Dropsuite’s head of marketing, Jon Samsel, recently had a Skype conversation with Todd Kane, President of Evolved Management Consulting, to discuss the topic of MSPs, ecosystems and innovation.

Todd Kane was the neighbourhood nerd who grew up to be a noted IT consultant to numerous Canadian firms such as EnCana, Canadian Natural Resources Ltd, WestJet, Bell Canada, Long View Systems, and Fully Managed. Todd’s work has been recognized with numerous awards, both technical and business. For MSPs, Todd specializes in helping reduce operating costs, improve service margins and lower ticket volumes so that more time can be spent on strategic initiatives.

Q: Nice to meet you, Todd. Thanks for taking time to chat with me. Let’s start with a broad topic – can you help paint a picture of the current state of the MSP channel from your POV?

A: Sure, Jon. The MSP industry has matured a lot over the last 5 years. Businesses are quickly becoming familiar with the managed service model and it’s creating more stable partnerships between the client and the MSP. People historically may have used an internal staff member or just call a support guy for help when something was broken. This is far less practical today because all businesses are so dependent on technology working all day everyday.

The general level of awareness to security threats has been a blessing and a curse to MSPs. While businesses are more aware of the risks of ransomware and cyber-crime, the rise of these events has created a certain amount of pressure on providers to manage these risks in a more mature fashion.

Q: How would you classify MSPs – For example: 1) Small break fix operations, 2) Modern, more strategic and recurring revenue model type of MSPs. Do you concur with these two general classifications or do you see the channel segmented differently?

A: The term MSP has been abused and has led to this confusion. IT support can be viewed in two segments, break/fix and managed support, but break fix is not managed services in my opinion. Being an MSP means you are contracted to a fixed amount per month to support the client’s technology needs. While the scope of that relationship can vary, it should generally be viewed as the provider being an outsourced IT department for that company.

I tend to view the market as a spectrum. On the one end is pure time and materials support providers that only engage in work when a client asks for help and they bill them for the time. There is a mix of methods, styles and relationships that exist in between including block-time, monitoring only, or bodies on site part-time. The other end of that maturity spectrum is an MSP that does 50-60% of their work behind the scenes as proactive work, not reactive work. That MSP acts in the interests of the client and influences the businesses use and adoption of technology through business driven conversations.

Q: What are MSPs doing well, and where are they struggling?

A: MSPs tend to be great at the basic mechanics of user and asset support. Fixing problems and using great technology is the core of the business after all. Where a large percentage of MSPs struggle is getting beyond that break/fix mentality even after they progress to an MSP model. They are still focused on the technical parts of the job and spend the majority of their day smashing tickets and desperately trying to get ahead of the never ending flow of tickets. This treadmill of tech support limits their ability to get proactive, which will limit their ability to scale. If you want to grow your MSP, at some point you need to stop focusing on the technical side of the house and work on the business.

“The general level of awareness to security threats has been a blessing and a curse to MSPs.”

Q. Can you provide examples on how MSP can work on their business? Is it things like Salesforce implementation or managing cloud infrastructure for the end clients?

Absolutely!

MSPs tend to focus a lot on the technology. It’s often why they started the business and usually what they are comfortable with, but if the owners don’t start to focus on building a management team underneath them they will struggle to grow. Developing a management structure and training your future leaders is an incredibly important investment. It helps the owners remove a few of the many hats they wear as the business grows and allows career growth opportunities for staff. It also allows owners to focus on more strategic activities like sales, finance, and account management. Owners need to set the groundwork early by developing a strategy for their growth. Determining what their key metrics are and communicating those goals to the team. Having trusted team members that can help you advance that strategy and grow into future managers for the business relieves some of the pressure that comes with managing a growing business.

From a service offering standpoint, fixing computer problems is the most commoditized part of the industry. So unless you’re moving up the value ladder and having meaningful business discussions with your clients, you’re eventually going to be competing on price. Working closely with the client to understand their business needs and applying technology solutions is where the value comes. Moving them to modern infrastructure and modernizing their business processes with a CRM or a new line of business software for example.

Q: We’ve heard some business clients complain that they are not getting enough value out of their MSPs in relation to the monthly fees that they are paying the MSP. Care to comment?

A: If you are not providing business value, clients will notice. The clients that don’t have a lot of problems will notice and say, “We don’t log many tickets each month, why do I pay you so much per month.” This can frustrate providers, since there is a lot of work going on behind the scenes that the client is unaware of. Patching, backup review, monthly system checks, monitoring, etc. The issue is that work done and not reported, is work undone. You need to be conducting regular meetings with the clients and giving them tangible insight to what you’re doing to support their business. QBRs, monthly reports, technology road mapping, user training. Whatever it is you need to be visible to the client to demonstrate your value.

Q: I know you’re a big proponent of using dashboards to improve operational efficiencies. Can you explain how today’s top MSPs are using data insights to both streamline their business operation and offer insights as a service?

A: Yes, I love dashboarding and data. The insights you can gain from tracking the right data can be tremendously valuable. Some providers will use data after the fact to report on things that happened (lag indicators), but the real power of data comes from real-time insights (lead indicators).

Dashboards are great for allowing management by exception. A simple example is a dispatch dashboard that indicates the number of scheduled items past due, or number of tickets that were last updated by the client. On a dashboard these numbers should be 0 and coloured coded as green. Once the number clicks over to 1 it may go yellow, then if it’s clicks higher it goes red. This is a visual indicator to everyone that an action is required. This is not a common approach in the industry, but when I help people implement dashboarding and reportable metrics. It’s a complete game changer for the business.

There are limited areas where this info becomes strategic for the client. Right now it’s limited to auto-generation of reporting for clients. There are some promising tools coming out that will enable some higher value strategies like governance and compliance for example.

“Implementing dashboarding and reportable metrics is a complete game changer for the business.”

Q: Are MSPs honoring their SLAs?

A: SLAs get talked about a lot, but few providers are forthcoming with reporting their SLA compliance. Industry stats show that the average SLA achievement is 75%. At the low end of the scale that achievement rate drops to under 50%. You can see this stat and 4 others in my 5 metrics infographic here

There are two parts to why providers have trouble reporting on SLA data.

First. Garbage in garbage out scenario. I find that most of the clients I engage with their PSA and RMM are haphazardly implemented. We spent the first few weeks sorting this out because the dashboard data won’t give you very useful info if the backend data isn’t structured properly.

There are also processes not being followed properly, like techs not using the correct statuses and are unaware of how this influences the SLA status of a ticket.

Second. If you’re just fighting fires all day without a escalation structure or triaging process, SLAs become really hard to maintain. As soon as something explodes and draws away significant time from 1 or more techs, everything else starts to slide. Quickly this slide can bury you and take the SLAs with you.

Q: Are advanced analytics and artificial intelligence starting to impact the SaaS landscape?

A: This is tough to extrapolate. Especially since this is such an overhyped field. What most people call “AI” in the industry is just simply automation. I would hope to see some progress in how and when workflows execute. Minimizing the effort of configuration of tools like monitoring based on defined rule-sets would be great as well. Think of something like a smart version or adaptive version of Connectwise: Automate Ignite.

Q: What types of things are you seeing in development that might change the way MSPs do business?

A: I’m very optimistic about the open ecosystems and innovation that are enabled by API access. This was the original superpower of Connectwise in my opinion. It’s ability to act as a single warehouse of information for the provider was a huge competitive advantage. This is an even greater requirement now given the tool-sprawl we face in our industry. If you need 8 tools to run your support desk you better hope they talk to each other if they aren’t integrated to begin with.

The continued development of security management and compliance software is a interesting development space as well. Security means a lot more now than before when it was simply perimeter and endpoint protection.

“What are you doing to provide value?”

Q: Are MSPs ready for the coming wave of new technologies such as machine learning/AI?

A: Yes and no. The rise of the Version 2.0 MSP over the last few years has displaced the market opportunities for the traditional VARs and break fix providers. In a similar fashion the commoditization of support and the standardization brought about by cloud and SaaS based services will favour providers that are already working on value over and above basic tech support.

It’s great if systems and services allow you to do less manual work on the client, but if that’s the case, what are you doing to provide value. Think back to when BPOS (what eventually became O365) was being introduced to the market. People railed against the model saying it would kill their revenue and margins. The progressive providers recognized the opportunity to be responsible for a smaller surface area and standardized stack. Since you didn’t have to support the exchange infrastructure and server layer, there was less risk and lower cost of support. This scenario will repeat itself as companies become less interested in the “amazing tech support” you provide. It will be harder to differentiate yourself at a technical level, so people will have to look in to the future and consider how they provide business value to their clients. This has several names in the industry including CSP (Cloud Service Provider) and TSP (Technology Service Provider).

Q: Thanks for your time, Todd.

Todd Kane
President of Evolved Management Consulting
E: todd@evolvedmgmt.com
W: evolvedmgmt.com

Author: Dropsuite
Dropsuite is a Cloud based software platform that enables SMEs to easily backup, recover and protect their digital assets.
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