled by all the progress and never satisfied. Who set these unrealistic expectations? How can we make sure we're not creating the problem ourselves? Check out this quick video and see what we can do to prevent it happening.
Having been inspired by the business model canvas, we started our own IT Management Canvas almost three years ago. We’re thrilled to see how creatively people adopt the canvas with the related questionnaire and instigate vibrant client engagement. Through our development of vCIO and IT Security related assessments, the new canvases have been born. Let's check out the revision of the original 7C IT management Canvas, the IT Security Canvas and the vCIO Canvas.
People are talking about MSP sales processes when it comes to discussion of new client acquisition. I believe we should see the process from the customer's perspective and realize that the buying process for them is terrible. Given the current typical buying process, a working future strategic relationship is becoming less and less likely. Let's take a look why the process is broken and see if we can figure a fix.
There are three major underlying issues causing this trouble:
Two weeks ago we posted the interview with Verne Harnish, author of Mastering the Rockefeller Habits and Scaling Up! The interview has inspired many of our clients and readers to think about particular aspects of their business. I’ve personally been experimenting within two of those aspects lately, based on his thoughts: Hyper Specialization and Service Productization. I just wanted to share an update on how we’ve developed what we learned.
We are continuing the “MSP 2.0 bestseller” series in March, as well. No question, one of my all time personal favorite books is Mastering the Rockefeller Habits from Verne Harnish. It helped me to apply the paradigm of “work on your business instead of in your business”. For many Managed Services Provider leaders this book has been a foundation to building their businesses. He’s followed this with his new book Scaling Up - Mastering the Rockefeller Habits 2.0. I had a chat with him about the required steps for Managed Services Providers to stay on top of their business and to start Scaling Up!
Verne is straight to the point, so put on your seat belts and get your notepad open, this is going to be a high-paced trip!
This is a motif that’s had some traffic in the last few weeks in several situations, coming up in conversations about differentiation, going the extra mile, remarkable service, engaging clients, building a brand and the use of stories in this business.
One of our managed services provider clients told us a story about a fashion design client in Los Angeles with fashion conscious California team members. The office is artistically designed of course, with bricks, standing desks and an open cafeteria with bar tables. Lots of nice, creative radiant people having lattés while working makes this the place where techs are making up reasons to go every day.
He had some work out there and got inspired by the environment to get expressive, so he bought pink cables instead of the boring black ones.
He was just having fun. He didn’t predict the result...
One of the most under-appreciated success factors of an MSP is its capacity to develop services. We’re the purveyors of Managed Services; there are hundreds in the repertoire of any given MSP. This keeps us busy - going from concept to a product that can be sold and delivered is a long road. While product based companies have a process for product development, we service companies too often overlook the value in this powerful business practice, where all our innovation, differentiation, profitability and growth can be formulated in advance.
The trend of fragmentation in services - into verticals, delivery tools, integrations - just multiplies the need for planned process.
The usual development process for managed services providers is to do a project - develop something that solves a problem for (and with) a specific client and standardize it later. This can lead to long term future revenue, but without a clear process mixing up service development and the real revenue generating activity of the company will not only kill our internal productivity, but likely our relationship with the client, if everything they see is always in beta testing.
Let’s identify some basics to ensure our process is better than the average and pull ahead of the competition.
One of the most common and largest hurdles for MSPs is difficulty expressing our value proposition properly, and hence differentiating ourselves.
There are two fundamental aspects of our industry responsible. First is the abstract nature of the proposition. The problems we solve are less tangible, like “competitive edge” or “staying ahead of the curve” rather than “keeping the lights on”. The second is the more managerial and higher level services such as solution selection, and team alignment and integration rather than executable defined processes like device management and remote monitoring.
A few months ago we started sessions of real peer groups, to get people together to discuss real issues, problems and challenges we’re all facing and hopefully to come up with some individual plans that boost the accountability of process execution. From these I’ve compiled a list of topics that are front-of-mind among participants. I can report that the discussions dealt with the problems in a very forward looking manner, with creative solutions and not stuck in status-quo thinking. In my opinion these sessions are giving a unique insight into where the industry is going.
I came across an illuminating infographic in the last week that discusses the different strengths and weaknesses involved in these demographics.
The other day I made some calculation with a client about vCIO services. Fortunately it is very easy to calculate your opportunity in creating a profitable and scalable vCIO service offering.
Last week we went through how we can stop giving out free advice and making consultation a revenue generator. Let’s see that in practice. Our example today is Slack, the latest silicon valley unicorn (1B+ valuation). Slack, in most cases, is a free tool designed to enhance your internal communication. So how can we as IT service providers deliver value and earn revenue with this great tool.
Many IT managed services providers (MSPs) and internet telephony service providers (ITPs) are suffering the challenges of charging for IT consultation. The IT industry has taught its customers that we sell big expensive boxed packages that come with free consultation, placing the value in the big boxes and none in the advice. There are no big expensive boxes anymore, but still the advice remains free. However a systemic shift is taking shape finally reversing this conundrum. It is about offering low-cost SaaS applications and solutions with high-grade consultation fees, placing more value in the advice rather than the tool.
We are continuing the “MSP 2.0 bestseller” series in January, as well. The pick for this month is Gary Harpst - Six Disciplines of Excellence. Gary has been a part of the IT industry since being the founder of the well known ERP solution Solomon Software that was sold to Great Plains then to Microsoft. After the acquisition he shifted his focus to one question: how to help companies to execute their strategies. He has put together a very solid methodology in a program called “Six Disciplines” and written a book about this topic. This book is in my top 10 business books and has changed my way of thinking. I was privileged to meet him in person and have a long talk about these challenges.
The MSP 2.0 model is catching fire around the world. Many MSPs have already started to design, sell and deliver vCIO services. Adding $2.000 - $4000 of vCIO monthly recurring revenue (MRR) to a current 40 seat $5000 MSP MRR is now doable but requires some preparation. We’re going to take a look at the requirements (which can be easily overlooked) of the delivery to make sure we make it profitable.
Branden Baker, President of Integration Technologies from Hawaii is a modern Tom Selleck. He shares a story about the transformation of his sales approach.
His team had not been able to close any MSP deals for more than a year. But he got involved in the vCIO conversation and after only a few weeks he landed his first monster six-figure deal.
We are starting our "MSP 2.0 bestseller" monthly book review. We want to start strong, so the first book of this series is the new consultative selling holy bible, Same Side Selling. The co-author, Ian Altman, CEO of Grow My Revenue, is a sales visionary, bestselling author, Forbes contributor and keynote speaker.
While speaking with Ian it became clear he knows how to win the hardest battle IT managed services providers have ever faced: commoditization of the IT infrastructure services and the resulting price pressure, shrinking margins, and the lack of differentiation from competition.
Larry Cobrin, CEO/Founder of MSP CFO, has been working on a project to make financials available for IT managed services provider to make better decisions. In my first call with him I knew we needed him to talk about finances! I was fascinated by his insights about clients’ profitability trends, classifying them and taking actions for better profitability.
He shares a lot of hints and tips about different data you need to look into (which are mostly available already in your PSA) for your organization to make better decisions. If you feel you are leaving money on the table check out this interview!
We have been producing interviews with MSP Thought Leaders and with our clients for more than a year now. We started this as an ad-hoc practice to usher great MSP 2.0 insights into the community. People seem to be enjoying the free interview format without presentation, special offers and other sales tactics.
Now with over 16 interviews we’ve received a ton of feedback and the message we’re getting most often is to make the content available in a podcast format. Many people like listening to these inspiring talks during their commute, or just in the background.
So we have transferred all videos to a Podcast format and it’s available here.
Greg Tanner from Denver is a maverick, no question about it. His “Technology Quarterback™” slogan has become a meme among the MSP 2.0 community. We spoke the other day and I am still speechless. He started crafting this vCIO offering back in June, piece by piece, and started selling it in early October. Since then he’s closed 11 virtual CIO contracts with over 20K MRR! In this video, Greg shares the secrets to these amazing results. Be aware, he has very strong opinions about MSP 2.0. (Even stronger than me - Haha!)
The Virtual CIO phenomenon is not new, yet the promises of the role have not been realized across the industry. Some mature MSPs who believe they have a functioning Virtual CIO practice, on closer inspection, still show challenges with delivery, scalability and profitability.
While we could go in depth to identify the root of these problems, instead here we'll highlight the twelve most common mistakes MSPs make with their vCIO. At the end of this article there is a questionnaire where you can measure yourself against other MSPs.
#update - We released this blog a year ago. This is an updated version covering the latest developments. It seems that the MSP 2.0 community was able to solve most of the issues during the last year. These mistakes now can be prevented. It has been a long year, for sure... :-)
Keeping up the margins for IT managed services providers is getting harder and harder. The competition is catching up and while needs of the clients keeps growing, the price still seems to be dropping - and many IT companies are making a practice of leaving money on the table. Let's look at 10 things you can fix to prevent losing money every day.
I was intrigued to have an interview with him because of my belief that IT companies are specialists in process. Clients need process management experts, but that’s usually seen as a management role, and not a tech discipline. Ryan has changed this with his tool: ProcessPlan is awesome software that can be used for planning and managing processes. It makes the process problems tech problems, so the IT managed services providers can leverage them to sell process related Virtual CIO services to their clients.
Carrie Simpson, Founder and CEO of Managed Sales Pros is the one and only MSP Cold Calling guru- an expert on what drives tangible results. Though we are very much focused on the inbound marketing side of lead generation, we cannot deny the potential performance of cold calling.
I was really interested in her best practices in getting leads over the phone, and surprised by some of the hints and tips Carrie shared with me. She talks on how to overcome call reluctance, how to build a winning script, and how to best manage the time investment.
There is no question that vCIO service is no longer a nice to have service offering for IT managed services providers.
However, the delivery of IT Management services is not entirely new; most IT companies have some issue to monetize on this opportunity.
Business Model Canvas has been a very hot management tool recently. Personally I have created 100+ Business Models over the last couple years for clients and for our companies. One of our companies is even a "Use Case" in the Hungarian edition of the Business Model Generation Book. We have developed different ways for IT managed services providers to use the tool for different reasons. Let's take a look at 5 practical ways to leverage this tool.