Don't Go Into Services Half-Hearted
By The Business Solutions Network
When asked about common mistakes break-fix VARs make when they transition to services, the biggest I can think of is going in half-hearted. Understand, I’m not suggesting that a VAR has to transition quickly to managed services. Take your time and do it right. I’m also not saying that all of your customers have to be on some sort of recurring revenue contract. Many of the most successful MSPs don’t even have all their customers on managed services contracts. Do what’s best for you and your customers.
What I’m referring to is not making the changes to your business that are necessary to do the model well. One area where some VAR-turned-MSPs lag is with the adoption and use of automation tools like a PSA (professional services automation) and RMM (remote monitoring and management). At our recent Channel Transitions conference in Chicago, I asked attendees to raise their hands if they use a PSA and RMM. About half the room raised their hands (great for event sponsor LogicNow). This might be okay, since many at the show are in the early stages of transitioning to services. However, as I told them, using these tools isn’t an option if they want success.
Earlier in the year, we did a survey of our readers and asked them to share some business information with us. The typical respondent had 8 employees and $1.5 million in revenue. Those who told us that they didn’t use a PSA had an average revenue of only $500,000. Those who told us they fully use a PSA performed above average at $2 million.
These tools are important for a number of reasons. One of which are the KPIs (key performance indicators) they provide to help you make business decisions on things like utilization of techs and the profitability of each customer. Survey respondents who told us they don’t use KPIs had an annual revenue of $400,000. Those who measure a few KPIs were at $1 million and those who measure every KPI they can were well above the average at $2.5 million.
Finally, it’s important that once you have KPIs and data, you act on it. Those who don’t use a business plan had an average annual revenue of just $500,000.
What this illustrates to me is that those companies that not only adopt tools, but use them to their fullest extent to make sound business decisions, were the ones that were doing very well in their businesses. Those who go in half-hearted are the ones struggling. As you get deeper into managed services, make sure you’re using all the tools at your disposal.