Which Cloud Service Should You Sell First?

IT service providers that want to start selling cloud services often struggle with knowing where to begin. Logic Speak CEO Jason Etheridge has some insights on this topic that are worth considering — especially when you take into account  that this eight-employee MSP has been experiencing healthy double-digit growth over the past few years, and a big part of that growth is from selling cloud services. “Cloud backup is the most logical starting point for selling cloud services,” says Etheridge. “Every customer needs it and IT service providers can not only recommend the right solution, but they can add value by bundling monitoring and data recovery services with their cloud backup solution.”

Jason Etheridge Logic Speak

Jason Etheridge, president and CEO, Logic Speak

One other tip Etheridge offers aspiring cloud service providers is to try it before you sell it. “Almost all vendors have a ‘freemium’ version of their services along with a mobile app that will allow you to get your feet wet,” he says. “Only after you’re familiar with the major players and technologies can you start to make decisions around which services you want to offer.” And don’t think that choosing a particular cloud service means you’re locked into a permanent contract. “Don’t be afraid to change vendors if it benefits your bottom line significantly, or if there is a significant leap in features and functionality,” he says. “One of the best decisions we made was changing to our current BDR vendor, which enabled us to double our profit margins on cloud backups.” On the flip side, there is a downside to switching vendors too often, and Etheridge says that the more research, testing, and evaluating you do up front, the longer and more successful your vendor relationships will be. “Once we select a vendor, we won’t even consider changing for at least a year, and even then, we need a very compelling reason to do so,” he says.

This MSP has additional cloud advice to share, which you can read about in my latest article: Find Your Cloud Services Niche.

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The #1 Lie Break-Fix VARs Tell Themselves About Managed Services

Those who figure out the secret to selling managed services not only realize healthy double-digit profit margins over a long period, but something equally desirable to many business owners — the ability to spend some time away from the business without worrying about the next “all hands on deck” IT catastrophe.

So, why exactly are so many IT service providers (60% according to CompTIA’s Third Annual Trends In Managed Services Report) reluctant to sell managed services? I
recently spoke with three industry experts on this topic, including Alex Rogers, founder and president of master MSP and HaaS (Hardware-as-a-Service) provider CharTec.
Rogers shared some great insights on what many experts agree is the most pervasive obstacle break-fix VARs are facing: The belief that there’s more
money in break-fix
. Here’s why Rogers believes this lie still persists:

Alex Rogers, Founder and President, CharTec

Alex Rogers, Founder and President, CharTec

“This misconception is often held because the VAR is thinking in terms of the hourly rate charged for project work rather than the longer term benefits of a recurring revenue stream. It’s also important to remember that project work is not guaranteed; however, a managed service deal includes guaranteed monthly revenue for a long duration.”

If you or a business associate are stuck in a break-fix rut, I’d recommend checking out Retail VARs: How Did It Come To This? written by Business Solutions Chief Editor Mike Monocello, which compares a $10,000 traditional software sale to a $10,000 SaaS (Software-as-a-Service) sale. He then highlights the fact that while the traditional sale has the early on edge over the SaaS option, during the third year after the initial sale, the SaaS sale overtakes the traditional sales model, and the gap between the two models widens from there.

Perhaps the above-mentioned myth isn’t what’s holding you back from making the move to managed services. If it’s either of these two beliefs:

My Customers Don’t Want Managed Services” or
It Will Be Too Hard/Expensive To Change My Business Model”

be sure to check out “3 Lies Break-Fix VARs Tell Themselves About Managed Services.”

 

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Is Your BDR Vendor Sabotaging Your Good Reputation?

ITsavvy is a national leader in IT products and services with 172 employees and thousands of clients worldwide in a variety of industries. The company prides itself in its vendor-neutral philosophy and excellent post-sales support, which is backed by a team of experts cross-trained in end-to-end IT implementations.

ITsavvy_Register_RGBSo you can imagine how concerned it was after discovering its legacy BDR (backup and disaster recovery) vendor was having major performance issues causing some of its customers’ to be unable to recover their backups. After a diligent search for a reliable BDR provider, ITsavvy found what it was looking for in Axcient through its value-added distributor partner Ingram Micro.

With almost a dozen new BDR deployments already under way, the MSP has now had a chance to deploy Axcient at IT environments of different types and sizes, ranging from only a couple of servers to several racks and a combination of physical and virtual environments.

“The Axcient appliance is quick and easy to deploy and initial setup is a breeze,” says Eric Kalseth, Client Executive at ITsavvy. “One of our clients actually had a primary server fail and was able to failover to the Axcient local appliance and continue working. It went so well, they ran directly on the BDR appliance for a number of days before replacing the failed server in production. With the number of devices we’re protecting, I definitely breathe easier knowing that Axcient can scale to our clients’ growth without compromising my tech’s time to manage it all.”

To learn more about ITsavvy’s BDR switch and subsequent growth, be sure to check out “Axcient Gives ITsavvy Competitive Advantage for Data Protection and Recovery.”

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How a Small MSP Lands Large Cloud Deals

Videology is an engineering firm that boasts one of the world’s largest video advertising platforms. The firm is headquartered in New York, with offices in Baltimore, Austin, Toronto, London, Paris, Madrid, Singapore, Sydney, and sales teams across North America.

Datasmith - Paul Smith

Paul Smith, Partner, Datasmith Network Solutions

Datasmith Network Solutions is an eight-employee MSP and Ingram Micro partner that’s based 30 minutes outside of Boston. In the traditional IT service world you wouldn’t likely see a company like Videology and Datasmith working together. But, Datasmith is not a traditional reseller.

“That’s what’s nice about the Web — it affords smaller businesses to look like larger companies,” says Paul Smith, a partner at Datasmith. “After we have a chance to engage with larger companies like [Videology], we can show them how we can provide them with everything they need to run their businesses more efficiently, and we’re very transparent regarding how we accomplish this. There’s something to be said for streamlining processes to improve workflow.”

But, getting a large client’s attention with a nice website isn’t the sole reason Datasmith wins deals with international firms — there are a few additional and equally important steps involved.  Find out what these are by reading “A Small MSP’s Secret To Landing International Cloud Deals.”

 

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Take “The E-Myth Revisited” Approach to Selling Cloud Services

The year 2012 marked several turning points for Jason Etheridge, president and CEO of IT service provider Logic Speak. It was during this period he was introduced to The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber. The author advises small business owners to be intentional about running their businesses, including determining eMyth Revisitedhow much profit they want to make.

“Most small business owners do what I used to do, which was to start with a revenue goal, then subtract employee expenses and other costs, and end with your profit margin,” says Etheridge. “The E-Myth flips this model on its head, challenging business owners to first decide how much profit they want to make and intentionally building a business model — including services, employee compensation, and all other costs — on top of that. This approach ends with a plan to accomplish the profit objectives set at the beginning.”

One of the first “intentional” changes Etheridge made to his company was retooling Logic Speak’s mission statement, something he says used to be long, overly wordy and formal, and above all else — inaccurate. “We originally created a mission statement because we had to put something on our website, not because we believed it,” he says. “Our mission statement now is: ‘To use our abilities and technology to have a positive impact on the lives of our clients and our employees.’ If we are doing that, we are succeeding. If not, we figure out why and change what we’re doing.”

Logic Speak’s new mission statement doesn’t say anything about shareholder value or profits. “If we accomplish our mission, I believe the rest takes care of itself,” he says. “That simplifying statement is hands down the biggest — and best — business decision I have ever made.”

After updating its mission statement, Logic Speak’s next move was to become a cloud services expert, which entailed engaging customers about their cloud fears and misconceptions via one-on-one lunch appointments and using this invaluable feedback to determine which cloud services it should sell.

Last year Logic speak achieved 15% revenue growth over 2012 and this year the eight-employee MSP is projecting 25% revenue growth over last year.

Be sure to check out the details of Logic Speak’s managed-services-to-cloud-services transition by reading, “Find Your Cloud Services Niche.”

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How a PSA Commitment Led to 150% Revenue Growth

In my last blog, I talked about some of the common pitfalls VARs and MSPs run into with PSA (professional service automation) tools. One of the biggest pitfalls identified was “Using 10% of the application.” I recently spoke with Kory Lindersmith and Lonnie Ladwig, cofounders of Dakota Retail Technologies, two guys who can closely identify with this pitfall.

Several years ago the VAR invested in ConnectWise’s PSA to track its helpdesk hours and serial numbers for its hardware sales — but that was about the extent of its PSA use for nearly three years.

Last year, after recognizing several inefficiencies in its sales and billing processes, the VAR made a commitment to use more of its PSA’s features. “We spent time watching training videos and becoming active on the ConnectWise user forums to learn how other IT service providers were using their products to run their businesses more effectively,” says Lindersmith.

Within a couple of months, the VAR started using the PSA tool to manage its service contracts and marketing initiatives. It also uses the tool to automate invoices and monthly credit card/ACH (automated clearing house) payment processing. “The PSA tool has even helped us be more proactive about selling professional services contracts,” says Ladwig. “Several months before a 12-month contract is up, we receive an email reminder, and the customer receives an email detailing the current service plan, the upcoming expiration date, and simple steps to continue the contract.”

The VAR’s efficiencies improved so drastically over a one-year period that it was able to hire another full-time salesperson to further capitalize on new growth opportunities. As a result, Dakota Retail Technologies is projecting 150% revenue growth this year over 2013. You can read the rest of the story, “Break Out of Paltry POS Sales,” on BSMinfo.com.

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Are You Guilty of these PSA Pitfalls?

As a follow-up to a product analysis I wrote last year on PSA (professional service automation) tools, I recently talked to representatives from Autotask, ConnectWise, and Tigerpaw Software to get an update on their products in the past 12 months. You can check out the details of their responses in my PSA Product Comparison Update.

During my interviews, I also asked each vendor the following two-part question: What are the biggest pitfalls you see among MSPs that shortchange their PSA benefits, and what’s your advice on how to avoid these pitfalls?

Following is a summary of the replies I received to this question:

According to Joe Rourke, director of product management at Autotask: “The biggest thing we see is MSPs making educated guesses instead of fact-based decisions because they’re not able to easily access the right data to make informed decisions. We also see them not fully taking advantage of the tools in their PSA system to be more efficient and use resources more effectively.”

Mark Sokol, ConnectWise’s director of marketing, had this to say: “Using 10% of the application, or fixing one problem within their company and not continuing to grow in their software utilization.  The most successful MSPs, VARs, and system integrators allow ConnectWise to automate a variety of tasks, manage projects, track sales, and complete their billing.  Underutilization is the biggest pitfall – that’s why we do so many things outside our software to promote using ConnectWise to its fullest potential.”

James Foxall, president and CEO of Tigerpaw Software had this to add: “Often it’s related to not owning the project and committing to moving their business forward with their PSA tool. This is especially challenging for smaller MSPs where the owner is wearing multiple hats. Once a purchase decision has been made, the MSP needs to commit to doing the things necessary to implement and take ownership of the end result. I’m always nervous when an MSP comes to Tigerpaw having run (unsuccessfully) our two competitors, as it makes me question their commitment to the solution they purchase.”

In my next blog, I’ll share insights from an MSP that was guilty of using only a small percentage of his PSA’s capabilities for years and the dramatic turnaround he experienced after he made the commitment to start taking this powerful tool more seriously.

 

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