Where the MSP serving software industry is going
All our accolades to the development people in the Connectwise Team and the super beta users; after three months of development we’re happy to announce the Connectwise integration is live.
I know integration is a boring subject and I don’t intend to explain the details of the features here. But the development process and the results have been prompting many to wonder where the software industry and specifically the MSP servicing software industry is going.
Ours was not just a simple data based integration. Our tool is actually running inside Connectwise with customized screens. One doesn’t even need to log in to our native tool to use all the features inside Connectwise, like execute Account Management, vCIO activities and running discovery workshops with prospects.
The question I am raising is: are we actually heading to where we have only one application that runs our MSP, and all the vendors create “modules” for that application?
1. MSPs ultimate need
In an ideal world you as an MSP would use only one application to manage EVERY task in your organization. That’s an ultimate verticalized application taking care of everything and managing all modules.
The obvious limitation is that such a system requires you follow set processes for every single area of the business, which makes it hard to adopt. Thus the current model of having a base PSA and many integrated applications makes sense. The drawback is that these integrations are in all different shapes and sizes, the user interfaces are unique and most just give you the ability to transfer data across applications.
Clearly there’s a need for a faster learning curve, and more flexibility for IT managed services providers to adopt more and more tools to their stack.
Based on the technology available today we as a vendor community were able to create just such an ultimate solution.
2. Required Effort
Let’s first see the current reality. Creating integrations involves almost the same effort as creating the product itself, dealing with moving parts, planning, alignment, version control, testing in different environments and so on.
We used the fairly new Connectwise API feature to embed our application into theirs. We’re sending information back and forth, so we created special screens that show in their app. Our need to hide our client navigation requires additional screen designs too, so there’s been a lot of work in trying to match to their design and environment.
The same additional risks and effort had to be there when iOS moved from the old design to the new. All apps had to adopt the new iOS design to comply with Apple.
Surely the platform provider (now Connectwise) will see a need to give additional support to developers and act as a real platform to enable them.
3. Growth opportunities
For a small bootstrapped startup like many smaller MSP spin off vendors like us, there’s no bucks for promoting our products. We rely on the channel and try to piggyback on other well established vendors. The strategy makes sense involving more hard work than dollars.
That means if the platform is open and supportive and has all the processes to promote a niche solution to a larger audience, smaller companies have more options. They can choose to be a “module” only. They can do the integration selling to only one platform’s users, then later expand to become a stand-alone product. In this way the marketing, sales and promotion costs can be minimized.
Thus more and more startups can develop real solutions for the MSP community because the entry level is lower to start something. Can you count all the companies spun off from an MSP scratching their own itches? DeskDirector, IT Glue, Passportal, Brightgauge have all been able to grow and have a sustainable business model. Can you imagine running your business without those awesome solutions? How many others have died because they weren’t able to push it through?
However this puts a high risk in the startup’s business and changes to the platform can kill the initiative overnight. Certainly as an MSP you don’t want to invest to a product with no firm foundation.
That’s why the platform has to have policies to protect the integrators, and increase the overall value of the platform.
4. Conflicting strategies
The platform owner and the integrator can have overlapping functions, and conflicting strategies need to be addressed.
I’ve been watching the open conflict between Connectwise and Keseya. Both have PSAs and RMM solutions integrations back and forth. The goal of both parties is to be THE platform. The question is how it affects the user experience. Could there be any strategic limitations from companies on the integration side which hurt the user experience?
However this conflict can be smaller and more operational. Another example is when Autotask decided to put the “Dashboards” and “Metrics” to their strategic scope and developed features around that. Integrator partners like Brightgauge invested a lot to create integration and offer Dashboards to Autotask users. Brightgauge is a far superior tool for dashboarding but if the platform starts developing peripheral features for their product around the integrator’s core business that can lead to conflicts of interest and confusion for the clients. Shall I use Brightgauge or can I use Autotask for dashboards?
Conclusion
Our integration, moving our product into Connectwise, raised many strategic questions. It’s an interesting time to be in this industry. To provide a more integrated experience is a need from the managed services providers standpoint. To get integrated and give a better experience to managed services providers is the duty of the vendor community. Becoming a platform provider for the MSP industry is clearly a movement for major RMM/PSA players. It will be interesting to see how we can leverage the true opportunities to make the industry better for everyone.
5 false Myths of Managed Services
As we have been talking with hundreds of Managed Services around the world we have been able to identify several common beliefs, and even myths shaping their thoughts.
The biggest problem here is that these beliefs were valid in the past. The times when the MSP model founded and spread across the world, these concepts were helping people to sell and execute services. However as the market went forward with the tectonic shift of consumerization, cloud, mobile and the overall maturity of IT, these beliefs are no longer valid.
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Myth #1: Offering vCIO as an add on to the Managed Services
Offering the vCIO service inside the Managed Services package was a natural step in trying to get back in the boardroom. It was more important to the service provider to show that, despite everything being done remotely, they’re working hard and proving it with ticket counts and reports.
It made the vCIO more an “IT infrastructure manager” role rather than a “IT executive” role. It led to three problems.
- First, the vCIO capacity of the contract does not scale with the size of the organization like other MSP related services do. IT scales up with the complexity, changes and developments of the clients. That means ball-parking a user based price for a Virtual CIO is unlikely to be appropriate. This results in either the price being too much for the market (they don’t want to buy it), or the contract being more work than revenue supports (you don’t want to sell it).
- Second, because it was a reactive rather than a proactive step from the MSP standpoint, it was more sales effort to differentiate the commoditized IT infrastructure services. There were no real processes behind the services and deliverables, no real value proposition, expectations were set inconsistently across the customer base, and the result was delivery not meeting expectations.
- Third, creating a solid offer on virtual CIO involves capacity time with a very expensive resource. That makes the MSP offering more expensive compared to the competition. For the client, the results and benefits of the "vCIO of the infrastructure" don’t make much sense. Customers are apt to compare prices ‘apples-to-apples’ between competing IT managed services providers but rarely are the service offerings that comparable.
Myth #2: Everything is packaged all in
When the MSP packages were designed in the middle 2000’s the value proposition of the MSP package was “keep the lights on”. The value proposition reflected the basic Helpdesk, desktop and server management. It was fairly easy to deliver, not so complex, and had well defined boundaries to the service.
If you see a competitive offering nowadays it’s full of IT Security, Application management, Advisory (vCIO) services managing hybrid complex modern environments with legacy stuff. The value proposition is no longer what it used to be. But as we package more and more goodies into the offering somehow the boundaries and value proposition have been lost.
We had only one iPhone model back in 2007 with one size, one colour and one storage. Now we all know of three different sizes, four different colours and countless storage options available. Even Apple, usually offering as few models as possible, had to follow the customer requirements as the market got commoditized.
Many MSPs are now unbundling their current services to different logical products, as well as bundling them to service offerings which are standardized, but give the client a choice other than buying or not buying the offering.
Myth #3: Value is in the “stuff” not in the consultation
In the good old days when an Exchange Server project was $20,000 or more, MSPs across the globe added “consultation” hours for free as pre sales activity to make sure the clients were going to buy the initiatives. Then as vendors pushed more and more high value network devices, backup and disaster recovery tools and virtualization, the “free advice” become the norm as everybody was making money on the devices and projects and not the consultation.
Now the landscape has changed dramatically. SaaS brought the idea for clients to transfer all IT expenditure to Operational Expenses rather than investing capital on buying software or hardware. The other trend - Cloud - has brought the customer community the democratization of software packages. They can buy the biggest corporate software package in the world called Salesforce.com (you make sure understand it is way no longer a CRM only) and can start with $25 per month.
In this landscape the free advice does not make any financial sense because there are no big ticket projects to bury the acquisition costs.
The value is no longer on the applications but the consultation to select the applications, implement them and make sure it’s used and well integrated. The IT consultation has to be paid regardless of the solution size. It can be literally a $2000 project to help them select a $50 per month project management application.
Myth #4: My target prospects are the companies with IT problems
Before the MSP space got saturated the sales process was more straightforward: get a prospect with visible IT problems and pains, show them some network assessment of how bad theirs performs and how we can help, and the sales was done. Most MSPs didn’t even have any marketing or sales process - the hot prospects were just coming through referrals.
Now if a prospect has any real, visible IT pain we might see them as a huge opportunity. But think about the following: why was the prospect not able to solve this problem before?! Maybe they didn’t see the value in IT, didn’t want to pay for it, or their industry is stuck in the past? There’s a chance the company is not going to turn into a class-A client. The flipside is that these type of companies need the “basics only”. They will check the competition and price will be the most important factor.
The bad news is that the pond of companies with real visible IT problems is shrinking every day, while a growing competition is fishing on it.
However there’s now a growing number of clients who’ve been served by an MSP for years. They have no backup issues, they know that IT is an investment and they see the changes and the opportunities. They are implementing SaaS applications comfortably, and leverage technology in nearly every part of their business. They are a potential customer for new and innovative services. These clients we cannot reach with traditional marketing, sales and referral channels.
The future “A Class” clients of yours are already served by an MSP. Going head to head is not a good strategy because it leads to a price war. However addressing their IT 2.0 / MSP 2.0 problems and communicating more effectively can lead to establishing relationships with executives who are open for the next wave of IT services and know they’ll not get it from their current provider.
This is fishing in a growing pond where nobody is fishing now. Choose where you want to be.
Myth #5: Account management is a sales activity
As MSPs have been providing more complex services the account management activities become more and more important. It can be anything from regular client visits, helping the engineering team close project deals, escalating issues and upselling different services.The selection criteria for Account Managers is more sales, a clear motivation from the MSP perspective.
On the other hand, as we see the complexity of the client’s ecosystem rising the “IT Management Challenges” increase too. That means the client needs more managerial resources to maintain their complexity and be able to realize opportunities, recognize threats and stay competitive with technology.
Now our sales account manager meets with IT management demands from the client perspective. He does not have resources or services to enhance the business and manage the traditional MSP issues during a Quarterly Business Review. The client will be interested in the engagement with the Account Manager because he has pains he want to solve. Unfortunately the Account Manager has no resources to solve those problems and the engagement will decline.
That is why the Account Manager role should be called “Client Advisory” and should be switched from the sales role to a service role. The service has to be defined and tracked the same way as we do for engineers. They have to have annual, quarterly, and monthly activities with clients, creating IT strategies, developing software roadmaps, helping them select applications, and conducting basic training and business related reviews. These services can help the client (and eventually get more project orders as the result) and also open the door for higher level stand-alone vCIO services.
Conclusion
These beliefs were valid in the past. As we move into the post-Cloud era the foundations have been changed, so we have to change our approach and adapt. With Managed Services Platform we’re working hard to create tools and processes for the activities we need to stay competitive in this new Managed Service landscape.
Managing "unrealistic" expectations
I just watched a hilarious 2 minute Youtube video where a comedian recounted the tale of someone righteously indignant over the atrocious inconvenience of the wi-fi breaking up during his trans-Atlantic flight. It made me ponder the trend of setting unrealistic expectations when it comes to technology. We have a short memory for problems fixed, take progress for granted and miss the chance to revel in our achievements.
Then I was thinking that perhaps this reminds you of a type of client of yours who is spoiled by all the progress and never satisfied. Who set these unrealistic expectations? How can we make sure we're not creating the problem ourselves? Check out this quick video and see what we can do to prevent it happening.
On a personal level I encountered the erroneous popular expectation in my own family, while travelling through the Canadian Rockies having a Facetime conversation with my brother on a highway somewhere in Europe. The line broke 4 times, and my brother was so frustrated he nearly threw the phone out of the car. At that instant Apple was a poor service provider without any consideration for him. Now, my brother is a perfectly sane person, so I realized that there’s a common misconception that’s easily reached...that instant and constant integration and global flawlessness should be expected from technology, and everything should be as strong as my wi-fi at home.
Now think of your clients, who will have a similar tendency to set expectations quite high. They don’t have a detailed understanding of the complexity of their network, applications or the necessary integrations. Nor is that their job. When you’re doing your job well they’ll inevitably start to take it for granted. Millennials especially are used to constant internet access and expect mobility across all devices. Some legacy corporate systems are still years if not decade behind that.
Who’s to blame?
The misconception itself is unavoidable. The public can’t be expected to all learn IT infrastructure, the world is just too big a place to cover with connectivity, and the competitive free market we all believe in includes proprietary and innovative fundamental disparities. The neglected measure lies within the marketing, sales and account management - the delivery of the message. Of course, service quality can be an issue, but that’s a reasonable expectation, and purposefully set in our contracts. We have to manage the unreasonable expectations of our clients about their corporate environment. Everything around technology is dynamic: your offering, your solution stack and their environment, so expectations cannot set for years (lie static in a contract). They must be readjusted frequently.
Often the sales process is over-ambitious, marketing collaterals can describe “ideal” situations where everything is perfect, or account management is promising resolutions for an irate client are rather than resetting expectations.
How can we reset the expectations frequently?
The solution is surprisingly simple. The secret is we have to actually ask for the expectations of our clients regularly (quarterly, bi annually) and adjust our priorities and perspectives accordingly. Just stating this isn’t enough. We have to understand what they think and see whether our services satisfy their expectations. If not, they may upgrade to a higher level service, or we need to communicate the realities of expectations and service. A proactive process is ideal, and it’s usually worst to address the issue during a complaint.
Let’s take a look at what we need as a process for this. We need some items in place to make it happen.
- The questions have to be “loaded” questions reflecting our services. In that sense we can directly couple the issue to one of our services. It also gives us the ability to gauge how well they understand our value creation.
- We have to make sure we can address the idea of responsibility. There might be solutions that prevent the problems, but somebody has to be responsible for the decision to buy a service.
- The questions should “educate” them and help them understand some basics, or help us raise a complex issue and explain its intricacies.
You might have a questionnaire with 10-25 questions (depending on their size) to get a 360 degree view of their perspective.
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Which statements are true about the company's Information Security? (select all that apply)
- We have secure control over all user/admin/internal/web passwords.
- Our devices are protected from virus and malware at all times.
- Unauthorized people can't get access to our email.
- Our email is separately tracked and archived.
- Unauthorized people can't access information stored on laptops or mobile devices.
- None of the above.
The questions are loaded with the following services: Password Management, Managed Endpoint Security, Managed Email Security, Managed Email Archive, etc. That gives us the ability to see whether they have those services and what to expect.
They have to make decisions whether they need the service, usually some type of add-on. If it’s included with the package they’ll understand the complete value proposition of our fully managed service.
The questions both educate and introduce the opportunity to get more clarification. Then, your sales people, account managers or vCIOs can elaborate on the details.
If you go through those questions every once in a while you can keep them aware of all the stuff you do for them as well as re-set expectations in this dynamic industry. This eliminates unrealistic expectations of greater functionality for free, and help us avoid overdelivery.
We can use it with current clients as well as during the sales process. The important part here is the discussion, communication and engagement with the client. The service delivery comes later.
Conclusion
Unrealistic expectations are common across the MSP market, and users are, to put it bluntly, spoiled with great technologies and misled by over-promising sales, marketing and account management. The solution is a frequent expectation resetting meeting through a Quarterly Business Review or a sales meeting.
3 Best IT reports for MSPs looking to better communicate with clients
Having been inspired by the business model canvas, we started our own IT Management Canvas almost three years ago. We’re thrilled to see how creatively people adopt the canvas with the related questionnaire and instigate vibrant client engagement. Through our development of vCIO and IT Security related assessments, the new canvases have been born. Let's check out the revision of the original IT management Canvas, the IT Security Canvas and the vCIO Canvas.
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IT Management Canvas
The 7C canvas is our original IT Management Canvas, developed to display and investigate the entire performance of a client’s IT, rather than just the traditional infrastructure. It elevates the conversation from the nuts and bolts to the business context of their IT, creates an IT Development Roadmaps, and enables development of business-minded IT strategies.
The original ITCq questionnaire can help the Account Manager, Virtual CIO or sales executive to assess a client's maturity. This is then used for traditional audits, maintaining internal compliance and in the continuous effort to make their IT more business focused.
The main strength of the canvas lies in its ability to make a client’s IT more relevant and facilitate a conversation around the current state of their system and opportunities they could exploit. It helps get aligned on the mission with your clients, differentiate your company when meeting your prospects, and generally enhance engagements.
Analysis of the ITCq will direct problems to services like general IT support, managed firewall, Office 365, virtualization, vCIO, Application Management and other IT related services.
Download the canvas in a PDF format
IT Security Canvas
For many MSPs the natural progression is toward Managed IT Security focus. The challenge involved here is to find the balance between the very high-level services like compliance, documentation, audits, training, and the low-level intrusion detection, risk management and a vast array of other technical details.
The IT Security Canvas and the NIST Cyber Security Assessment create this balance, including Human Resources Management, Access Control, Service Control, Risk Management, Network Protection, End Point Protection and Policy and Compliance as main aspects of concern.
We created a questionnaire to assess and score the client's IT Security, and score the seven security dimensions together. It works the same - you put a widget on your website and clients and prospects can click to complete the questionnaire, and you get their scores.
By nature IT security is a complex issue, and thus difficult to disseminate to the untrained masses - your clients. Again the canvas is a big help to exhibit for the client in one page all the main aspects of their IT security. It dramatically assists in understanding this broad subject.
It also directs problems and missing pieces to IT Security services, such as IT Compliance, Risk Management, Intrusion detection, Managed Email Security, Managed Desktop Security and so on, mixed with consultative and technical services.
Download the Canvas in PDF format
vCIO Canvas
In the case of handling the traditional Account Management (or as we call it, vCIO Light) services, the 7C IT Management Canvas is more than enough. The more sophisticated stand-alone vCIO packages ranging from $1.500 MRR to $6.000 MRR, however, need more support. We created a separate questionnaire for assessing their IT management maturity and a Canvas to handle the elements visually.
We make the IT Management and Leadership visual through the building blocks. IT Vision, IT Readiness, IT Project Management, IT Leadership, IT Governance, IT Plan and IT Execution are the main elements of this Canvas.
The focus here is on the comprehensive management of IT. When you find a gap, a misunderstanding or other issue, usually one of the vCIO services will be the solution, such as budgeting, vendor management, or solution selection.
Again the same purpose applies: the questionnaire helps us gauge their maturity and identify their problems, and directs them to specific services.
Download the vCIO Canvas in PDF format
Conclusion
The common challenge in all these approaches is getting across the idea of how much needs to be taken care of, the myriad benefits and critical risks of such a technical subject, usually not well understood by the client. If we don’t start with a platform of engagement and education we’ll miss the chance to help them. We are the ones in the know, so we must be the ones who get the message out.
Your success depends on proper understanding and communication with your clients and prospects.
Scaling up your MSP with Verne Harnish
We are continuing the “MSP 2.0 bestseller” series in March, as well. No question, one of my all time personal favorite books is Mastering the Rockefeller Habits from Verne Harnish. It helped me to apply the paradigm of “work on your business instead of in your business”. For many Managed Services Provider leaders this book has been a foundation to building their businesses. He’s followed this with his new book Scaling Up - Mastering the Rockefeller Habits 2.0. I had a chat with him about the required steps for Managed Services Providers to stay on top of their business and to start Scaling Up!
Verne is straight to the point, so put on your seat belts and get your notepad open, this is going to be a high-paced trip!
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My take-aways from the video:
- Focus on marketing - start with a weekly meeting and make marketing a priority. The most successful tech companies always have a non-tech member in the team with a strong marketing focus. If you would like to excel with velocity, check the least obvious of the 4P (product, place, price, promotion) - the pricing. This is the most undervalued aspect but has the most impact on your differentiation and bottom line than the rest.
- Hyper Specialise - differentiate yourself by specializing in an industry, vertical, or specific problem and become the number one IT service firm in that specialty. It gives you the differentiation power while lowering your marketing expenses dramatically, and gives your clients a huge competitive advantage from working with you.
- Strategy also includes saying no - saying yes to every opportunity is great if you’re finding your place in the market; after that it’s going to hinder you in scaling up. Once you reach 3-5 years experience, you should have a firm scope of what you do and for whom, and how integral that focus of your expertise is to your and your clients’ success. Stick to that.
- Get into the Executive Suite - getting to the executive suite and being included in the client’s strategy is not an option anymore. Everything outside of that conversation is a commodity. If a service provider wants to be in the high margin arena, they have to take on a strategic role with their clients, period. Becoming a trusted advisor or a consultant is not difficult is you follow the next point.
- Leaders are readers - “read the freaking manual about business” not just technologic manuals. Or listen with Audible, read some Kindle, watch YouTube, whatever. Learn, learn, learn and make it a policy for your team too. Pick 40 books, get others to read some, report on the great ideas found in them and get implementing. Start checking out Verne’s reviews of the best business books every year on Fortune.com: 5 Best Business Books in 2015.
- Use Demand Driven Pricing - The hidden gem here is in Confessions of the Pricing Man: How Price Affects Everything by Hermann Simon. Demand-based pricing (or customer-based pricing) is a powerful shift, turning low and non-profit industries into revenue successes. In the US airline industry alone this shift brought $22 billion in increased revenue. The "all in one" pricing strategies were successful for MSPs in the past when execution was the bottleneck. Now, however, those who don’t accommodate the customer’s requirements and adopt some sort of customer-based pricing can suffer.
- Be agile working on your business - use sprints, agile methodologies (Scrum for example) like software developers do. Set your bi-weekly goals and work on them every single day. If you want to move faster you need a faster pulse. Use daily huddles and focus on the one or two things you’re going to do that day to close on your goal. For more advanced Service Providers, set goals for your clients - quarterly and monthly - and keep on top of them together in your weekly huddles.
- Have a peer coach - and hold yourself accountable. First have a quick chat with him/her and detail those things you commit to every single day. It has the effect of making you accountable, and choose wiser goals in your personal and corporate life. Verne has had his peer coach for years now! (We should organize something like that internally, come to think of it).
- Productize your services - product based companies are adding services and service companies try to productize their services. It’s the trend. Service providers who deliver defined, “tangible” products offer more choice to their clients and give a better buying experience. This is part of demand driven pricing - implement a service catalog with service bundles and balance your productized services with the customer's demand.
Verne is a generous teacher: check his site for all the goodies:
- Sign up for Verne’s weekly insights and join the 75,000+ business leaders every Thursday for a handful of easy to digest business ideas.
- Check out all the free goodies in the Scaling Up website. You can find many one pagers, templates resources to Scaling up your MSP.
- Grab his books in Amazon - Master the Rockefeller Habits, The Greatest Business Decisions of All time and Scaling up (with all the downloadable templates) and work on these ideas right away.
- Join in the movement and get the equivalent experience of 1000 books at the Scale Up Summit, May 24-25 in Atlanta. Meet other purposeful business leaders like yourself and get inspired!
Thanks to Verne for taking time to share his wisdom!
What is your pink cable?
This is a motif that’s had some traffic in the last few weeks in several situations, coming up in conversations about differentiation, going the extra mile, remarkable service, engaging clients, building a brand and the use of stories in this business.
One of our managed services provider clients told us a story about a fashion design client in Los Angeles with fashion conscious California team members. The office is artistically designed of course, with bricks, standing desks and an open cafeteria with bar tables. Lots of nice, creative radiant people having lattés while working makes this the place where techs are making up reasons to go every day.
He had some work out there and got inspired by the environment to get expressive, so he bought pink cables instead of the boring black ones.
He was just having fun. He didn’t predict the result...
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The reaction was extraordinary. The whole staff gathered quickly, coming out from their offices telling each other “hey check this out”. He was surrounded by people in no time, inspired by his one little choice.
This is the kind of situation service entrepreneurs dream about.
From “the IT guy” he became an instant star of customer care and known for remarkable service. He got everyone’s attention and for a little while IT became the important thing. Not because of well designed backup, virtual servers or smooth applications, but because of a set of pink cables.
This was instant differentiation from the rest of the IT companies sniffing around, make him the lovable service provider who cares. He became part of the team instead of being a cost line item in the books.
I like this story…. It tells a lot.
The ultimate question you should be able to answer with your team is the following:
What is your Pink Cable?
4 Disciplines of MSP Service Development
One of the most under-appreciated success factors of an MSP is its capacity to develop services. We’re the purveyors of Managed Services; there are hundreds in the repertoire of any given MSP. This keeps us busy - going from concept to a product that can be sold and delivered is a long road. While product based companies have a process for product development, we service companies too often overlook the value in this powerful business practice, where all our innovation, differentiation, profitability and growth can be formulated in advance.
The trend of fragmentation in services - into verticals, delivery tools, integrations - just multiplies the need for planned process.
The usual development process for managed services providers is to do a project - develop something that solves a problem for (and with) a specific client and standardize it later. This can lead to long term future revenue, but without a clear process mixing up service development and the real revenue generating activity of the company will not only kill our internal productivity, but likely our relationship with the client, if everything they see is always in beta testing.
Let’s identify some basics to ensure our process is better than the average and pull ahead of the competition.
1. Value Proposition
The first important aspect of the service development process is the proper Value Proposition. We’re always ready to sell gadgets, tools and things we can use to solve something. Finding the problem it can solve usually comes second - “Hey, we have a Mobile Device Management feature in the RMM tool! Great, let’s sell it to clients.”
This is the approach of the average and uninspired MSP. If we instead use the Value Proposition Canvas, we start by understanding the client’s problem before designing the service itself.
We seek to discover things the client wants to get done, the obstacles in their way, and the results or gains they hope to get. This is the right hand side of the canvas. Then we can design the service value proposition on the left to solve the problems and the deliver their requested results. We build a bridge connecting their issues with the benefits of our services. Lastly we craft the service description itself.
Let’s see a Value Proposition canvas for the Slack and vCIO services to see how it works in real life. We even have a complete blog post for that one.
In that sense we know in advance precisely the mission of the service - why the client needs that - so if we develop it further all marketing, sales and delivery efforts will be aligned.
Development will also be made more agile. For example we’ll be deploying different maturity versions of the service. The first instance of Mobile Device Management may only cover basic functions like wipe and remote deployment, but later will be covered with BYOD policies and internal compliance.
We may even find we cannot solve the problem, or the problem isn’t actually worth the effort and expense, and we can drop the service development fairly early, so we and the client can both invest our time in better pursuits.
2. Demand Generation
The second step is to create some Demand Generation materials. I know...how can anyone not want to pay for our obvious expertise? We have the skills, but the customer inevitably makes the buying decision. If we can’t explain the service and its benefits clearly, we can’t drive demand and there’s no reason to proceed or invest further.
We have to learn fast, and active materials are best at getting quick feedback on our thoughts. Sending a one pager is not interactive - it won’t have the specifics - which feature is the most important, for example. Graders are great tools for asking questions about the problems clients have with a particular issue and actually measuring our marketing effort, the copy, the delivered benefits and interest.
Demand Generation is part of the Service Development process, not something marketing folks do after we finish. It gives us real-time feedback and clear understanding of what really needs to be solved, a crucial objectivity to the process to make sure we develop the service for the client and not for the engineer.
3. Sales
Pricing and packaging is a big deal for services too.
- Is the service included in an MSP package or stand alone?
- Does the service have tiers, or should we scale it with GB, user, device?
- Does the service has a definitive process such that we can price based on the resources we put into it?
- Is it an open, listed price or customized per proposal?
- Do we sell it directly or through the account manager?
Again this is can’t wait until after the development process; it is part of it. We have to go out and test our assumptions. We can take a little advantage of our “early adopter” companies to go through experiments. We need the clearest understanding possible of all aspects before we scale.
Sell the service to the early adopters without a price tag. The goal is to find out whether they see the value without any price attached. Once we confirm the need we can find the price they will pay for the solution. In this case we can measure the value and the price independently. If the value isn’t compelling it won’t need to proceed to a price conversation. If it is a value, then we specify everything, and then create the perfect solution that both works and fits their actual budget.
To early adopters we can always offer a discount in exchange for their participation. We can get marketing contributions like testimonials, interviews etc. We can ask for contribution - content samples, real life data for presentations, and we for a flexible delivery schedule. We’ll only help ourselves if we state the discount clearly up front.
4. Delivery Processes
The last piece of the service development process is the Delivery Process definition. Usually we don’t consider this part from the beginning, but rather on an ad-hoc basis.
We start services sometimes as one time projects. A client needs something and we bring it to them as a project - making the common mistake of failing to look forward. We do so much to make one individual project come true, when we should treat every project as though it will become a repetitive service, so we generate service delivery process prototypes during our project work.
Therefore we’re going to need a quick service delivery prototyping tool. We’re going to use it to create service processes in real life and be able to reuse the materials later. Many people use Project Management or Process Management planning tools to create a project plan, or a process description. These are good for when we create documentation, but aren’t flexible enough and lack the feedback from real life as discussed above.
The best way is to fire up lightweight project management tools like Basecamp, Asana, Teamwork, etc. These have the flexibility for a prototyping situation (for instance your PSA’s project management is too robust, not flexible, lacks collaboration), and allow testing in the real world. You can open a workspace and quickly input the process deliverable items. Templates, Excels, Word docs, notes, todo lists, and everything else you think you need. As you start working on the project you’ll see a refinement of your efforts. Later of course, as we finish the project we can reverse the process, moving those todos and templates and deploying to a robust professional services automation when our goal is no longer flexibility but performance and efficiency.
Let’s put it together
To recap, create the Value Proposition, and test it internally first with broad (vague) definitions, then move forward with interactive Demand Generation materials to define the ideas more clearly, create Sales materials and scenarios of the Pricing and Packaging, then create agile Service Delivery processes.
We’re going to separate Production from Development. The development folks are going to hand hand off their work to the production team to deliver it. In the case of a small MSP we can at least separate the process virtually, if not physically.
As we need to be developing more and more services it will become harder to keep ahead of the curve without a solid Service Development process. Consider the services you’ve put together already, and how they’ve developed in terms of these four stages. It’s never too late to implement proven techniques.
6 strategies to make MSP services more tangible
One of the most common and largest hurdles for MSPs is difficulty expressing our value proposition properly, and hence differentiating ourselves.
There are two fundamental aspects of our industry responsible. First is the abstract nature of the proposition. The problems we solve are less tangible, like “competitive edge” or “staying ahead of the curve” rather than “keeping the lights on”. The second is the more managerial and higher level services such as solution selection, and team alignment and integration rather than executable defined processes like device management and remote monitoring.
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Without a doubt that which is more tangible and more clearly defined is easier to explain, sell and even deliver. We try to answer the question: how we can make our vague and complex services more tangible.
The process below will first identify the different types of services you have, then set up a structure to help manage this process. Then we’re going to demonstrate the practices to enhance different types of less tangible items into a more tangible format. You’ll see how you can actually transform the most difficult to monetize services and make your service portfolio more ready to explain, sell and even deliver.
Let’s go through this short process quickly and see what is going on…
We’ve created a mapping tool to help us visualize the suite of different services we have regarding their type and degree of clarity. The service can be any activity or process you do for your clients.
You can do this easily with your team. Get out your flipchart/white board and sticky notes. If you’re more tech savvy you can use the given PPTx template.
1. Determine the type of service: Management or Execution
On the vertical axis we see a grade of services, management type or execution type.
Managerial type activities include making plans, having meetings, brainstorming new ideas, thinking on the big picture, managing people, aligning your team, and educational initiatives. Professional Services, Account Management, Technical Account Management, and vCIO related activities are typically managerial activities.
The execution part is where you actually implement something, fix things, solve particular IT problems, manage devices, deploy applications and so on. Level I, II, and III support, engineering and solution architect works are execution type positions.
2. Determine whether the service is more tangible or less tangible
On the Horizontal axis you see whether the service is more tangible (clear) or less tangible (less clear).
More tangible services have more physical attributes. These may be attached to a device, an application, a specific deliverable (like an excel sheet, word document), are easy to define and explain. They also include services defined by events or processes such as regular meetings, calls, emails, feedbacks etc.
The less tangible services have no firm definitions, no real processes behind the task, instead consisting mostly of ideas, goals, and vague offerings: starting a project, brainstorming a business problem, evaluating processes and so on.
3. Find the most problematic services
As you can see you’ll often find that Management type services tend toward the less tangible region of the chart while Execution type services are usually more tangible by nature. This means as your clients are pushing you to be more “strategic” or more “business savvy”, what they’re asking is that you deal in services that are inevitably less tangible.
Let’s apply this personally. I bet if you go through your service portfolio you’ll find that the services you call “problematic”, “less profitable”, and “annoying” are on the right hand side - less tangible. It’s no surprise, less tangible services are harder to manage.
Let’s choose the services you want to improve by making them more clear and explainable. Circle them
Now we’re going to apply one or more of the Six Strategies and see which function to move them into the more tangible side.
We’ll use an example here to go through these items. The service that probably eats most of your time is setting up projects. Taking some issues your client has mentioned from discussion to proposal is a long process that we are likely to do without being able to monetize. We’re going to take this service which we give them for free and construct a solid, tangible service with the following strategies.
Strategy 1: Apply a specific deliverable to the service
This first strategy is all about having outcomes with more tangible deliverables. It can be any type of document that demonstrates to both the client and our team member what is expected to be the end result of the service.
Example: Our service is quite intangible at first: “solve a problem”, “manage an issue”, “create a business case”. We can easily turn this into a very specific item with a template. We use the “10 point exercise” for these type of cases. It’s a quick exercise and at the end we’ll have the issues and problems spelled out and prioritized by the team, plus a list of possible next steps as action items. Showing the client such a completed template will bring substance and help them understand the value. Instead of just saying “have a meeting” we are going to deliver tangible evidence of our managerial activities so real value gets recognized.
Strategy 2: Apply specific meetings, workshops to the service
The second strategy creates clarity by applying some sort of specific “workshop” or “meeting” to the service. This is an active strategy of making a vague pursuit more tangible.
Example: We have a slick template for the “10 point exercise” and it gets completed during a “10 point exercise workshop”. We start with vague issues, problems and a misaligned team. We gather them into a workshop and ask everyone their main concerns, issues, problems and perceived opportunities about a given topic. We write it all down, then ask them to distribute 10 points across the answers on the chart. After summarizing points we see together clearly which major items are aligned or misaligned and we can expand on them. Have another round and convert those major items to specific action items. It all takes 30-45 minutes in a workshop that turns a vague input into a specific output.
Strategy 3: Apply a specific process to the service
This third strategy is to attach a very specific process to the service. We can have deliverables and we can have events, but we should also have a set of very specific steps we go through. Standardization like this creates clarity.
Example: We can put on paper the specific process of a 10 point exercise, and present the client with the plan for a workshop, with a briefing in advance. Explain what they can expect as a follow-up, like a template message with the appropriate action items. Even better we can chain together these exercises to encourage a wider vision of these esoteric processes as well. For example the first exercise will be the definition of the problem that leads to different options. We can then manage those options in other 10 point exercises which can lead to continuous solution selection process.
Strategy 4: Apply a cadence to the service
The fourth strategy is going to make the individual service item to a recurring service item. If we give a cadence to a service - such as annual, quarterly, monthly or even weekly - it will tremendously increase clarity of purpose.
Example: Clearly our clients need problems solved and business issue resolution all the time. Every company is working on their bottlenecks, so even when we do ‘fix’ something, something else will come along to keep us busy. Nobody wants to sit back and say “good enough.” In this case we can turn this “Business Issue Management” 10 point exercise of ours into a recurring service. Let’s say we have three 10 point exercises every Quarter to manage different issues with our client’s IT. We use the Quarterly Business Reviews to identify the problems we need to manage and to review the results of exercises.
Strategy 5: Put the service into a clear context
The fifth strategy is to address the problem/solution couplings within a bigger context. This is communicating the function of a given service in context of your overall service portfolio. Ask questions and lead discussions that exhibit your other services working together with this one. If you show the services next to each other you’ll demonstrate their value when playing together nicely. It’ll be seen as a higher level service built up from smaller components designed to fit together.
Example: We have our “Business Issue Management” service now quite nicely defined with templates, workshops, process and cadence. However we do many other things as well and they need many other services too. Let’s list those services in a questionnaire and put some structure around it all. Let’s say this service will be the part of the “Business Alignment Service Type” which falls into virtual CIO services. From that perspective it becomes clear that the virtual CIO has the job of identifying issues and problems of the business and addressing issue management and resolution. Again it gives the service a higher touch and puts it to a context with other activities all critical to a successful structure.
Strategy 6: Put the service into a framework or tool
The sixth strategy is to put the service into a bigger set of services. We touched on that in Strategy 5, with the catalog discovery perspective, and now we’re going to use it as a delivery perspective. If you use tools to group your services together they will communicate more fluidly and foster aligned synergies and notable efficiency.
Example: We have our “Business Issue Management” small service defined among many other services the vCIO can do. Implement the services to a tool that lets us interact with a client for another boost in clarity. For example, use a Customer Management - Project Management tool like Basecamp.com. We can put the 10 point exercises results into it, collaborate with the client and facilitate chat and discussions, and even use it during the Annual Planning. We’re creating a supportive environment where we and our clients are executing services together.
Next Steps:
Now go through your service portfolio and pick some to focus on making more tangible. Apply the strategies one by one and see which work best.
If you can see the process make sense but want to save some time, we’ve applied the six strategies for most of the IT management type services already. It makes Technical Account Management service pretty clear and made vCIO service very sellable and executable from a $1.500 - $5.000 Monthly Recurring Revenue range (with all related vCIO Projects excluded of course).
There are more than 30 services with all six strategies applied with templates, processes, events, cadence, and a sales questionnaire in a customer facing delivery tool.
If you’re interested in these practices, let’s have a quick chat and learn how quickly you can implement them.
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Trending Topics in the MSP 2.0 Peer groups
A few months ago we started sessions of real peer groups, to get people together to discuss real issues, problems and challenges we’re all facing and hopefully to come up with some individual plans that boost the accountability of process execution. From these I’ve compiled a list of topics that are front-of-mind among participants. I can report that the discussions dealt with the problems in a very forward looking manner, with creative solutions and not stuck in status-quo thinking. In my opinion these sessions are giving a unique insight into where the industry is going.
Let’s see the topics one by one
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1. Structure needed in vCIO services already sold
There’s a growing number of cases where IT managed services providers are able to sell a $4000 - $8000 MRR stand alone vCIO service. These sales are happening usually with a client or prospect who’s been looking for a full-time CIO as an option already, but the vCIO service were more appealing with their flexibility. The challenge is to reverse engineer back to structured, processed deliverables that meet the value agreement.
2. Differentiation with business consultancy on the website
This is a general trend of changing the focus of our websites from a collection of IT related items into a suite of IT strategy related consultation. There is still some debate on whether the original website should be fixed, or a new website is needed in a separate domain. Most people agree however that the website’s goal is not to be a “marketing engine”, but rather to function as a substantial support through the sales process; helping to qualify prospects and to differentiate this MSP from the herd.
3. Modular pricing methods instead of all in one
Not surprising is that customer needs are changing dramatically in the IT scene. The traditional “all in one” value models no longer seem to help close deals. Modular pricing balances out the standardized delivery with partially customized offering, while retaining the efficiency and accountability of standardized prices. Contributors are currently working on the model for the service stack, offering both traditional MSP related IT management services and even general SaaS applications as well.
4. Capturing the Micro SME (5-15 people) market in a profitable way
Many MSP have difficulty selling to micro clients in a profitable way. Since these firms tend to function entirely in the cloud, most of the traditional MSP package is an overkill for them. They do need some kind of support, but more likely a self-service rather than a fully managed service. Models are being formed for a solution applicable to this demographic with higher performance and lower resources based on 100% cloud stack.
5. Clearing the difference of the MSP 1.0 and 2.0 offering
The MSP 1.0 and the 2.0 model can nicely play together, however mixing the two without a clear separation of roles and processes can be harmful. Letting a virtual CIO manage ticket escalations and focus on infrastructure projects can easily kill the initiative. The best way to achieve clarity is to design a Business Model Canvas with MSP 1.0 and MSP 2.0 items separated. This will help managers, employees, and clients alike understand the non-obvious differences.
6. Ways to start the stand-alone vCIO
For many MSPs there exists an internal mental hurdle to offering the virtual CIO as a separate service not bundled in. It seems easier to bundle at first, but the lack of clarity, agreement and expectations make it impossible to execute profitably later. Different stand-alone one-time services are instead created to trigger the monthly recurring vCIO services.
7. Annual IT Strategy process to upsell vCIO to existing clients
Related to the previous topic, this challenge is to start pitching the vCIO to our clients. Many members have been working on the “IT Strategy Process” to kick off their vCIO initiative. Most understood that pitching the vCIO service without clearly stated needs and benefits doesn’t work. But creating an IT strategy (the process is 7-8 hours) is worth the time and a well presented IT Strategy with many deliverables will pave the way for the vCIO monthly recurring work.
8. Closing deals faster
Lastly we noticed a common lament: that for many IT companies it’s fairly easy to get a positive conversation about the Virtual CIO or other high level MSP services, but that the discussion often remained abstract, in the realm of possibilities, and deals were not closed. That’s why picking 1-3 items to quickly solve will show the tangible value to the client, leading to closing more - and more expensive - vCIO deals. The group actually together summarized that this experience was needed, as it is a new product/service category unlike traditional MSP services.
Conclusion:
If you see the value in these 8 major topics the Peer Groups are working on you’ll see that this is a unique and powerful tool, and very forward thinking. I’m impressed by people’s creativity, entrepreneurship, clarity and persistence - a room full of people from all over the world, not complaining, and doing what it takes to put their IT companies ahead of the curve. So thumbs up, good job!
Teams vs individuals for IT management roles
Baby boomers, Gen X, Millenials: the different generations in the workplace set some challenges for IT leaders and service providers as well. Who’s best suited for the vCIO role?
I came across an illuminating infographic in the last week that discusses the different strengths and weaknesses involved in these demographics.
Not surprisingly the Millenials - those born after Generation X, in the 80s and 90s - are often (keep in mind this is statistics, and there are always exceptions) the most IT savvy and most adaptable to new systems. However they tend to lack proficiency in communication, collaboration even some problem solving skills.
Gen X - those born after the baby boom in the 60s and 70s - excels at communication, problem solving and relationship building. They fall short of the Millennials on the tech scale, and they’re not the leaders in executive presence.
Baby boomers - the post-war bunch - are the leaders as executives and mentoring, again unsurprisingly, are mediocre to weak with tech saviness and adaptability.
To the desired end of maximizing the strengths of your MSP, it would be nice to be able to foresee your best choices CIO, IT leader or vCIO. In the service provider industry most of these roles are filled by a team of people. So from that perspective, how can we leverage these different generational strengths to fulfill the leadership role as a team.
The key is to bridge the gaps in talents - to mix these generational aptitudes in pods or modular teams together.
- Generation-X people can focus on communication, client facing, and business development, based on their general strengths of revenue generation, relationship building, collaboration and problem solving.
- Millennials are most likely your best bet for the implementation of solutions, planning and do the engineering work mostly. They can adapt to and manage changes in concepts and technology, as they’re more up to date on it.
- Baby boomers will probably excel at dealing with the senior client interactions, and can also be mentors to the rest of the team.
This still leaves the question: who should lead those pods? As we see the bridge generation is Gen X with very good collaboration and relationship building strengths, which can be tapped to lead the teams.
Indeed these are generalizations, but I think they can still be a guide in one’s thought process to envisioning the structure of your team based on these statistical inferences. Just being aware of such trends can help you build teams based on combined strengths rather than searching for an elusive master of all skills needed to deliver value to your clients.
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