Practice-building or Business-building Discussion

By Denes Purnhauser on September 4 2014

James Vickery, a very progressive MSP CEO, had a couple of thought provoking questions. We’ve created a short talk to cover the issues he was curious about.

The main issues we are talking about:

• Scalability of the consulting type businesses
• The capacity of an average MSP 2.0 vCIO
• Training and retaining high profile virtual CIOs
• Managing, motivating and keeping virtual CIOs
• Building the practice for ourselves or building a business
• Transitioning to the MSP 2.0 business model
• Importance of checking the current and future business model
• Importance of very consciously developing services

Check the audio file for the 20 minute talk here:

Open the audio in a new window: MSP_QandA_with_James_Vickery

 

More about James Vickery and his managed services provider "I know IT" here:

http://www.iknowit.com.au

If you too have questions like that, let me know and set up a short session like this!

 

START GROWING WITH MSP Business Building RELATED RESOURCES FOR FREE

 

6 Vital Elements of a Successful Business Building Process
REX FRANK AT SEA-LEVEL OPERATIONS
Watch this interview with our MSP operation excellence expert guide, Rex Frank, to learn how to make a profitable operation by familiarizing your managed services provider with the Annual Strategic Operations Plan’s best practices to leverage your RMM and PSA tools that will drive down costs, manage your engineers and guide behavior

 

Webinar Takeaways on Selling IT Security and Compliance

By Denes Purnhauser on August 15 2014

It was a really engaging talk with Steve Rutkovitz CEO of Choice CyberSecurity. He is a very successful MSP practitioner specializing in IT Security and Compliance.

We were talking about MSP challenges, strategies, IT consultative sales processes, IT security and compliance opportunities and partnerships, and I learned the following:

 

Generate client engagement

with five cyber security roadmaps in 30 days

 

• there are surprising similarities between the mainframe to PC era shift and the PC to Cloud era shift
• To become a successful MSP one of the most important traits is having best-in-class partners
• When you move up streams, you have to make sure you are able to manage management type people
• You have to develop a solid marketing / sales engine to teach your clients and prospects
• The Challenger sales is a great way to leverage the natural teacher inside IT managed services providers
• You can sell NIST Cyber Security and Compliance solutions without doing the delivery side
• The business model of selling IT security solutions through a partner
• The best foot-in-the-door tips and tricks to get front of CEOs
• The complete MSP sales process from “access to address” that maintains the IT security issues
• The natural advisory mindset of IT companies and the potential contained within
  
  

 

Thanks to Steve Rutkovitz for the wisdom and the honest, straightforward answers. I believe his thoughts could help IT managed services providers in any size and any maturity. You can bet this won’t be our last discussion with him.

 

Nist Cyber security Framework Quickstarter Pack

 

 

MSP Game Changer IT Sales Ideas From The Book - The Challenger Sale

By Denes Purnhauser on August 13 2014

The MSP 2.0 service offering in the 7C IT Management Framework

By Denes Purnhauser on July 28 2014

 

Upsell your clients with strategic QuaRTERLY BUSINESS REVIEWS and IT strategy meetings

Frameworks in general are good for:

• helping the service provider see all the client’s functions and service delivery areas
• helping the clients understand their situation and the context within a clearly defined system
• measuring the current state against the framework benchmark, define the goals for both parties, and attain team alignment
• creating a transition between the current state and the future state - the action plan

The goal is to move from an ad-hoc attack strategy to more systematic thinking.

This approach is more likely to give a comprehensive perspective so you can make an informed decision where to invest and where not to.

The 7C IT Management Framework was designed to solve the problems of small and medium sized companies. These companies do not usually have a full-time, fully trained CIO or VP of IT, and without a skilled person in that role, IT decisions are made by the wrong people, such as:

• The COO, CEO, or CFO, doing the job part-time, without the requisite experience of the full range of technologies and trends;
• The IT Administrator, doing the job but with no experience in managing projects or understanding business needs; or
• The outsourced, managed-service provider, with no understanding of the scope of the infrastructure and too technology-focused to have the most effective and productive strategy skills.

In many cases all employees work together on IT management. One will prepare a budget, another will plan the infrastructure, and a third will manage the projects. Often as IT managed services providers we are in the middle of this tornado, with no clear responsibilities, deliveries, or measurements. Everything is a bit foggy, but we try our best to do our best for the client.

The 7C IT Management Framework creates the following alignment:

• defining all the necessary elements that could be leveraged to get a competitive edge with technology
• measuring the current IT management maturity through a simple scoring system
• discovery of the business needs through a goal setting workshop
• creating an action plan to get to the target scores
  distributing the work and the responsibility across the IT ecosystem

The benefit is a competitive edge for the clients through technology:

• more revenue to leveraging technology on the Value Proposition, Marketing, Sales, and Customer Loyalty parts of the company
• lower expenses in leveraging the technology on the Operations, Business Processes, People, and Systems parts of the company
• maximized business continuity, ensuring smooth operations and minimizing the impact of ‘disasters’ on the performance of the company

The 7C IT Management Framework

The 7C IT Management Framework covers 7 critical management areas of IT and asks these questions:

• Continuous: What is the level of the IT security/NIST Cyber Security?
• Competent: How efficient and professional is the IT ecosystem?
• Charged: How proactive and responsible is the IT ecosystem
• Conscious: How strategy and business focused is the IT ecosystem?
• Controlled: How measurable, governable is the IT ecosystem
• Clear: How transparent or clear is the IT ecosystem?
• Cost effective: How well are costs controlled in the IT ecosystem?

These seven Cs are the key questions every CEO has to answer in order to have a competitive edge in IT. That also makes them the areas in which every MSP has to provide service, in order for the same goal.

As an MSP, you are providing value-added services to your client like backup management, disaster recovery planning, IT strategy building, and providing proactive services.

However, if you do not create a clear structure for clients you won’t inspire confidence. These are interrelated services, but if there are no defined boundaries, structures, or systems built around these individual services you will fail to maximize their potential.

7C, like any framework, is intuitively and expansively organized. The backup management and the disaster recovery are in the Continuous block; The IT strategy is on the Conscious block and the Proactive Services are in the Charge and the Competent blocks. If you can map every service you are doing and show your clients every management area in which there are deficiencies you’ll become aligned and effective.

Use 7C to map all your services and show the clients the big picture. It will also help discover the maturity level of your current service offering, and what services you should develop next.

7C is not a delivery framework. Its goal is not to tell you how to do better backups, or how to develop a better IT strategy. Its goal is to help clients understand what you are doing as an IT service provider, and for you to be able to get aligned on the service with prospects and clients.

One of the most important parts of 7C is the IT competitiveness quotient, which measures all of the 7C building blocks on the client side. It is an award-winning tool, which measures current maturity and generates an action plan based on the client's delivery areas.

Let's look at the defined service delivery areas based on different building blocks.

 

Upsell your clients with strategic QuaRTERLY BUSINESS REVIEWS and IT strategy meetings

 

1. Continuous: Services to Increase the level of NIST CYBER security 

Backup management implementation

Keep the data safe and sound, without any chance of data loss as a result of any single point of human error, lack of responsibility, or technical failure.

• Backup policy, regulation implementation
• Backup process implementation
• Backup process responsibilities setting
• Data recovery testing & implementation
• Offsite backup implementation
• Data recovery plan implementation
• Offsite backup solution implementation

Disaster Recovery Plan implementation

Have a plan for when a disaster happens. It is a practical document that walks through all possible scenarios in case of an emergency event.

• Business Assessment
• IT Assessment
• Disaster Recovery Plan development
• Disaster Recovery Plan implementation
• Disaster Recovery Plan audits

IT security best practices implementation

Implement the best practices that can help to drive a smoother, safer, and more secure environment. This involves both systems and people.

• Corporate Information Security policy and regulation implementation
• Corporate Information Security guidelines, education & implementation
• User role and Lifecycle management implementation
• BYOD management implementation
• Password management implementation
• Risk management implementation
• Ethical hacking testing services
• Physical IT Security protection implementation
• IT Security, policies and procedures implementation
• IT Security governance implementation

Basic IT security management implementation

Implement some very basic tools to increase the protection of the IT environment, devices, storage and systems.

• Mobile Device Management implementation
• Encryption management implementation
• Access management implementation
• Onsite data access management implementation
• Online access management implementation

 

2. Competent:Services for a more Efficient and Professional IT Ecosystem   

Managed Service Implementation
Create the most advanced and efficient IT service environment. The infrastructure management is a core functionality and has to be done in a very professional manner. Using the latest automation and management tools, centralized services, and monitoring key to success.

• RMM Service Implementation
• PSA Implementation for Ticketing, Project Management, and Asset Management
• Knowledge Base implementation
• NOC service Implementation
• Disaster Recovery Plan Implementation
• Asset Management Implementation

 

Proactive Services Implementation

Achieve high level proactivity. IT is here to maximize overall productivity, but often even if we have the latest software in place, the client team is not aware of the advances and can get frustrated when the interface moves buttons. There is no shortage of personal productivity tools around but they are losing their potential business impact when the team is not shown how to use them to create a personal operation system with to-dos, calendars, and emails.

• Proactive End User Training Program Implementation
• Proactive Internal Self Service Knowledge Base Implementation
• Proactive Personal Effectiveness Program Implementation
• Proactive Business Process - IT Alignment Practices Implementation
• Proactive System Integration Practice Implementation

 

Uptime Extension Services Implementation

Create and generate as high tenancy as possible for the given budget. You could influence the uptime of the overall systems with the professional services. Most of the job is proactive maintenance, standardized infrastructure, and redundancy. Discipline is the watchword here.

• Redundant Infrastructure Implementation
• Standardized Infrastructure Implementation
• Server Side Patch Management Implementation
• Desktop side Patch management implementation
• Life-cycle, Recycle Management Implementation

Virtual CIO Services Implementation

Manage the IT ecosystem at the most professional level possible. Most IT management jobs are done by one of the C-level executives with an internal admin assistant and perhaps a third party MSP. These three roles don’t cover the needed management capacity. A Virtual CIO and a third party IT consultant need to be in place for the following activities.

• vCIO Role implementation for IT Strategy Development, and Leadership
• vCIO Role Implementation for IT Strategy Execution, and Leadership
• vCIO Role Implementation for General IT Leadership
• vCIO Role Implementation for IT Infrastructure Management
• vCIO Role Implementation for IT Security and Risk Management
• vCIO Role Implementation for IT Consultancy, and Representation

 

3. Charge: Services to Increase the Level of IT Service Maturity

Managed Service Implementation
Implement Managed Services not just for the professionalism but to maintain responsibility as well. That means creating a service offering around the overall responsibility and accountability of IT using tools, policies, systems, and best practices to make sure nothing falls through the cracks and customer expectations are always met through assured alignment.

• Ticketing System Implementation
• Disaster Recovery Plan Implementation
• SLA and Ticketing System Implementation
• Dedicated Service Manager Implementation
• SLA for Overtime Implementation
• SLA for Special Device Implementation

 

Proactive Services Implementation

Create all the necessary proactive services to prevent problems or fix them as soon as possible. Monitor, optimize, and remediate if required. This is not just related to the infrastructure but for the business processes as well. 

• Proactive Maintenance Practice Implementation
• Proactive End User Training Program Implementation
• Proactive Optimization Practice Implementation
• Proactive Onsite Support and User Feedback Implementation
• Quarterly Business Analysis and Reviews Implementation

 

Responsibility Matrix Implementation

Manage the responsibility and accountability of many internal, external , and third party resources and vendors. On average a "Virtual IT Department" consists of at least 15 parties (ISP, Software Companies, Consultants, Hardware Vendors, and Service Providers etc.). Who is the boss? Who is responsible for what? The issue here for the CEO is that if no one is responsible then ultimately he/her is responsible. These workshops are a great tool to align and organize the team.

• Responsibility Matrix - Including the CIO Role Implementation
• Responsibility Matrix - Main Categories Implementation
• Responsibility Matrix - Education Implementation
• Responsibility Matrix - Main Categories Implementation with Ticketing System Aligned
• Responsibility matrix - Attached to the Contracts

 

4. Conscious: Services to increase the level of strategic IT focus

IT Strategy Planning Retreat
Create a rock solid IT strategy in a very short timeframe. Executives’ time can’t be wasted sitting and talking for days. What is the best practice for spending 4-16 hours of work to create a very solid IT concept, roadmap, or strategy? The answer includes processes, best practices, efficient data collecting, and decision making techniques.

• IT Strategy, External Review, SWOT Session
• IT Strategy, Internal Review, SWOT Session
• IT Strategy, IT Ecosystem, Infrastructure Audit Session
• IT Strategy, Business Modelling Session
• IT Strategy, Virtual IT Department Evaluation Session
• IT Strategy, Business Functions Mapping Session
• IT Strategy, Business Processes Mapping Session
• IT Strategy, IT Functions Planning Session
• IT Strategy, Strategic Initiatives Planning Session
• IT Strategy, Development Roadmap Session

IT Operational Planning

Create detailed guidance for the execution of the strategy. This should be a year long plan with all the deliverables, initiatives, projects, priorities, and responsibilities necessary for flawless execution. Most small businesses do not have these plans in place. They often see it as too much work to create them, so the cost/benefit ratio precludes it. Again the keys are the processes, templates, and best practices to do the work in the very small amount of time.

• IT Operational Plan, Budgeting Session
• IT Operational Plan, Capacity Planning Session
• IT Operational Plan, Priority Setting Session
• IT Operational Plan, Resource Redistribution Session
• IT Operational Plan Finalizing Session

 

IT Strategy Execution Management Implementation

Execute the plans adeptly. The agile methodology helps to create closed loop systematic rhythms around the execution. The key is to foster alignment on the deliverables and set expectations on time and budget. The most often overlooked factor is the personal time capacity planning. You have to set aside time for managing and doing all the project related work.

• Quarterly IT Execution Plan Implementation
• Monthly IT Execution Cycle Implementation
• Weekly IT Execution Cycle Implementation
• Project Execution System Implementation
• Quarterly Performance Management Implementation

 

Upsell your clients with strategic QuaRTERLY BUSINESS REVIEWS and IT strategy meetings

 

5. Controlled: Services to ensure a robust IT Ecosystem with Agile IT Governance  

IT Performance Management Best Practices Implementation
The goal here is to maximize reliability through implemented best practices. Quarterly and monthly target setting measures performance and creating action plans drives costs down and increases efficiency.

• IT Performance Management Framework Implementation
• IT Infrastructure Planning and Monitoring
• IT Management Planning and Monitoring
• IT Strategy Planning and Monitoring
• IT Vendor Planning and Monitoring
• IT User Development Best Practices Implementation

 

Strategy Execution Best Practices Implementation

While it’s great to think big-picture during the IT strategy session and develop fancy projects we need to reach our goals, we have to use specific IT related project and program management best practices to make sure that we are not just dreaming, but executing flawlessly.

• Key IT Initiatives Management Best Practices Implementation
• Key Project Budget, Risk Management Best Practices Implementation
• Key Project Visualization, Planning Best Practices Implementation
• Key Project Change Management, Communication Best Practices Implementation
• Key Project close Best Practices Implementation

 

IT Audits Implementation

Ensure everything is safe and sound and works as we think it should be working. The various types of audits not only let us sleep better, but also keep up awareness of specific areas. To create such internal compliance requires a higher operational maturity.

• Independent Auditor Service Implementation
• IT Audit Process Design Based on Best Practices
• Data Security Audit, Disaster Recovery Audit, Data Backup Audit implementation
• Server Management Audit, Network Audit, Server Room Audit, IT Services Audit Implementation
• IT Management Audit Implementation

IT Organization Best Practices Implementation

Organize the IT Ecosystem. This is a virtual department with 20 to 30 different vendors. Who is the boss? Who is working together? Who needs what information? How do we assist communication? It is worth the effort to establish order to get maximum value from our vendors and internal resources.

• IT Operation Process Best Practices, IT Operation Policies Best Practices Implementation
• IT Operation Manual Best Practices Implementation (Knowledge Base, Administrator's Guide, Responsibility Areas)
• Collaboration Platform Implementation, Ticketing, Project, Yearly, Quarterly Planning, Alignment
• IT Organizational Chart Design
• Competence Management and Personal Growth Plans

 

6: Clear: Services to maintain transparency of the IT ecosystem 

 
IT Reporting Practice implementation
Develop the necessary reports to be able to measure the performance of all departments and groups. What we can't measure, we can’t manage. This is not an exercise in flooding the C level with reports. It means delivering critical weekly, monthly, quarterly, and yearly metrics of business performance.

• Reporting Framework Implementation
• IT Infrastructure Reporting Implementation
• IT Management Reporting Implementation
• IT Strategy Reporting Implementation
• IT Vendor Reporting Implementation
• IT User Reporting Implementation

Responsibility Matrix Implementation

Establish clear aligned definition of who is doing what. Going through the 200+ responsibility areas, from checking on the backup to aligning the technology with the business needs is going to raise a lots of questions. Who should do what to make sure nothing is ignored or forgotten. Again the takeaway for the CEO is that if no one is responsible for an element of the matrix, ultimately the CEO is. It is better to know who does what before you need them to. 

• Responsibility Matrix Audit, Interviews and Workshop
• Responsibility Matrix Management Implementation
• Team Dependency and Risk Analysis

Internal SLA Implementation

The goal is to create the Service Level Agreement (SLA) internally. That means identifying all the necessary services the company need, make decisions on the needed quality, speed, cost, and create alignment on this. The internal audits could make sure the agreement is not just a paper on the shelf.

• Internal SLA Creation based on Template
• Internal SLA Enforcement

Efficient IT Management Tools Implementation

Use the most efficient tools as possible in IT management. If IT wants to make the company more competitive, it first needs to be competitive itself. Using the latest and best efficiency tools is key to drive costs down.

• Execution Management Tool Implementation
• IT Maturity Management Measurement Tool Implementation
• IT Document Management Tool Implementation
• Password Management Tool Implementation
• Budget Management Tool Implementation

 

Vendor Management Implementation

Make clear that the client is in the driver's seat and not the vendor. Vendor management means yearly negotiations on prices and services, switches if needed, mediation on tough problems, and enforcement of the service level agreement. Make sure they are creating the value we agreed on.

• ERP Vendor Management Implementation
• Telco Vendor Management Implementation
• Cloud Vendor Management Implementation
• General Vendor Management Implementation
• Printer Management Implementation

 

7. Cost Effective: Services to minimize the costs of the IT ecosystem 

 

IT Budget Management Services Implementation
Create and manage the most cost-effective IT budget. What is included in the budget needs to be strictly defined because everyone has to be on the same page when we’re talking about costs, expenses, budgets, targets, etc. Setting a budget is incomplete without proper governance, reconciliation, reporting, and solid decision making.

• IT Budget Planning
• IT Budget Controls Implementation
• IT Budget Reports Implementation

 

Operation Efficiency Services Implementation

Analyse all the IT related processes in the organization. Are there any new tools we could use? Is education required to use the current systems? Is there any integration that could be done to make their processes leaner? A service offering encompassing these topic is a great tangible source of continuous improvement and total quality management.

• Continuous Process Improvement Implementation

 

7C IT Management Framework and a vCIO Role Implementation

Manage every aspect of IT in a lean and straightforward framework. We create and implement the 7C Framework based on the 7C methodology.  We must understand that the vCIO is a high level IT Executive and can be a third party. The framework he/she implements, manages, and further develops is based on;

• 7C Methodology Implementation
• 7C Certified vCIO Implementation
• 7C vCIO Toolkit Software Package Implementation
• 7C vCIO Community, Continuous Education Implementation

 

IT Procurement Management Implementation

Manage all IT expenditures of a company and keep them as low as possible. Set up rules around purchasing, and create standards to achieve a homogeneous environment including managing all software subscriptions - key to keeping the costs down.

• Purchase Policy Implementation
• Standardized Device Policy Implementation
• Software License, Subscription Service Implementation
• Purchase Process Policy Implementation

 

Conclusion

The services discussed here are not new. What is new is the perspective. We can see the goal, see what the different services are about, and how to frame the services so that the client understands their value. It is an alignment tool to help clients understand their situation and to help them make informed choices.

You are able to help your clients without having capacity, knowledge, and experience in every service. You are able to be the one and only trusted advisor and vCIO, and outsource the rest of the work, with partners who excel at creating a budget, strategy, or security. That is your value in using the framework: being the big-perspective guide on IT, and ensuring the smooth, natural delivery of a professional trusted advisor.

 

Cracking the code of the future of MSPs

By Denes Purnhauser on July 17 2014

There’s been a lot of talk lately about a fundamental change in the MSP industry, and the subject may seem overwhelmingly complex. The change taking place is quite evident, but what’s inside the tornado? What is the force behind this change happening?

Understanding the underlying impetus will enable businesses to make more educated decisions where to drive their companies. Let’s demystify this change and put it in a very easy to digest format, as the core of the change is actually simple.

It is not our shortest Blog but I promise worth the read. You will see the change taking place and how it could help you drive enormous growth in the next couple years. So fasten your seatbelts!

We are going to use one of my favorite thinking tools to analyze and understand the situation: The Business Model Generation framework. We use this method nearly every day, to understand our customers and their business, brainstorm new business ideas, etc. We like it because it is very simple, very straightforward, and separates complex systems into simple components.

We’ll start by showing you the current typical MSP business model and why this model was the right answer for the market needs in the past. Then we’ll look at how the core of market needs have changed and the resulting changes that have been made to the business model.

Market need:

Think way back to when computers first came into the commercial environment and dramatically changed how we do business. These were large and complex systems and unwieldy from a technological perspective. For so many tasks somebody technical was needed to finish the process - to convert a picture, scan a document, set up a network, or just save a file. These tasks needed to be more user friendly and the users to become adept in these environments. The problem to overcome in was technological complexity.

So the IT support companies came to the scene and solved the problem of technological complexity. They have been evolving since, and the most mature format of this service is the Managed Service Provider model.

Let's analyze the classic MSP model, particularly to see how all the aspects of the current model are working together. We will then see how a small change on one part of the business results in adjustments in every field of the model.

Value Proposition:

The core value proposition of an MSP is reducing the complexity of technology. This is the ultimate goal and the value they are delivering to their customers. It can be stated in various ways: "run your business smoothly", "peace of mind”, "security and compliance", or "strategic IT design and decision making". Every company has its own style but all promise to reduce the complexity of the technology in their client's environment.

In order to fulfill this promise, IT managed services providers first create a so-called "Outsourced IT Team" service, which includes all the human resources as an independent unit. Clients do not have the necessary skills or resources to manage these teams.

Second, they provide an "IT infrastructure": design it, build it, manage it, and support it. The infrastructure includes all the switches, servers, desktops, and gadgets and all the software elements on them.

Very simply, this is the core value proposition: reduce the complexity of the technology with outsourced IT staff and IT infrastructure.

Customer Segments:

Channels:

The typical sales method for MSPs is word of mouth referrals. As with doctors and lawyers the performance of the provider is judged on criteria unmeasurable by the customer and in industry jargon that no outsider understands. This makes trust and reputation essential factors. An MSP could lose a client by dropping the ball on a deadline, or by neglect, but without these catastrophes it has been a comfortable space to be.

Most IT managed services providers do have some form of website; not so many have a blog or other educational content. However, these are very unlikely to create a "marketing engine", or to excel at collecting and managing leads. Also, most are made by the owners or directors, whose only frameworking tool is a "network assessment tool" which helps them discover the IT infrastructure of the client and give recommendations based on that.

Customer Relationships:

The Service Desk drives the main relationship between the MSP and its clients. While the most important elements in its service quality are the response time, the personalized services, and dedicated resources, many IT companies have outsourced this function and had a hard time afterwards.

In our terminology, account management is still part of the Service Desk, because it’s the management part of the service. Still, some MSPs claim to be vCIOs, though it’s likely that this service was made a part of the MSP package just to improve sales.

Moreover, Virtual CIOs have tended to concentrate on IT infrastructure planning and design, or on doing quarterly "business reviews" and neglecting other parts of the business. They operate without a process-driven separate service offering. The clear loss from this is that very few MSPs will get a call if from a client with a business problem. The client will call once they’ve solved the business problem and they need a new server. Instead of being a business advisory role in most cases it’s one of technology infrastructure advisory.

Key Activities:

While there are several models, there are only three main functions within service delivery: software, hardware, and service areas.

Among existing service areas, there are projects, system developments, NOC, and Service Desk. Some companies separate the project work and maintenance; others some separate NOC from Service Desk.

The HW/SW sales have typically driven the projects, and every 2-3 years major developments were taking place. These developments drove an enormous amount of fixed base revenues for the service providers.

Key Resources:

Key Partnerships:

Partnerships have been an overrated area of the business. The software and hardware vendors have been pushing this. They have to sell and MSPs became a channel for them, so they worked everything to sell through that channel. Fancy conferences and sticky account managers were replete until the Cloud era had come. Then as I think you know most of them turned away from that channel sooner or later.

Other more valuable partnerships were based on service delivery software. PSA and RMM solutions directed the quality and the efficiency of service delivery. These companies invested heavily to educate and help IT companies.

Cost Structure:

Revenue Streams:

In terms of revenue streams the most prominent have been the resource-based ongoing revenues, which could be Time and Material, Block of Hours, Retainer, or Recurring service models. Next are the project-based revenues, which usually include fixed costs. On top of these there is a shrinking margin of hardware and software sales.

So, this is the traditional MSP 1.0 model. I have spoken with around 100 MSPs in the last few years. I have read most resources and we have built two MSP-related companies.

Business model design demands the ability to see the patterns and the changes around these whole sets of building blocks. We have to see the precise nature of changes as well as other parts of the business model have to change to adapt.

So let's see what has changed in the last few years related to the classical MSP 1.0 model:

1. Using technology is gets less complex

The user experience of mobile devices has driven an enormous change in reducing the complexity of technology. Just five years ago the method of sharing pictures included taking a photo, downloading it, converting it to Jpeg, and then copying it to a USB drive. Now my parents are doing that all with their mobile devices. Just take the picture, edit if you want and easily share it through Instagram or Facebook.

The cloud democratized technology. Everybody can get the latest CRM platform with the swipe of a credit card. There are no implementation plans, consultants, or hefty projects needed. You can just start today and emerge.

Further the current generation of users is now much more comfortable with technology. The complexity of the technology became not just absolutely simple (like using iPhone), but also relatively simple to learn and adopt. Generation X and Y are more willing than ever to search online to solve problems themselves without calling a help desk.

2. Management of technology gets more complex

The market has fragmented. There’s both a multitude of applications around the web solving problems, and numerous corporate and private problems looking for solutions. These realities are often prevented from meeting, however.  Both client companies and vendors are specialized in niches, and the sheer numbers make getting together difficult to manage.

The impact of technology on businesses is greater than ever before. Everything is wired and a single point of failure could run a company out of business. Consider CodeSpace: a small company hosting websites, where a hacker was able to erase all their data, including backups. CodeSpace was forced to close their doors. Having a clear vision of all aspects of security, applications, access, vendors, costs etc. is still a management challenge.

The IT budget has also increased because many things that were outside of the IT budget are now included in it. Managing this budget is a complex issue as IT is no longer a technology challenge but a management one.

IT is clearly a strategic asset. It is not the infrastructure but the applications, the adaptability, and the culture are what the company is using,. It can be a differentiating factor among the competition based on costs and customer experience.

So the two major changes that have taken place are, first, the complexity of technology has been declining and second, the management complexity of technology has been increasing. These trends are interdependent and supporting each other.

The problem is that these two factors work against the current MSP model in a big way.

The first is undermining the basic value proposition of an MSP by removing the technological complexity. With demand decreasing, the services that the MSP delivers are devalued. It’s the first thing MSPs are witnessing: fewer client calls and some IT decisions are being made without them.

This is a typical "Red Ocean" scenario, meaning the competition is increasing and the market is commoditizing. This is not a good place to conduct business.

The second trend is creating a new demand, but this demand has not manifested as service requirements yet. There isn’t yet a mainstream service around the problem, so clients aren’t shopping around. While there are still opportunities to solve problems for companies but they aren’t able to translate the myriad choices into a service they want to buy.

Hence this is a typical “Blue Ocean” opportunity. There are few to no competitors. The market is wide open for influence and education and unique value propositions can be made, a new service can be developed, and at a higher value.

However, as you will see, you have to pay a price as well. A switch from the current model is no mean feat and there are many obstacles down the road. This is a higher risk, higher margin model.

If we can properly read all these changes, we then have to design a new business model around them to make a viable business.

So let's have a look at the so-called MSP 2.0 model. In this chart everything green is new, the orange is of reduced value and everything red is going to be obsolete based on the new model.

 

The New Value Proposition

1. Improved efficiency with technology: find how we can drive down client costs through automation, standardization; better processes, information, communication, and collaboration.
2. Competitive edge with technology: fuel client revenue streams with technology, better customer service, faster delivery, and better information flows.
3. Maximized business continuity: as the impact of breach is much higher than it used to be, so the IT security, information security, and vulnerability are going to become more important aspects in the business perspective.

 

“Management" is all about making decisions, creating strategies, planning accordingly, and executing projects. We have to create services around these three building blocks following the principle of the value proposition: We are going to comprehensively handle all the aspects of these management issues on behalf of the client.

This is not entirely new; every MSP has been doing some of this in one area or another. However, this puts it in perspective of the two major shifts. These must be fully fledged service offerings, and not just something we do for our clients as a side offering.

The New Customer Segments:

We have to seek out companies with more complex operation. This kind of service has not been developed for larger groups so we could have 150 to 500-member organizations as targets as well. We may not drive their whole IT strategy, but we could be a part of the Sales, Operation, or HR-related IT strategies. These are also small companies within larger ones with a particular focus. Harvesting those projects could be very profitable.

Also, we have to understand that being thought leaders, and not interested only in infrastructure, could open a lot of doors to larger organizations. This solves the problem of hearing “we already have an IT department” from larger potential customers.

The New Sales Channel:

If we want to sell this new value proposition, we are going to face new challenges. Nobody is buying it now, period. There is no such service around, and the market is still uneducated on these terms.

In order to be able to sell, we have to educate the clients, and we have to "reframe" them. For education, we need to create content and distribute it. A blog is a better start than books and case studies and is a common and effective avenue for content and inbound marketing.

Our value proposition is to increase something that is very intangible. The competitiveness with technology is a pretty fuzzy term. However, the actions and ongoing activities driving competitiveness can be measured. This is "ITCq" (IT Competitiveness quotient); a measuring of all the things related to well-managed technology. Using this tool makes it very easy to start a conversation with prospective clients.

Starting a conversation is one thing but closing deals is another. For that, the different workshops are a great option. We provide services to show our expertise, and then we can move on to important quick-win projects. Those projects are our foot in the door; and after successfully closing those projects, we can open up many other services. This is a seeding rather than a hunting sales approach, with the understanding that clients need time to adopt.

The new client relationships:

It is now apparent that our new core service offering is totally centered around a true virtual CIO role. The True vCIO deals with all aspects of the technology, not just infrastructure.

This role is going to fulfill all the needed high-level management roles, communications, and interactions. It creates all the IT strategies, roadmaps, budgets, and operational plans and manages all the projects needed to execute the strategy. This role is going to drive the perception of our services. The switching cost is considerable - we can still drop the ball on the delivery side if our vCIO isn’t dynamic - but if we stay active and communicate well, we have nothing to fear.

This is a business analyst or IT consultant role. If you don’t yet have one, hire someone with this skill. Set processes and job descriptions in place so you can train and set expectations for his or her performance.

The New Key Activities:

What are we going to doing differently on a daily basis? One thing is for sure: we are going to sell less equipment and classic software licenses. Instead, we are going to aggregate services and sell cloud-based applications based on a different business needs.

Because the vCIO services are now standing on their own, not attached to an MSP contract, we need to incorporate an "IT management framework" that comprises all the processes and deliverables that IT management now does and the vCIO is working on. The IT management framework is like a small ITIL, or any other framework, but more practical and automated.

We are using our own 7C IT management framework for that reason. The ITCq is the tool which measures all of the activities we have in the 7C framework. Implementing that sort of framework produces a decent revenue and creates a very visible form of ongoing services to maintain and further develop the client’s IT competitiveness. It contains yearly strategy, planning, budgeting, and auditing, based on templates and best practices. Everything goes into the software that clients can access, and which we can use to make what we bring more tangible and visible to the clients.

Because we are creating IT strategies, someone has to manage them. This includes overseeing all the IT projects the client is doing, but it could also be the specific third-party project management of a larger solution.

We will continue operating our NOC, Helpdesk, and traditional IT infrastructure services as long as it makes sense.

New Key Resources:

New Key Partnerships:

Here the change seems to be slight, but the importance isn’t. You could create a marketplace of cloud application providers. These could be niche players (solving a problem for a vertical) or general players (Google) in your marketplace.

The goal is to get some commission based on the sales of those services. As a vCIO, you are making decisions on behalf of the client, which means you are going to face problems and look for solutions. Your marketplace is the set of solutions looking for problems. You are the interface between the two worlds, coupling problems with services.

If you think five years into the future, 75% of an average client's budget will come from cloud-based solutions. It’s not difficult to calculate how much money an MSP could make based only on recurring commissions. A general cloud-based provider (Salesforce, Google, or Microsoft) could offer 8-10% of the sales recurring. A smaller niche provider could leave 20-30% of the sales on your side. Revenue could be coming in every month with just these partnerships.

This is a cloud broker model. However, we are not brokering just traditional cloud service providers, but every software company, because everybody will be switching to a cloud-based delivery model in the near future.

New Cost Structure:

New Revenue Streams:

Plenty of new possibilities here.

Conclusion:

These are two big trends of technology - it’s becoming easier to use while management of all the choices is more complex and creating a tornado. If you think you are going to be able to stay only a 1.0 MSP, cloud and reduced complexity is going to put you out of business. If you are not getting into IT management, you are missing the boat.

The new model will enter into the mainstream in the next few years. As it does the incumbents will have tremendous advantage over new entrants. The learning curves, the thought leadership, and the processes are hard to copy or implement quickly. In my opinion, someone who invests now and spends the next few years developing this model would be reaping the profits in the following 5 to 10 years.

During the next session, we are going to talk about the specific MSP 2.0 related Projects, Ongoing Services, and the natural adoption of the model in 12-24 months, so stay tuned. Subscribe to the Blog alert on the top right to make sure you get the new articles.

 

The process of becoming the Trusted Advisor

By Denes Purnhauser on July 8 2014

For Managed Services Providers (MSPs) the ultimate goal is becoming the ‘trusted advisor’ on all things IT.

We’ve created a process which enables MSPs to earn this trusted advisory role as fast as possible. The key is to understand the client, and in turn help them understand their situation and their opportunities.

Looking into the 7C Methodology and processes can be a tad overwhelming at first, we know. It’s so effective because it’s comprehensive, so there is a learning curve. However in our continuous effort to make everything as simple as possible, we’ll start by emphasising a couple of core concepts.

One of the crucial elements is the client reframing process. From the client’s perspective it’s a discovery process, the goal of which is to make the necessary transformation to start working with the client at a new level. The key component of the process is the Reframing 7C canvas workshop, where we ask questions of the client’s business in order to help the client rethink basic assumptions about IT and its management. Normally such a fundamental shift is a tough, very high level process, but if you’re properly prepared to ask the right questions and challenge the client, it can be a very easy and straightforward process.

Client Discovery

So to be able to conduct the workshop - the central element - with confidence, we have to be as informed as possible regarding the client, as well as the nature of the company itself: the key players, industry etc. We need a streamlined data acquisition process to be able to immediately focus on what matters. With an established client this is much easier...it’s the new for whom you must prepare a bit more.

If you peruse the 7C Report, you’ll find it entails all this needed information about your client in IT function and their IT management perspective.

To be able to get the necessary data from the client and to be able to make the analysis and build the report, you need input. This input comes from the questionnaire you get your prospective client to fill out - not the client's ‘IT guy’, or service provider, but the CEO of the company -the one responsible for the IT in general at the senior level. We’ve provided several helpful methods encourage them to fill out this questionnaire. If it seems like a big deal for them you can infer either that they do not trust the value of the process, or that they see little value in IT generally. In either case you can make the transition with the workshop, so do your best to get started with the questionnaire.

This is the discovery of the client that prepares for the workshop.

Reframing Workshop

In the workshop you are going to use the 7C Canvas as a companion. It goes on your wall and comprises all the building blocks of the competitiveness of IT.

This is meaningfully accessible to the client: there is the IT execution segment, and the IT management - both cost-effectiveness and the competitive edge. It creates a conducive platform for talk about the company's challenges, issues and the possible IT related solutions.

First of all the Canvas will assist your confidence in the meeting, with the information on the wall 100% aligned with the report, scores, etc.

Secondly, it outlines the structure of the session, which in turn helps you to facilitate it.

Thirdly, it engages the clients in conversation - this is a workshop, and your goal is to work together and strengthen the relationship.

Fourthly, unlike some workshops, the Canvas remains, a good basis for further conversation between the CEO and the rest of the company.

The outcome of the meeting is some initial action items involving overall objectives, directions, and possible initiatives or projects.

Action Plan

Your next duty is to build a comprehensive action plan for them based on the results, and set a possible achievable target score, and to put everything in context, set priorities, state realistic expectations about IT project sizes, IT budgets, possible results, and the necessary capacity from the senior level or from staff.

So now you are becoming a natural leader of their Global IT, not just the infrastructure, background, support etc, and you can come up with big projects and industry changing initiatives with IT. This is the process of how to start your work, what you need to achieve the first quarterly plan.

As you start the first company-wide quarterly plan (the cornerstone and "trial" of the MSP 2.0 model), you are incurring more information, more trust, and even more loyalty.

Here’s where we kickstart the MSP 2.0  onboarding process to implement all necessary parts of the model - where you are able to start the complete IT management operation with the client.

Conclusion

Maybe you see this is a long process, but slow is fast and fast is slow in this arena...the initial investment of preparation will soon lead to a pivotal element, the inflection point which is the workshop. You get the client’s attention and from there are able to reframe them.  Discovery and the preparation, workshop, action plan, and finally trial quarterly management - these five components give you the proven process of client reframing.

 

Why are clients lately needing more consultative work from MSPs?

By Denes Purnhauser on July 6 2014

So we all agree that IT companies are facing challenging times, right? We all need to figure out a new business model in the near future. But what about the clients? Are they facing a similar problem? We have to take a good look at what’s happening on the client side to understand the trend.

We’ll use a chart to make the explanation easier. We’re looking at how things have changed in the last couple years, and where it could go. 

In this chart the horizontal axis is the business impact of IT. It shows how in time, the overall IT influence has changed on the client's side. How the IT impacts their everyday activities, but also product development, communications, service offerings, manufacturing and so on.

On the vertical axis you can see the overall complexity of the IT ecosystem, showing that over time it also has changed on the client's side: the number of different processes supported by an IT system, the amount of software and, hardware, connections, and network infrastructure in their ecosystem.

We graphically emphasize the overall IT management challenges with bubbles. The bigger the bubble gets the bigger the management challenge on IT.

 

So meet Carla, who runs a travel agency with 75 people and in a growth mode which she started in the mid-eighties. She’s quite IT savvy, and so has several legacy custom software applications still in use from way back then - word processors etc. IT wasn’t always a big deal, nor so complex, and had a very limited impact on her business.

In the nineties, they all upgraded to PCs, fax modems, better software, Windows - the big boom of the PC era. At first only the IT-savvy few were using that software, but as Carla upgraded to a more integrated ERP, the whole company started to. IT was getting more and more complex, with more software and hardware.

Even the reliability of a smooth running system was a big issue, but because everything was still backed up in hard copy, in the case of an outage the operation wasn’t catastrophically ground to a halt. When such management issues came up, someone internal who was familiar with the systems did the techy work.

Since 2000 the internet has become ubiquitous in business, so they upgraded again to a better ERP with CRM, and more communication to clients, and invested heavily in infrastructure with servers.
Because collaboration and email was a daily use they had to keep up with new tools as well as products being constantly developed. Every three years they’ve had to change the whole infrastructure with PC-s servers and softwares.

The local IT person was no longer able to manage so they switched to a IT Managed Services Provider, who was able to support all their systems from a technical standpoint, including helping them figure out upgrades, projects, and developments related to the IT infrastructure.

That was the “BC” era... Before the Cloud. In 2010 the cloud became the new standard, and we’re now ‘AC”...After the Cloud.

Carla has several internet based applications running. Now she can acquire and usually run nearly every IT function from the net.

Still she does not want to put everything in the cloud; just the most basic things, both to be more efficient and to incur less expense as a service. She enjoys the continuous development of the services without having to involve herself in big projects, upgrades, or infrastructure investments.

Small companies next emerged in the beneficial new milieu of AC, and had very cheap products available immediately without any server, or PC work. So they decreased their budgets supporting the old-fashioned infrastructure. They switched to Office 365, relying heavily on Google Apps with clients, using mobile devices with dropboxes, etc...hundreds of applications tied to devices without any coherent structure or defined boundary.

So Carla missed the direct but responsibility-laden control of the infrastructure in a way, but is prepared to move on. All she really needs is someone who can give her the control back, but the myriad vendors, ERP, CRM, B2B, B2C, cloud applications, integration software developers, and web developers are overwhelming her.

The MSP is doing his job, but there’s a role going unfilled: someone who puts all this together. The business impact is enormous now; if a system goes out, the company can be entirely missing a part of the operation.

The complexity of the ecosystem is now very high, and aching for adequate control.

This new role needs to be a very high level non-technology oriented management duty. Currently only the structure of the IT is managed. Unfortunately her MSP is focusing on too much on the technology side, which is not an issue. She is missing the management part - the Global IT budget, the management of vendors, the direction of projects, security in global, real IT strategy and so on. The MSP is performing their job at a high level, but aren’t able to give a comprehensive solution for her IT altogether.

So we see the challenge of Carla is to get something that seems beyond the scope of her current Managed Services Provider. She could go the path of developing an internal staff, and solve the problem sooner or later, but it would be far more competitive if the IT company could transition to the MSP 2.0 business model, which is basically management of IT with a global approach to give a competitive edge. Carla is willing to pay the additional fees to the MSP, as they have an established relationship, and she trusts she’ll get the functionality and performance she needs.
 
Carla needs a new working model from the MSP.

 

MSP East vs West All Star Game

By Dr Peter Torbagyi on June 25 2014

We have been producing a fair amount of research on the topic of MSPs offering vCIO services.

Because one of my colleagues is a great NBA fan, we’re now able to present the “MSP East vs. West all star” comparison.

Now we’re very sceptical guys, but since this is based on work with 591 IT managed services providers, we inclined to believe that this is a reasonable view of the real situation of the US Virtual CIO market.

But we like to be sure, and you could help us!

Go to our virtual poll and vote for your team if your MSP offers vCIO services! Choose the NBA team based on your company operation. If you have multiple locations, you can vote with each of them.

We close the vote on the Independence Day, and then we can have a heated conversation why East has beaten West so much. Or the other way around? :-)

Final Report of Survey Results

1. New York Knicks 14.29%
2. Golden State Warriors 14.29%
3. Chicago Bulls 9.52%
4. Dallas Mavericks 9.52%
5. Los Angeles Lakers 9.52%
6. Cleveland Cavaliers 4.76%
7. Boston Celtics 4.76%
8. Atlanta Hawks 4.76%
9. San Antonio Spurs 4.76%
10. Houston Rockets 4.76%
11. Washington Wizards 4.76%
12. Philadelphia 76ers 4.76%
13. Oklahoma City Thunder 4.76%
14. Sacramento Kings 4.76%

 

• Defining vCIOs from around the world: Part 1 - Canada
• Defining vCIOs from around the world: Part 2- New Zealand
• Defining vCIOs from around the world: Part 3- Australia
• Defining vCIOs from around the world: Part 4- United States
• Managed Services Platform vCIO Report 2019
• Managed Services Platform vCIO Report 2020

 

The MSP Stories that lead Managed Services Platform projects

By Denes Purnhauser on June 23 2014

Some of you have been asking us about our background, who we are, and why we’re doing Managed Services Platform. 

Our Challenge

One of our companies at first was an IT managed services provider. We’ve since reintegrated it into our holding company, but think telling its history will be illuminating...

We discovered that while our clients always needed consultancy on IT in general, we lacked a viable model to do it both properly and profitably. We’ve tried to incorporate the consultancy into the MSP high-end package, and tried to do T&M. Neither approach was satisfactory.

But the pressure just gets heavier as we’ve been witnessing the evaporating services on our MSP practice, accompanied by ever increasing needs of the clients for IT management, vCIO, and 3rd-party-project management, all while IT gets more complex in terms of organization management.

7C IT Management Framework

We’ve created a checklist questionnaire, the aim of which was to improves sales of our services while setting the stage for prospects. We tried to ask the questions we knew they were trying to formulate to express their needs.

We gave this questionnaire an easy to follow structure and designed it to produce a score for each taker. We’ve identified seven critical aspects of IT competitiveness today, and because we were able to pick seven words starting with the letter “C”, we called it "7C.

Once we started to send this out to prospects and clients it became a dynamic tool. The software behind the analytics that produced the score and report was popular too. Also, because it was about business terms, it helped somewhat demystify IT. It covers all the aspects of the activity of IT management that 40-200 seats company need to know about.

Reframing Your Clients

One of our ventures at this time was with our other company - where we became a Country Developer for a General Management Consultancy methodology. This was a general company development framework with strategy building, organization, execution, and alignment. Uncommonly at the time was that it was a true 100% consultancy business, though it had a monthly recurring service model, a project for implementing the framework, and recurring service revenue to maintain it.

We got curious; if general consultancy was able to work out with a recurring service model, it must work with IT management, as well.

We then started to implement the principles of the general management methodology to IT. We listed all the duties of a vCIO, from client discovery to strategy creation, quarterly planning, documentation, audits, vendor management, execution, communication, leading the internal users, IT admins, and so on.

We end up with a framework like ITIL for small clients, with implementation, project-oriented and ongoing activities. We put all this into various packages and started to offer it SEPARATELY from our MSP contract.

The kicker was that we had charged a lot for the implementation of the IT management framework.

Our value proposition was that we were able to get you from 28 to 75 in 6 months with the implementation of the framework. CEOs were able to grasp this measurement thing quite adeptly.

That was the tipping point. We have more than doubled our size in nine months. We’ve added several new clients, and several new doors are opened with the productized SEPARATED vCIO roles.

We even acquired a client who had MSP but with weak vCIO role, and have done more than a dozen “implementations." The sale itself, not to brag, went rather easily, because the result was very tangible to the clients. Everything from strategy to roles, activities and documentation, etc. is dealt with by the software. When they saw the vision and the results, they ordered the project. Then to maintain every part of their IT ecosystem they ordered the Virtual CIO services.

Everything about us follows from this story. We wanted to share our questionnaire, the scoring, the model, the pricing, and the packaging to the MSP community. Because we are running so many things at once (we are starting a pure MSP 2.0 company in Canada with no MSP resources), this venture has long held a status of our pet project.

Along the way Autotask and GFI saw an opportunity in what we’re trying to do. Both of them supported us in a big way to be able to move forward. Those guys are just awesome!!!

We’ve now pulled off a website and have a handful of companies using our beta, but are still fine-tuning the package to be able to help other IT companies the best we can

MSP 1.0 vs. MSP 2.0 [video]

By Denes Purnhauser on June 20 2014

MSP 1.0 is not widespread yet as a business model, and there is already the new 2.0 model.

What are the key differentiators between the two models? The following will refer to an average MSP 1.0 and MSP 2.0 practice.

We are assuming that the MSP 2.0 model is heavily supported by an MSP 2.0 framework, which is crucial. The differentiations may seem simplistic, but our aim is to show the possible limitations and challenges of the MSP 1.0 model, and the opportunities of the MSP 2.0.

Keep in mind that MSP 2.0 is not a substitution of the MSP 1.0 model. It is an expansion. You can move your existing 1.0 services forward, but with 2.0 as a companion the new options are going to be very promising.

 

 

 

Tech Value vs. Business Value

Giving someone a technology solution is not necessarily giving business value. The technology solution is only a part of the complete solution. If it is an ERP, the software is just part of the internal processes, interactions etc. If it is an email system, it’s also integral to the entirety of company communications.

The business value of an ERP project to is to enhance the efficiency of their processes, through automation and streamlining. The business value of the email system is an effective, well-processed, internal and outside communication system with secure limited access.

The technology is 30%; the rest is HR, management, controlling, etc. With MSP 1.0 usually the MSP does only the technology part of the project. In MSP 2.0, they become the leader of these projects; evaluating vendors, conducting the project management and quality control, as well as implementing the technology. This is a very visible difference in value to the customer.

 

Techy Slot vs. Trusted Advisor

The general limitation of the MSP 1.0 is that you are a technology service provider, and you provide value by providing technology. Yes, we know, this includes you providing business sense for the different solutions, but you don’t usually receive the following call: "Hi, we need to expand our operation abroad, and we need your expertise." or "We want to penetrate the new market segment and establish a sales representative system. Let’s figure it out together."

More likely it’s in the form of “‘You guys know any accounting packages which can handle foreign currencies?', or "Can you guys deploy a server for MS Dynamics CRM to us?" You’re pegged into the "Techy slot."

That’s a noble role to fill if you want it, but you will find yourself waiting for them to realize they need something concerning technology - it limits your opportunities tremendously.

Instead with MSP 2.0 you give them business value, which means you are there if they have a major challenge, development, or other change in their business. You stay current with their vision and direction so you are able to become a Trusted Advisor, or virtual Chief Information Officer (a vCIO). You’re already there well before the issue with technology arises, and you’re able to alert them to an IT challenge and background support for their decisions. This vastly expands your billable opportunities.

 

Thin Focus vs. Broad Focus

In MSP 1.0 you focus on technology, and your part of the client side. Maybe you give them quarterly planning sessions, even some kind of strategy, but the scope of these projects is limited to your service scope. In MSP 2.0 you think of the entire operation holistically from the client's perspective.

You re-think your MSP 1.0 service as one piece of the pie, and now manage all the vendors, third parties, and even the internal IT team to some extent. You negotiate the support contract for the ERP vendor, sign the bill of the telco company and so on. Your focus is on the global value creation of the IT, not just the MSP 1.0 scope.

Low Level vs. High Level

Alistair Forbes, General Manager of GFIMAX is presenting the Concept publicly first

With this in mind you can see that the MSP 1.0 focuses on technology and low level execution. MSP 2.0 focuses more on high level management. Don’t think of one as better than the other, but rather as models with different scope and approach.

Most of the time, the low level ground work isn’t visible to the C level executives. They are not able to measure and evaluate costs. In high level work, you are dealing with them personally and you help them with their problems. Your visibility is entirely more significant.

 

High vs. Low Acquisition Cost

With MSP 1.0 you’re often being summoned by a client with some painful problem. If they do not have IT related issues, it can be difficult to convince them to move forward. Also since other problems will keep arising at unpredictable and distinct times, you can’t stay connected with the prospect and ready when they have the next painful issue. It’s necessary to keep the relationship going for a long time in order to be visible and trusted to let them know of impending problems to which you have solutions.

The process of starting a business can be quite slow and unpredictable. On the other hand, MSP 2.0 gives a solution to a general problem, and is not dependant on big problems and imminent pains. You are able to start the conversation any time. Reframing this approach will lead to closing more deals. MSP 2.0 means you can start a basic service and as problems and opportunities arise you can upsell your higher value MSP 2.0 services.

 

Hard to Acquire vs. Unique Value Proposition

The other sales-related problem in MSP 1.0 is not just the closure ratio and the long cycle, but the effort needed. Usually the entry barrier is very high. If there is another MSP vendor, even a poor performer, you have to be able to prove your service is better at the same price, and usually you have to bear some part of the switchover costs. This means a fight over minimal margins.

In MSP 2.0 your service is of a higher level with a very Unique Value Proposition. It does not really matter what the existing situation is on the low level. You can offer your services in a white space, without internal competition. This makes the process easier, without sacrificing the profits, and without high switching costs. Of course still if you are competing with any MSP they will be seen as redundant quickly.

Pushy Sales vs. Consultative Sales

MSP 1.0 is a quite competitive place to be, so sales tactics can be pushy with practiced sales techniques, closing strategies, and unnatural communication. It reduces the comfort of the prospect and erodes trust, because you need to talk them into something.
Immediate solutions to real problems are still in play, but this occurs less and less as the market saturates.

In MSP 2.0 with 7C, the sales technique is different: a consultative sales approach. You get to know them in a business and IT perspective, in casual meetings with questions, helping you and them both understand their situation with a questionnaire-based benchmark and report, conduct a workshop, and create an action plan.

The more consultative experience shows your value from the get-go. It’s also more natural, as you can demonstrate your valuable expertise in a formatted way and garner trust during the sales process.

 

No MSP Sales Process vs. Predictable MSP Sales Funnel

Usually smaller IT managed services providers don’t have any sales oriented people, so the sales process is absent and the acquisition and the upsell unpredictable. Even more mature mid-size IT companies lack a streamlined, well-controlled, transparent sales funnel with all the metrics and motivation for the salesforce.

MSP 2.0 with 7C IT management framework is both the sales funnel and the consultative sales process. If you have a clear message for the audience, the inbound marketing is easier. You have an inbound marketing tool, a discovery tool, questionnaire, analysis, report, workshop, action plan builder and first quarterly plan.

This sales process will identify the necessary relationships, rationally spread the responsibility and clarify accountability. Also, because the process is well-defined, you are able to easily educate the client for more predictable results.

You can quickly implement the funnel as an inbound marketing campaign, and expect new clients in 4-6 weeks. Even an inside salesperson can acquire good quality, targeted prospects in 2-3 reframing workshops, which, with a 50% closure ratio is 4-6 new clients every month.

 

Low CEO Awareness vs. High CEO Awareness

As we have seen before, general awareness of the MSP 1.0 services is quite low. Usually during the reframing workshop with existing clients, it turns out that they don’t know what you do on a weekly or monthly basis with their back-ups, policies, and so on.

You may have discussed it with them and they may have nodded to do it, but these don’t stay front of mind, especially if you are working so well that you avoid outages or firefights, and completely disappear. In MSP 2.0 with 7C, you are working with the CEO directly.

You solve their business-related problems, gather information for them to help guide their decisions, lead their virtual IT department with all the vendors and internal IT staff, and report to the CEO directly. This greatly enhances your visibility and awareness of the CEO as to what it is you do and how much value you actually deliver. It’s a different relationship, trust, and respect level.

 

Slow Progress vs. Immediate Results

Although managed services providers usually have a wide portfolio of services, the client often signs up for a limited part of it, and it’s a very slow process to upsell all the great new services. Why? MSPs are not really proactive, and the whole portfolio is rarely known as part of the client’s business lexicon.

The client sees separate services instead of the big picture you can bring. With the 7C MSP 2.0 this is different. It’s much easier for the client to draw a development roadmap for 1-2 years, and execute the development plan with the MSP, because you put your and other IT services into their business context.

You are able to gradually raise the maturity of the client in a measurable, accountable journey. This gives you a faster, more aligned process to grow on the client side. Everything starts with a very solid 1st quarterly plan. Executing it flawlessly will open the door to further development projects.

 

Commodity vs. Margin

Alistair Forbes, General Manager of GFIMAX is presenting the Concept publicly

Because the MSP 1.0 market is now so saturated, the competition is tight, vendors deal directly with clients, and services are in very tough markets. This is called a communization, where, at the end, services are differentiated only by price.

To avoid the communization and avoid lower margins and price reductions, you have to change or extend your model. MSP 2.0 with 7C provides the client unique benefit and business context, and a very powerful weapon against their competition, leaving you in a very unique position.

This way, you are able to sell your existing offers at a higher price, while also more streamlined, and very profitable. Also, because the MSP 2.0 model is very new and rare, it’s seen as a high value service worth a higher price.

 

Avarage Brand vs. Remarkable Brand

As a local technology company, it can be very hard to be seen as a remarkable brand. With all the communication, service delivery, and collaterals, 100% alignment is needed to give a consistent brand feeling. You have to have a very unique value proposition where everybody knows what’s behind it. Volvo is a safe car, Starbucks is a great place to relax, Apple is a great user experience.

MSP 1.0, doesn’t include these engaging messages. MSP 2.0 with 7C, it’s different. You can show a very stable user experience during the sales process, your messages, the service delivery, and communications. It is fundamentally more professionalism and inclusive while maintaining a friendly, down-to-earth feeling. Your brand will emerge and become remarkable locally with high referral rates and powerful communication.

 

Cloud risk vs. Could proof 

The Cloud is disrupting the MSP 1.0’s main business and revenue stream, its infrastructure projects and support. All related services are changing, as well as the consumption rates. This is hurting MSPs. In MSP 2.0 with 7C, the cloud model is actually favourable. You can use the growing complexity and business impact of the several different cloud-based applications and services to sell to the management layer on the client side.

Mixing Cloud applications with on-site integrations and reliability concerns means security is a big issue. You can control the whole ecosystem and build a solid service, managing IT at a high level and ensure departments, technologies, approaches, and models of delivering IT are completely in harmony regardless of the client’s particular business model.