Calculating the utilization and profitability of a vCIO

How many clients can a vCIO viably service, and what is the utilization rate? How much revenue does a virtual CIO need to generate? What is the W2 goal rate for a virtual CIO? Many questions like these need to be examined if we want to structure our virtual CIO services successfully. Let's use the vCIO calculation sheet to figure it out!

How to transition from the server room to the boardroom

This week's question: How do I become a virtual CIO when I'm “just a tech?”  This week Denes and Myles Olson discuss a path to transition to the virtual CIO role. You may be more comfortable in the server room, but now you're needed in the boardroom.

To learn more, visit our MSP 2.0 Business Building Platform. 

Delivering Business Focused QBRs

ADAM WALTER AT VIRTUAL C

You would like to be a high-value business partner in your client’s eyes rather than a basic technology service provider. Your QBR process is a critical part of influencing their engagement up to a higher level. Watch this recorded webinar with our vCIO expert guide, Adam Walter, who has shared his 5 step process to make any technical QBR into a business-focused one.

6 Best Practices of Top Performing vCIOs

ADAM WALTER AT VIRTUAL C

Watch this interview with our vCIO expert guide, Adam Walter, to learn how to be more engaged with clients by finding best practices for becoming a trusted business advisor in 6 single steps.

 

Reporting vCIOs in the United States of America

After Canada, New Zealand, and Australia, we take a look at vCIOs in the United States.  70% of all registered Virtual CIOs operate in the USA. Because of this dominance the US vCIO trends are often difficult to separate from the international scene. When we talk about US trends, we are talking about the international trends at the same time.

Develop and operate a scalable and structured account management and vcio operations

One year ago we announced a very successful polling game called the MSP East vs West All Star Game to get an overview of the geographical distribution of the US vCIO market. The poll confirmed that the eastern coast's movement is more matured than the west's.  Also, almost a third of American vCIOs are operating in the largest metropolitan areas: New York, Philadelphia, Dallas, Los Angeles, Washington, Minneapolis, Atlanta and Boston.

Based on our following research you can see the geographical distribution of U.S. vCIOs.

Now let’s see what we can learn from the recent research shown on the bottom of the blog post. VCIO experience and IT managed services provider company sizes hiring vCIOs in the US are nearly the same as the international trend: most vCIOs have more than 10 years of experience (80%), and are hired by companies with fewer than 200 employees, most of which (70%) only have 11-50 employees per company.

It is important to note that more than 12% of vCIOs are going to large organizations, with 10,000 + employees; a number much lower than in other countries, where small and medium size MSPs cannot gain much traction.

The 5 most popular schools among vCIOs in the United States aren't from the above-mentioned cities, which illustrates the wide range of schools there. Only 7% of American vCIOs studied at these 5 schools: University of Phoenix, Drexel University, The University of Texas at Austin, Western Governors University, Michigan State University. We think it’s important to point this out because it shows the vast number of choices vCIOs have in the U.S. in obtaining their education.

The most essential vCIO role is information technology (50%); however, the MSP 2.0 roles are significant too: in sales, in IT consultancy, and in business development. Very interestingly 8% of the vCIOs themselves are MSP entrepreneurs on their off-duty time.

Finally, it is significant to note that most vCIOs are using social networks to connect with industry experts, check references and create deal-making contacts. For this reason, they are members of C-level executive groups, Cloud Era and MSP network groups.

Please note: our insights come from staying open to new information.  If you find that our research is not representative of your community, please share that perspective with us so that we too can all stay on the same page.

See previous parts:

• Virtual CIOs in New Zealand
• Virtual CIOs in Australia
• Virtual CIOs in Canada
• Managed Services Platform virtual CIO report 

Reporting vCIOs in Australia

As part of our work with companies in the process of implementing virtual CIO services we are interested in the general vCIO movement worldwide. So we’ve created a series of research discussions country by country.

Although the largest vCIO movement is resident in the U.S.A., we also observe distinct trends in other countries where the movement is under way. Having looked now at Canada and New Zealand, let's travel to Australia and see where the vCIOs reside down under.

DEVELOP AND OPERATE A SCALABLE AND STRUCTURED

ACCOUNT MANAGEMENT AND VCIO OPERATIONS

The centre of the Australian vCIO movement is undoubtedly Brisbane where almost half of Virtual CIOs operated, but the vCIO movement is present in all Australian metropolitan areas: Sydney, Melbourne, Perth and Adelaide. The most popular schools are also the best executive educators from their regions: The University of Queensland and Mt Eliza Business School. Then there is a small but important minority who received their education in foreign universities.

Most Australian vCIOs have more than 10 years of experience, consistent with international trends. What’s notably different is what we see when comparing the IT managed services provider company sizes that are hiring vCIOs:

• MSP companies below 50 employees are more represented compared to the international trend, and
• MSP companies between 50 and 200 employees are barely visible in Austria with regards to this movement at around 22% of the international level.  
  
  

Further, regarding the Australian and also New Zealand virtual CIO roles, it is important to note that MSP 1.0 roles are over represented compared to the international level, while MSP 2.0 roles, namely sales and business development, have lower levels of representation. This may explain why Australian vCIOs much prefer to be members of technology-focused social media groups and why small and medium sized managed services provider groups are more popular than in other countries.

Please note: we’re always open to learn. If by chance you find that our research is not representative of your community, please share that information with us so that we can take it in and pass it on.

See previous parts:

• Virtual CIOs in New Zealand
• Virtual CIOs in United States
• Virtual CIOs in Canada
• Managed Services Platform virtual CIO report 

Reporting vCIOs in New Zealand

As part of our work with companies in the process of implementing vCIO services we are interested in the general virtual CIO movement worldwide. So we’ve created a series of research discussions country by country.

Although the largest virtual CIO movement is driven by the US, we think it’s important to have a global perspective so we try to present trends of other countries where the movement is visible. After Canada, let's travel to New Zealand and see how the kiwi vCIOs live.

DEVELOP AND OPERATE A SCALABLE AND STRUCTURED ACCOUNT MANAGEMENT AND VCIO OPERATIONS

The majority of New Zealand vCIOs are operating in the two largest regions, Auckland and Wellington - no surprise, and the majority operate in the largest metropolitan area of Auckland. As well three of the five most popular schools are also there: Unitec Institute of Technology, AUT University and Massey University.

Experience and company sizes in the aforementioned areas are very similar to the international trend. On the overall scale most vCIOs have more than 10 years of experience and are hired by managed services provider companies with fewer than 200 employees...including about half with a personnel complement of only 11 to 50. A notable difference with NZ is that more than a third of vCIOs are joining the larger organizations - 10,000 employees and more - a number several times larger than the international average. SMB managed services providers need to know these trends and keep an eye on these large organizations.

Regarding the New Zealand vCIOs’ roles, the noteworthy feature is that MSP 1.0 roles, like Information technology, product and support, are over represented compared to the international trend, and MSP 2.0 roles, like consultancy, sales, and business development, are conversely very rare so far. 

This is reflected by how the kiwi vCIOs much prefer to be members of technology-focused social media groups, rather than groups engaged in business challenges and competitive-edge development.

Please note: we’re always open to learn. If by chance you find that our research is not representative of your community, please share that information with us so that we can take it in and pass it on. 

• Virtual CIOs in United States
• Virtual CIOs in Australia
• Virtual CIOs in Canada
• Managed Services Platform virtual CIO report 

Reporting vCIOs in Canada

We work with a variety of companies that are implementing vCIO services, and think it’s important to have a perspective on the general vCIO movement worldwide. We have thus created a series of research country by country.

Although the largest vCIO movement is driven by the US, we are starting this series of analysis on our home soil. So let’s see how the Virtual CIO movement is doing in Canada.

Please note: If, by chance, you find our research is not representative of your particular situation, please share that information with us so we can all be on the same page.

• vCIOs in New Zealand
• vCIOs in Australia
• vCIOs United States
• Managed Services Platform vCIO report 

The secret to making money for IT consultation

We have been using a very basic management tool called the 10 Point Exercise, where the goal is to channel client issues into a defined consulting "product" rather than just having discussions pro-bono….getting people together to ask specific questions, getting everything out on the table and developing a plan. It’s easy to learn and it turns IT tech guys into business advisors in 20 minutes.  Most importantly though it let them charge for their knowledge instead of giving it away. Let's see how...

Get long term client loyalty with regular and strategic Quarterly Business Reviews and IT strategy meetings

We aren’t going to teach how to use it here. You can learn and practice the 10 Point Exercise in many ways.

Our focus now is on how it can be used to turn your free advice into something that both helps the client and generates revenue.

Create a process to solve problems

Let's imagine we run into our client who happens to have an issue with their IT, people or systems and are actively seeking advice. Of course we engage and try to help them. However, we do not have a process; so we miss the chance to understand the root problem together, from the start. We probably sit d

own with the client several times, as we’re often their Trusted Advisors for IT, and we don’t want them to go somewhere else. Ironically this can mean both that they don’t get immediate value, and we don’t get paid for that service.

Now imagine you have a process to turn vague issues and problems into tangible results. When next you discover one of these issues just say: "This is a perfect place to have a 10 Point Exercise!" This means sitting with a few people and doing a quick and easy exercise.

There are telltale signs to identify the proper 10 Point Exercise for solving the problem based on their scope and goals. We need to keep end goal in mind: what we want to achieve.

Create alignment

Usually when these issues/opportunities for improvement arise there are differing perspectives.  While there may be agreement on the symptoms, there is no alignment about what causes the problem, so no clear diagnosis. This is vital to get at the beginning. 10 Point Exercise questions like these can help: “What are the most common reasons our employees spend so much time searching?”, “What are the underlying causes of the low productivity of office workers?”, or “What are the most important issues behind our apparent problems with working together as a team?”

Solve a problem

Our goal now is to find how we can solve the given issues. We have alignment on the problem, we’ve defined it, but we do not have a strategy to solve it yet. There are methods that work on a general level. Questions like this can help: “What are the next steps we can take to solve the internal communication problem?”, “How can we ensure we solve the team productivity problem by the end of this month?”, or “What specific actions can we take to reduce time-wasting document searches?”

Opportunity discovery

We need to clearly identify a business opportunity out of this issue, and what we need to do to capture it. Questions like these can help: “How can we improve our internal processes?”, “What is the best way to leverage our current IT tools for better collaboration?”, or “What actions should we take to make sure we can develop the service on time?”

Project visualization

The goal in this is to be aligned with the team on what we need to achieve at the end of the given IT project. Regardless the type of IT project and before anybody jumps in and starts planning, we know what success means to every stakeholder. Questions may include: “If we think about the Document Management project, what are the deliverables we expect from this?”, “What exact results are you looking for at the end of the productivity improvement project?”, or “How would you define the success of the collaboration project?”

Decision making

Now we need to make decisions and have a commitment to particular solutions, the scope of projects and needed deliverables. Questions may include: “Which collaborative solution are we choosing for implementation?”, “What are the expected deliverables and priorities for the productivity project?”, or “Which application should we use for internal chat?”

The more complex the problems the more sessions involved. We can start to clarify the issue with an Alignment session, then have a Problem Solving session and then jump into a Project Visualization. The sequence can be 2-4 sessions in a row, or on an improvised schedule as it progresses. There can be a natural sequence here. The outcome of one session can be the input for another. As we move forward we have to set expectations about how far we need to go in certain exercises.

If the team is bigger, we need more of the same exercise and to aggregated results. Do the same exercise in smaller teams and compare outcomes. Afterward, summarize the results and present that to the board.

Nice, but how do we make money?

Most of the time we are going to charge for these sessions. On one hand, we can do it ad-hoc, but we think it’s best to have prepaid packages of 5 x 10 Point Exercises, or part of the vCIO engagement.

If we see that one session takes 60 minutes of our time not including travel, prep and follow-ups, a session can easily cost us $250-$400.

We should demonstrate the exercise in real life first, so as to prevent the client from seeing it as a cost. We want them to see it instead as a great investment to solve problems with an outside party. Being unaligned, spinning the wheels and having arguments last for weeks, are very inefficient ways to solve IT problems. The $150 to $400 we are asking for the exercise has a significant return.

An IT related project can easily cost the client tens of thousands, plus applicable internal utilization of resources. Having a 3-4 session sequence of workshops can leverage that investment in a big way. Having more precise projects, better alignment and more teamwork is worth the investment and can get rid of unmanaged, ad-hoc projects.

Conclusion:

Learn and use the 10 Point Exercise, to create an entry type Virtual CIO service. The service leads you naturally to formulate and close more projects. Your time will be monetized, and your clients will come to expect to pay for reliable and prompt solutions. They’ll get a process to solve problems while you get funding for spending time with them as a vCIO.

Escape the free-advice MSP trap once and for all

Get out of the MSP commoditization trap

One of the more common problems we see IT managed services providers suffer is increasing difficulty with the commoditization of services and differentiation within the industry. There are three factors involved here that we need to understand and manage to solve these problems. 

Differentiate yourself from your competition and become sales ready

Problem 1.: Our prospects are seeing fewer visible IT problems

Even ten years ago not only was Windows XP less reliable but so were servers and the internet in general. These are not generating problems anymore..the average CEO doesn’t have "technology issues" on their agenda.

So our traditional marketing and sales efforts are no longer effective. Even referrals are not coming with the same frequency lately.

Problem 2.: Our Value Proposition is limited

The MSP value proposition is designed around peace of mind - keeping your lights on, managing your technology so you don’t have to. The entire value proposition is reflected in the challenges of managing that technology. We can embellish and enhance, but that is the core value every managed services provider is delivering. All our discussions tend to come back to proactive maintenance, anti-virus and managed devices.

Problem 3.: Communicating MSP value proposition is a dead end

The ability to market the service by appealing to technology awareness is diminished and the industry is saturated. Prospects have fewer IT problems with their IT infrastructure and there’s no room to move sideways to look for new IT infrastructure territories. Too many fish in a smaller pond. Trying harder is not a solution, nor is tweaking your delivery.

A few smart folks in the Business Model Generation group made an interesting observation, of service companies who see these problems we’re facing and start to look inward to develop new services. This, they found, is very ineffective. Instead they thought: what if we first understand the problems of the target market - their pains and wishes, and then try to figure out how we can solve their problems. Once we have these in mind we can start developing IT services.

Check out their cool Canvas tool. On the right-hand side, you see a traditional CEO's job, their pains, and the gains they are after. As it was when a CEO had visible IT problems, as service providers on the left, we have been able to solve their pains and offer services to reach their desired gains. It is a very simple formula to connect our services to their needs, so it’s called the Value Proposition Canvas.

If we really take the time to understand our clients and prospects we can quickly see they actually still do have IT problems - they just aren't as obvious as they used to be.

First and foremost they usually want to grow and to be more efficient. They see their hurdles as lack of productivity among their staff, for example, and as in need of immediate solution. But while every business is looking to grow sales, they don't see these as IT-related opportunities. They see these as general business problems.

Here’s where we can excel! If we try to figure out how we can help their business problems using IT solutions, the whole conversation starts to change. In reality there are many solutions to their business problems. A new CRM or improved reporting and adoption by staff through proper training, or some improved collaboration and internal communication could ease their pains. Sadly all too often some or all of these solutions do not exist in our particular service stack.

Right now nobody is there to connect the dots - find the problems, look for opportunities and manage the implementations. Their internal resources cannot do this and most consultants and IT companies aren’t either. There may be no shortage of skilled experts, but nobody there to manage the solutions.

If the solution for them is to be more IT savvy and do better implementations, and to better use their existing environment and become more productive, we have to find out how we can deliver this value to them, and this is what a virtual CIO is doing. This is the Value Proposition of MSP 2.0.

The idea here is that unlike the MSP 1.0 model, where the Value Proposition is limited in scope to IT infrastructure problems, here we can solve any business problem. This value proposition is thus UNLIMITED. We can now differentiate our vCIO services by vertical structure, size, business problem, or any other metric.

Free yourself: why fight the same limited dead-end MSP 1.0 battle. We can elevate our conversations and solve the problems that really matter to clients.

Proactive Customer Development: Leverage your QBRs

Most IT managed services providers are quite proud of how proactive they are, especially in terms of technical services like maintenance, antivirus, warranty, etc. However, if we look at their client's IT savvy, operational maturity, and  IT enablement, this is less true. Here are four easy tips to leverage Quarterly Business Reviews and implement the proactive mindset on a higher level.

If you do Quarterly Business Reviews (QBRs), you can start working on these items immediately. If you’re not familiar with the term, just imagine you’re sitting down with your clients regularly for an informative and engaging business meeting.

1. Preparation for the QBRs

Skip the infrastructure based preparation for now. Let's concentrate on their business instead. Check their industry, and consult with a couple of people...try to understand their pressing needs right now. It can be sales, marketing, cash flow, internal processes, anything that is not IT. For an easy introduction to this conversation let's use the business conversation tool from our free MSP 2.0 Quickstarter Kit.

Here’s an example: check their LinkedIn profile. Is everybody from the sales department using LinkedIn? How many connections do they have? There’s a chance they are not big on business social media. Let's download some intelligence about LinkedIn and social selling and put together a 5 minute session for the QBR.

Let’s add more: look for Slack as an online collaboration hype. Sidekick is a nice sales automation tool out there. Check out Do.com for managing better meetings. Let's put those items on the agenda as HOT products... see what they think and have a conversation.

Sooner or later they are going to read about these software somewhere. If they get important IT based information from somewhere else, our position is redundant. We have to be the center of relevant knowledge on business IT.

2. Implement a killer agenda

Prepare a real agenda. Send it before the meeting, leave room for curiosity, and plan for it to be 60-90 minutes. Use do.com and demonstrate a well-organized meeting with a kick-ass tool. Put business issues into the agenda like "Suggested solutions for pressing needs: sales, marketing, cash flow." Include items to ensure we do not just talk, but act: "Clarifying the deliverables for the next Quarterly Plan," or "Review of IT Productivity Initiative."

It may even sometimes sound trivial, but you need to present it with a proactive mindset. We do not want them to have to ask us about training their users, or what is hot out there. We have to act before they find out about so many opportunities they could leverage from somebody else. We need to be the fountain of great information. Keep in mind you can use this one agenda, with custom modifications, for every client for the given quarter.

3. Forget Bomb reports

Bomb reports and infrastructure reports are fading into the past. Now we are on top of the game, and they should not have any critical issue with support. It can be mentioned in passing that every possible gauge is green and not to worry. They are paying us to keep them green. Don’t forget that customer behavior, motivation and problem awareness has changed dramatically. There are still of course companies out there without decent infrastructure. For them the traditional IT reports are a must, educating them and setting expectations. But sooner or later we solve those problems so we have to move forward. If their IT maturity grows, we have to adjust our reports as well.

There is a better way to use business type gauges: Graders, and Opportunity Sheets. These tools put together checklists on clients’ use of best practices, processes, and so on. We just check whether they are being used, and we can come to a conclusion whether they are working effectively.

For example, we check for productivity and ask about emails, best practices, file sharing, searching for documents, version control, etc. In just a few minutes they have a grade on a scale from 1-5. If they are missing three points then we let them know we should have a talk. Believe me, they’ll be much more interested in that than in expiring warranties and quotes for the replacement of devices that are working fine.

4. Campaigns to release peer pressure

Prepare for a campaign every quarter and your MSP sales and development goals can skyrocket. Imagine this: June is the month of security. We do benchmarks sets for every client who signs up as well as teach best practices, prevention for users, basic safety guidelines, and do a Disaster Recovery Plan with 30% discount.

The idea is to make sure everybody is on board. It’s easier to make it a campaign and do 10 DRPs with a discounted rate rather than selling individually. Also, it is easier to communicate the campaign through emails, and brochures.

Every month or every quarter, you need some unique flavor to show them your skills.

If you are a pro, you can create batched events for that. For example, classroom training, seminars for managers, users among your clients, launch-and-learn sessions for executives. Let's lead the community. When people see their peers working on the same things, they can feel more urgency to take action, and are often more actively involved in solving the problems rather than just discussing them..

Conclusion:

Change the conversation: be proactive about their business, not just their IT infrastructure. Let's move and shake them every quarter and create a community of IT savvy executives who you can lead to progress. If you do, your client base will give you the necessary growth without extraordinary new customer acquisitions, and your referral engine will fire all cylinders!