Trust in your Managed Services but always use an SLA

We're happy to bring you another insightful guest post from MSP owner Brandon Phipps. See his first post on the MSP Builder blog, Managed Services: A Beginner's Introduction. If you are interested in guest posting, please contact us.

I have recently noticed a somewhat troubling trend in the Managed Service Provider community. Purveyors who have been a trusted source for valuable information have started bringing up a stance on service level agreements that goes against everything that I have ever been taught and, more importantly, everything that I have ever learned in the field as a business owner.

I see a disparity developing between organizations that offer Break / Fix services to prospective clients, not so much as a definitive business model, but a method to fulfill the specific needs of a particular client and move them up the ladder of managed service levels and so-called "MSP only" shops that seem to scoff at providers offering the Break / Fix model and businesses that it may be the best fit for.

What's the fit?

I have been in IT for 14 years. I have worked for Fortune 500 companies and billion dollar banks. I have also supported tiny offices throughout Central California that couldn't rub two dimes together to create an IT "budget." Dealing with such a widely diverse corporate culture and coming to understand their specific vision of what IT systems meant to their businesses has allowed me to create a true, custom fit model that satisfies the best interests of the client.

Sometimes that fit is a fully managed, all inclusive package, including security, VoIP, BDR, email hosting, and various other tertiary services. Sometimes it is a client that needs help for one or two things but doesn't see their particular IT needs as being overly demanding and have a built-in wall that insulates them in case their systems go down while also allowing their business to continue moving.

The difference between break/fix and managed clients?

I have learned to value the relationships that I build with businesses and their managers in the community over the monetary value of any particular contract. To that end, the only fundamental difference between a Break / Fix client and one with a fully managed + labor contract is my ability to respond to issues as they arise, incident by incident. For us, the quality is always there and I am always working to show, not tell, the Break / Fix or monitor only clients the added advantage my companies services can bring to theirs.

No SLA, no service.

All of that aside, I always require the client to sign a contract that includes a Service Level Agreement. This typically underscores my ability to respond in a certain time frame to a particular subset of varying issues. There really isn't an inch of daylight between our managed and managed + labor contracts except how projects are defined and what constitutes billable labor. They are all setup with the same RMM package, the same AV and malware packages, the same automation, the same help desk package with a slight variation on times and days a client can expect an agreed upon response time.

We offer free 30 day demos of our RMM / MSP package to new prospects to show them the reporting, etc., and use that to show them where their break and pain points are and how we can help address those. I still require a contract to be in place for this as well.

photo credit: Myxi via photopin cc

One and in?

Every once in awhile I get a call for a one and out. Good business practice says that there is infinite possibility for future business on the phone and all I have to do is address their issue in a timely fashion. The easiest sell in the world is to tell a prospective one and out client what you charge and follow up immediately with, "If I can't fix it, you don't pay."

I have used that method successfully in the past to build up my largest and most profitable account that continues to grow not just my business, but my reputation in the Oil & Gas community, which is our main vertical. Even with the one and out's, I have them sign a work order upon completion. The fine print details their responsibility to pay me within a NET 30 time frame. I have never had an issue with getting paid when doing this. I am also able to take immediate credit card payments through my Intuit Go app on my iPhone.

SLA's: A Necessary Foundation

Contracts and SLA's are in place to define a relationship between business's and to protect each business's interests within the agreement. They define an MSP's responsibilities to their clients and what the client should reasonably expect from the MSP. Contracts and SLA's are not meant to be a pair of sticks by which the client and MSP fence with, but a foundation with which a solid business relationship is built.

The only time that you would not want to have a well-defined contract with well thought out service levels in place is when a client's relationship with your business is considered unimportant and you are not concerned with being paid, nor the aftermath of a potential fallout.

Have all of your contracts thoroughly reviewed by a professional business attorney and make sure that your client fully understands the content and context of each section. This will avoid any number of headaches in the future, trust me.

Maintaining a rigid service structure that fits the MSP's need to streamline operations over the widely varying needs of individual clients is fine if you are very large or very profitable and can afford to say no to prospective clients because they don't fit into your mold. Keeping an open mind about Break / Fix or one and outs, while maintaining a focus on moving the client upward by showing them the value your company brings to theirs will open up new avenues, new markets, and new satisfied clients that can and will refer you to even more business in the future.

Protect your investment.

Never undervalue your services, never undervalue your client relations, and make certain that you never sacrifice quality of service for some perceived value to a rigid delivery model. Protect your business's investment into your clients relationships by always insisting on having a signed agreement in place.

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Brandon Phipps is the owner of Second Star Technologies in Bakersfield, CA. You can connect with his company on Twitter, Facebook, LinkedIn, and Google+.

Managed Services: A Beginner's Introduction

MSP Builder is excited to bring you a guest post from MSP owner Brandon Phipps. If you are interested in guest posting, please contact us.


There are several things every Managed Service Provider needs to start out and succeed. Sometimes it is hard to wade through all of the chatter in the industry about the latest and greatest "must have" service or technology. Focusing on the core requirements and building a strong service offering upon those is an easy to measure, calculated approach that has brought us success. When combined with an elite Service Level and a dedicated, client first, marketing perspective, it is very easy to step up from a Break / Fix, VAR, or Remote Support model.

photo credit: nikkorsnapper via photopin cc

Assess Your Strengths

The first step is to take a very hard look at you and your company's strengths. Concentrating on your key strengths and supplementing your weaknesses will be key to long term growth.

Are you very strong with Windows management, but weak with Apple or Linux? What type of hardware and software vendor relationships do you have that you can leverage toward managed delivery? A good example would be large photocopiers. Does your company offer a Managed Print Service through a reputable vendor? Do you have the time to focus on the service, maintenance, and delivery of the products? If you don't, you may consider either partnering with a local company or looking into an MPS relationship to supplement an area your company does not have the time or high level skill set to focus on. Another common service would be cabling. If you don't have the time, resources, and available personnel, it is much more practical to develop a relationship with a reputable cabling company that you can refer work to. Long term, you may be able to work out a sub-contract relationship with these vendors so that they are working directly for you on the clients' needs, allowing your company to present a single brand to your clients.

 

Assess the Market

Once you have ascertained what your company's particular internal focus should be, it is very important to pay attention to the specific markets that you will be servicing. It is very tempting, especially when you are first starting out, to cast a wide net and just take in whatever business you can get your hands on. This method lacks focus on your clients' industry-specific needs. Typically, you will hear this referred to as a "vertical market." I personally hate buzzwords, but everyone uses this, and sales guys love to throw this at you. As an MSP, we tend to focus on Oil & Gas. In our area, there really isn't much of a choice. We are currently working out a move to include Healthcare IT.

Outside of the obvious differences, each industry has its own specific requirements, regulations, quirks, and support expectations. This requires a well thought out plan that must include all potential avenues such as specific services and how they should be delivered, specialized hardware and software requirements that you will be expected to be an expert at, regulatory compliance and legal ramifications, and specific types of security needs. Consider these carefully before stepping into a market or you may find yourself buried very quickly.

 

Don't Jump the Gun

Now that you have decided who your company is and what your focus is going to be, it is time to run out and get a huge loan and lease a pricey office...just kidding. This is probably the absolute last thing that you want to do. If you are just starting out, I highly recommend you follow the example of Sir Richard Branson and look at running your business from home. In the event that you need to meet with anyone outside of their office, Starbucks or your local restaurant will usually get the job done.

 

Flexible Service Levels

photo credit: LexnGer

You will also need to decide on service levels. Will you be offering tiered services such as break / fix, monitoring only, fully managed, or fully managed + labor? Don't get too hung up on this part. Find the sweet spot that works for you with the understanding that it will probably change several times over the first few years as your focus expands and prospective client lists build. Keep an open mind and try to tailor fit your service level agreements to your clients' needs and expectations. It is easy to start with break / fix and progress a client up to a fully managed + labor contract if you can show the client the value your service has to them. Keeping a client focused, "What can I do for you?" attitude will put you in a strong position to move a client toward more profitable contracts and new products and services.

 

The Importance of Pricing

Though not the most important aspect by any means, one of the primary requests I hear from established MSP's pertains to pricing models. How do you price your services? More specifically, what can I charge? Never undervalue your service. Business owners, especially the established guard, can smell weakness and blood on the water. Many business owners will do whatever they can to get as much as possible done for as little as possible and they are not above expecting you to work for free. Don't fall into this trap, as it is the surest path to failure.

A document, provided by Kaseya, that has helped my company out tremendously is the MSP Global Pricing Survey. Take these numbers with a grain of salt and see where and how you can plug them into your current offerings and models. Keep in mind that it is more important to show the value your company can provide a business as opposed to selling services to a faceless company. Consider the relationship a long term investment and actually care about your clients, their specific needs and issues, and I promise your company will grow financially and in reputation.

 

Don't Mess Around with Managed Service Agreements

So, we have now established a definition of your company, decided upon its core market and client focus, and taken a look at pricing averages. It is important to define all of these things in a Service Level Agreement. I am going to avoid getting into contract details, as each state and territory has its own rules and requirements. If you are looking for a good example, head over to MSP Business Management and check out Scott Calonico's article on SLA Templates. He links to a pretty good template from TechRepublic. My one true piece of advice on this topic is to have all of your agreements reviewed by a business attorney. This is not the area that you want to play around with. Poorly defined agreements can leave you in a bad way very very quickly, especially if the client decides not to pay, or there is an issue with expected service delivery.

 

Finding the Right Software for Your MSP

RMM

Next, the core of any MSP: the Remote Monitoring & Management package. There are too many choices to go through, but I will give you a brief rundown of the ones that we have used or demoed, and why I ended up with GFI Max.

N-Able and LabTech are the largest. I have never used N-Able but they are at the top of the market. From my time with LabTech I noted two things: it is extremely powerful, so be careful because you can damage a client's system with poorly thought out automation, and it, like N-Able, has a minimum license requirement. I believe that they are both still at a minimum of 100 seats. If you don't have contracts to support more than 100 workstations and servers, you will be losing cash. Continuum and GFI Max do not have minimum seat purchases. They offer cloud based service, as opposed to housing your own server, which is great for the SOHO MSP, and they have a very affordable license per seat model, GFI Max coming in lower than Continuum. Cost, simplicity, cloud availability, and the ability to leverage my own scripts were key in my decision on GFI Max. You will have different criteria and requirements. Each vendor offers trials of their products and I encourage you to try out as many as you have the time for before you settle. Once you do, trust me, trying to migrate to another solution can be daunting.

photo credit: Nick-K

PSA

PSA software seems to be a requirement when considering the prospect of possibly selling your company in the future. AutoTask and ConnectWise are the two biggest. I have used ConnectWise in the past as a sub-contractor. My experience was rather limited and I was not responsible for the deployment or configuration, so I will refrain from commenting other than to say that ConnectWise is more expensive than AutoTask, but is at the top of the heap. We use Field Service Management by Corrigo. I like that it has a technician dispatch and tracking capability. It also allows me to setup my SLA's per client to streamline my billing.

All of the PSA's have the ability to sync with QuickBooks, which is our accounting package, another chief consideration when starting out. My bookkeeper prefers Quicken for our accounting over QuickBooks, so we use both; QuickBooks for the quoting and invoicing, Quicken for the accounting, FSM for the work orders and dispatch.

I still use Spiceworks, my original monitoring software, to handle our alert tracking. It is free and I have been able to integrate it from the ground up internally. It does require a physical server, so that is something to keep in mind as operational costs, especially your electric bill, can get up there pretty quick.

CRM

One last software package available for free is Shockey Monkey. It is a good basic PSA with a built in Customer Relationship Manager. It's hard to argue with free when you are first starting out, and this could give you the experience you need when auditing the larger packages.

There are several free CRM packages available. Google Chrome offers several in its app section. CRM helps you to track sales leads and progression. Find one that fits and give it a go. The leader in this market will be ConnectWise, AutoTask, and Salesforce.com. Keep in mind that it is better to start small and move upwards than to sink a lot of money into a product that you probably won't be able to fully leverage right out of the gates.

 

Length of Terms

One final point to consider is the length of terms for your SLA. It is something that I would work toward building as opposed to pushing forward full steam ahead. 3-year contracts seem to be pivotal. I attended a TruMethods webinar that discussed the future possibility of selling your MSP business. The multiplier for 3-year contracts was significantly higher than a 1-year or month-to-month. 3-year contracts add value to your business and show others in the industry, also banks if you decide to go get a loan, that your business has staying power.

 

Don't Forget Insurance

Some supplemental material to look at is Professional Liability insurance. Check out TechInsurance.com. The prices are more affordable than you might think, and if you plan to work in a large office complex, the building owner will probably require a copy of your insurance to be on file.

 

Bring It All Together

To sum it all up, focus on the core aspects that set your company apart and then partner with other vendors to fill in the weaknesses. Stick to showing your clients and prospects the value that your company and services can bring to theirs. Start small with an eye toward the future when deciding on needed infrastructure. Keep longevity in mind when building SLA's but don't be intractable about the length of terms.

Thank you for reading, and I hoped this has helped answer some questions you may have and provoked more questions you may not have considered.

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Brandon Phipps is the owner of Second Star Technologies in Bakersfield, CA. You can connect with his company on Twitter, Facebook, LinkedIn, and Google+.

Tech Companies Celebrate Earth Day 2013

Ingram Micro VentureTech Network Spring Invitational 2013

Stay tuned for more updates! Let us know if we missed anything. You may remember MSP Builder from our booth at the VTN 2012 Fall Invitational in Boston, where we had the "What is managed services?" video available at a discounted price for our fellow VTN members. Contact us if you didn't get a chance to take advantage of this special offer and we will send you a coupon code!