So you are ready to take your business to the next level and migrate to an MSP model. You know that customers on a reoccurring revenue model will greatly increase the valuation of your company. Great, but where to start?
Since each VAR has its own DNA, there is no magic recipe that will instantly convert your break/fix company into a monthly revenue-generating monster. You might think at this point that MSP stands for Multiple Service Possibilities and you are right. The various ways companies have implemented the MSP model has as many flavors as Coromoto Ice Cream Parlor in Venezuela (Guinness World Record of 860 flavors). Don’t be discouraged…it’s better to find a small selection of what your clients wants then to inundate them with choice.
MSP MODEL – DIPPING YOUR TOE IN THE POOL
If you have legacy clients that are used to the break-fix model, it will be a challenge to convert them, compared to new clients that are already MSP aware. Some have found success with these legacy clients by offering the value add of the monitoring service based on a per device model (workstations at one price, servers for more). This model is low risk…you simply keep an eye on the alerts and take action when needed (billable time). Some have absorbed the cost of the monitoring and have used the monitoring to simply create billable tickets to take action. Because of the proliferation of BYOD, some are shifting from per device to per user model which can take into consideration their multiple devices (laptop, desktop, tablet, phone).
MSP MODEL – GETTING IN THE SHALLOW END
If you know your customers, you can look back over the last year and see just how much time was used for various activities. Some VARs will estimate the work they did in the previous year, adjust for future growth and find a monthly price that will normally be slightly higher then last year’s spending. They then sell the value add of being watched over. Everyone can call the police when an intruder is entering their house, but those who have a monitored alarm have the benefit that the police are on their way before they even know something is wrong! Because of the remote monitoring, problems are detected earlier, issues are resolved faster and some issues are avoided altogether.
Of course, with any of the MSP models, it is important to describe what is included and what is extra in your contract. Questions you might want to ask yourself:
Do I include virus/malware cleanup?
Do I include new computer installations?
Do I include firmware upgrades on networking equipment?
Do I include recovery from failed hardware?
There is bound to be some trial and error, but simply tweak your contracts as you go and adjust on renewals.
TIP: Some find it useful to do offer a review after 60 or 90 days and adjust accordingly if the estimates are off.
MSP MODEL – JUMPING INTO THE DEEP END
Some will make it through to the deep end first by dipping their toes…then getting in the shallow end and slowly swim to the deep end. Others…will Cannonball right into it. The trouble with the Cannonball approach…it’s not very graceful and it gets everyone around you wet! How much nicer it is to see a graceful dive into the deep end?
Since the all-you-can-eat MSP model is the one with the most risk, before jumping in, it’s important to be careful so as to avoid a belly flop! The hardest thing to evaluate for this model will be the pricing strategy.
We have all been to an all-you-can-eat restaurant at least once in our lives. Did you eat like you normally eat, or did you pile it on high? Think about all the waste that these restaurants produce. In business, time is your most precious asset and it can be easy to have your time all eaten up or worse: wasted.
In all these models, but especially this one, reporting is a key element of your business. Tracking if your contracts are priced right is essential and can allow you to modify the pricing for subsequent contracts.
TIP: How about offering a discount if a client is below a target amount of hours every quarter or bi-annually?
Quick response to issues will show the value of being in an MSP contract and regular maintenance will avoid many issues so common with the break/fix approach. Because a lot of work is being done behind the scenes, it becomes very important to offer regular reporting showing with a quick glance the highlights of any pro-active work done. Sending a 10 page detailed report monthly will probably never be read. Think about sending a dashboard style report to your clients with the number of calls, health status and a quick note about any special incidents that occurred or points that need to be looked into in the next status visit (upgrades, migrations, etc.).
The evaluation of the tools for monitoring will also be important. Do you have a ticketing system in place to monitor all the calls? Does it communicate with your accounting software? How do you track onsite maintenance visits? The list of questions goes on and on. Where can you turn to for help?
To find out the best way for you to get into the pool and take your business to the MSP model is to use the VAR Consulting services that are a part of the VAR Office Suite. Not only does the VAR Office Suite have access to the best of breed solutions to help you add the missing pieces to your business, the VAR Consulting Services can now help you integrate these tools in your business with your own dedicated consultant.
Call us today and ask about your free 30-minute Strategy Session to work ON your business and not IN it.
About the Author: Randal Wark, Founder/IT Consultant, IT Revolution
Randal Wark is a public speaker and founder of IT Revolution, a firm that helps VARs hack their business to increase profits. Having survived in the IT world for 20 years, Randal’s instincts have given him the tools to help others adapt and evolve with the changing market. His latest obsession was the inspiration for the creation of VAR Mastermind groups, which offers peer mentoring, combined with industry leading coaching sessions.