The $1M Managed Services Gamble

By Jay McCall, Business Solutions magazine

This VAR-turned-MSP is projecting 25% revenue growth following a big investment in a unified communications (UC) NOC (network operation center) and selling managed services.

(Photos by Tim Schemerharn)

There comes a point in every VAR’s business when it hits a plateau. It’s usually when the company grows to around 12 employees. At this point the VAR is big enough that the president, janitor, and secretary are no longer the same person, but it’s still not big enough to dedicate resources to capitalizing on the next big market trends (e.g. BYOD [bring your own device], VDI [virtual desktop infrastructure], cloud-based computing). Harbor Networks (formerly Boston Wireless) has been in this predicament. Founded in 1995 as a telecom and in-building wireless solutions VAR, the company sold wireless and telephony solutions primarily to SMBs in the Boston area. Sometime in 2008, however, the VAR turned its sights on the enterprise VoIP (voice over Internet Protocol) market (which it defines as companies with more than 100 employees). This change led to new growth, but a couple of years ago, Harbor Networks found itself hitting another sticking point: its customers wanted it to provide more than hardware and software; they wanted the VAR to provide full support services, too.

Greg Bertschmann, president of Harbor Networks, recognized that his company needed to make the transition to a managed services provider. With that thought, Bertschmann took a calculated risk and invested more than $1 million to build a NOC (network operation center), which went live in January of this year and now serves as the platform for the VAR-turned-MSP’s managed services practice. Even though it’s been a time and resource-intensive effort, Bertschmann believes this decision is going to play a key role in Harbor Networks’ projected 25% growth this year.

Making The Decision To Build Or Outsource The NOC
After making the decision to get into the services business, Harbor Networks needed to determine whether it would outsource this service or handle it in-house. “This is a difficult and competitive business we’re in, and I realized a long time ago that if we were going to sell a product or a service, we needed to control it,” says Bertschmann. “When you contract any part of that you lose control of a part of that user experience and put your reputation at risk.”

One thing Harbor Networks had in its favor was its VP of technology, Jeremy Vignaux, who had previously worked at a large IT consulting firm. Vignaux helped Harbor Networks narrow down its technology choices for the NOC. “He helped us select hardware and software that was scalable, and he helped us create useful marketing pieces we could share with our customers,” says Bertschmann. “He was also instrumental in our staffing decisions, helping us ensure we hired people with the right skills and attitudes to support our goals.”

Assembling The Managed Services Components
The next step Harbor Networks needed to take was to select the managed services software that would give it visibility into its customers’ networks. To accomplish this, the VAR created internal research committees. Each committee was tasked with selecting a specific component of the managed services solution. In the end, Harbor Networks purchased the following software applications:

• N-able N-Central RMM (remote monitoring and management). This browser-based software uses agents, which are installed on its customers’ devices (e.g. servers, desktop computers, VoIP phones), and provides information about each device (e.g. server capacity, operating system status, the amount of RAM being used by an application), and provides alerts if any device falls outside an acceptable performance range.
• Tigerpaw business automation software. This software is integrated with the RMM software and helps Harbor Networks create tickets to more easily prioritize the alerts generated by the RMM and to record billable hours (and generate invoices) for time spent troubleshooting
• VaultLogix online backup. This software enables the VAR to provide an online backup of its customers’ data, which serves as a business continuity and disaster recovery solution in the event a customer’s local backup fails. The backup is also managed via the RMM software to ensure each incremental backup happens as planned.
• AppNeta PathView Cloud network performance management. This software reveals packet loss, congestion, or other problems associated with customers’ networks.

Customize Your Managed Services Offering To Fit Each Customer
After selecting its managed services offering, Harbor Networks needed to determine how to package its services. “We relied on direct market research for this decision,” recalls Bertschmann. “Our VP of business development, Chris Gioffre, conducted interviews with several of our existing customers and asked them to explain what type of managed services they wanted from us.” The VAR’s research led to two categories of managed services, which it calls Harbornet VoIP and Harbornet Infrastructure. “Within these two categories, we also have multiple levels of service, plus a la carte items, so that we can design a service package that’s customized to each customer,” says Bertschmann.

Taking Managed Services To The Enterprise
Making the move into the enterprise services space was a smart gamble for Harbor Networks. Within the past five years, the UC MSP has grown from 25% customer participation in its managed VoIP plan to 92%, and its goal is to take its Harbornet Infrastructure Plan to that 92% and sell the added services and support it now has available. Harbor Networks is projecting 25% revenue growth this year, which would take it to a $15 million company. With new markets come new challenges, however, and this move has been no exception. “Our biggest challenge is attracting new customers,” says Bertschmann. “There have been several instances where we didn’t even find out about an opportunity until it was too late in the process.” To overcome this hurdle, Harbor Networks contracted with a public relations company to help increase its exposure. In a short period, Harbor Networks has produced several press releases and has been featured in a few local business journals. Bertschmann doesn’t expect the process of building his name and reputation in the enterprise space to be easy. But if there’s one thing he’s confident in, it’s this: by staying focused on his company’s core business expertise and being willing to adapt to his customers’ needs, he’ll avoid the threat of plateauing any time soon.