Magazine Article | February 13, 2013

The Secret To Double-Digit Managed Services Growth

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By Jay McCall, Business Solutions magazine

This MSP moved its outsourced help desk support in-house, bundled its services offerings, and is now projecting 19% revenue growth this year.

Two years ago, we featured Platte River Networks (PRN), an IT solutions provider that was just getting into the managed services space. If you’re a VAR that’s in the early stages of the transition to becoming an MSP, check out “4 Threats To A Managed Services Start- Up” (of the Oct. 2011 issue). If, however, you’re well into that transition and looking for what’s next in managed services, read on. What’s interesting about PRN is that it has not only made it through the gauntlet phase that every new MSP must pass, but it’s also managed to continue growing by integrating its managed services applications and honing in on common IT trends and needs among its customers.

Bringing Help Desk In-House
For just about any startup MSP, outsourcing its help desk is a nobrainer. A newer MSP typically doesn’t have enough employees to competently handle this critical component on its own. Platte River Networks was no exception to this rule, and when it first decided to sell full managed services more than three years ago, it partnered with NetEnrich to provide remote-server infrastructure remediation services for customers requiring after-hours support and Synergy to fulfill larger customers’ helpdesk needs requiring 24/7 support. As the company grew and became more comfortable with the recurring revenue business model, it looked at the potential benefits of bringing its help desk in-house. “We’ve always preferred handling customer service and remediation ourselves,” admits David DeCamillis, director of business development at Platte River Networks. “When you outsource any service, you lose an important customer touch point that not only serves to strengthen the business relationship, but also can lead to upsell opportunities as well.”

To the MSP’s surprise, making the transition to in-house help-desk services didn’t go as smoothly as planned. “We initially thought we’d have little trouble convincing customers to pay a slight increase in their monthly services fee by switching from an outsourced help desk service to our in-house service,” says DeCamillis. “On the contrary, we were hit with objections such as, ‘We never have to call in for help afterhours or on weekends,’ and ‘We’re fine with the way things are.’” Rather than abandoning its plan, PRN did a cost-benefit analysis and decided that the new revenue potential of insourcing its help-desk support outweighed the additional costs it would incur. The plan allowed PRN to deliver its customers a higher level of service. “Moving our customers to the new plan allowed us to remotely resolve customers’ issues more quickly and reduce truck rolls,” he says. “If we do need to dispatch an engineer on-site to a customer, he can hit the ground running from the work already performed by the inside team.”

One of the primary requirements to making the change was finding a new RMM (remote monitoring and management) solution that it could integrate with its Autotask PSA (professional services automation) software. “Our previous RMM software couldn’t be integrated with Autotask, and we wanted our help-desk employees and field-service techs to have access to each other’s notes,” says DeCamillis. Autotask also integrates into our ticketing, scheduling, and dispatch processes, which greatly improves our client management and service delivery. After attending an Ingram Micro event, PRN selected Level Platforms (LPI) as its new RMM vendor partner. (See the sidebar for more details about PRN’s partnership with LPI.)

Pay Attention To IT Services Drains
After integrating its PSA and RMM, the MSP experienced a couple of benefits right away, which justified its investment. First, its help desk significantly reduced the burden on its field techs, which enabled its 12 field techs to serve more customers. “With Intuition, we can automate many of the maintenance tasks, which allows our techs to spend less time performing on-site maintenance and more time focusing on our customers’ overall technology needs,” says DeCamillis. The second benefit was that PRN was able to identify trends among its customers, which led to two other changes: the way it onboarded new clients and management, and replacement of its customers’ technology hardware and software.

“The CRM reports [from its PSA software] we were running, based on our help-desk employees’ notes, revealed that we were spending too much time servicing some customers’ legacy hardware, which is a problem that is better corrected upfront during a network assessment,” says DeCamillis. “To avoid these profit drains, we now include a required network assessment for every new customer.” Previously, PRN would onboard a client as quickly as possible, so it could move on to the next IT project. Nowadays, it spends 30 to 60 days learning about the customer and its IT environment, time the MSP says is well spent. “If you overlook the fact that a new customer has several 6-year-old workstations running Windows Vista, for example, or its servers are nearing the end of their lifecycle, it can become a major expense to put that customer on a managed services program,” says DeCamillis. “One thing we do differently now is provide customers with an upgrade plan, and we start their managed services contract with a 30-day agreement, which includes a higher level of support than they’re paying us for, just so we can catch and address their IT issues as early as possible.” At the end of the 30 to 60 days, PRN meets with the new customer and shares its IT findings in a consultative manner. “The key is being able to show them how much it’s really costing them to keep an outdated workstation in production,” says DeCamillis. “For example, we’ll show them, ‘This is how many calls we received in our help desk over the past 30 days from your two employees running outdated Windows Vista computers, here is how much time they spent on the phone with us, and here is the cost savings you would receive over a three-year period if you upgraded those two PCs.’”

Hone In On Common Customer IT Needs
In addition to changing its onboarding practice, the data points gathered by PRN’s help-desk team helped it identify several needs shared by SMB customers. These needs led the MSP to develop a bundled offering it called “Intuition.” According to DeCamillis, “All companies with 5 to 125 users have nearly identical IT infrastructures. They all have the need for a file and print server, Exchange server, backup/DR [disaster recovery] solution, switches, remote access, end point security, email and web filtering, and virtualization. This is true whether they’re legal firms, healthcare companies, or retailers.”

PRN’s Intuition bundle comprises Level Platforms infrastructure remote monitoring; Trend Micro end-point security; McAfee/MX Logix spam filtering and email continuity software; Datto, StorageCraft, Veeam or Intronis backup and DR solutions; and Awareness Technologies Web-filtering software (e.g. to block employees from accessing Facebook or YouTube during work hours).

Having a bundled solution benefits PRN and its customers in a couple of ways. First, it shortens the sales conversation by reducing the back-and-forth haggling that occurs when VARs/ MSPs sell each technology as a line item (e.g. “Instead of using your Trend Micro, we’d like to continue using our Norton antivirus,” or “Can we get a discount if we postpone the Web filtering now, and maybe we’ll add it later?”). With Intuition, customers see one product that solves their backup, networking, and security needs. A second benefit to bundling is that it helps the MSP become more efficient at serving its customers. For example, when a vendor comes out with a new security patch or software revision, the MSP can remotely send the update to all of its customers on a managed services plan rather than having to make dozens of exceptions.

PRN offers its Intuition bundle with a choice of three services options, based on each customer’s needs and budget. Its “Basic” offering includes remote management and monitoring of servers and backups and basic remote maintenance, plus monthly on-site maintenance. Approximately 50% of its customers are on this program or in the process of migrating to it. A step up from the Basic offering is its “Standard” offering, which adds to the Basic offering workstation monitoring and support, firewall support services, and an allotted number of on-site time and materials per month. Approximately 15% of its customers currently subscribe to its Standard offering. PRN’s “Premium” offering, includes everything in the previous two offerings, plus help-desk support at no additional cost. Currently, only 10% of PRN’s customers are on the Premium offering, but DeCamillis is encouraged because he’s seeing an increase in customers upgrading their services to the next higher category. “We are always striving to move our customers up to Standard Intuition at a minimum and eventually Premium.” PRN still services a small number of customers, only 5%, under a time and materials contract with no managed services contract (i.e. Intuition). These customers pay a higher hourly rate than Intuition customers. PRN plans to migrate the remaining 20% of its customers to one of the Intuition offerings over the next 6 months.

Since moving its help desk in-house and bundling its IT solutions with its support services, PRN has seen healthy doubledigit growth. In 2012, the MSP experienced 14% revenue growth over the previous year, and this year, it’s projecting 19% growth, two strong confirmations that it’s figured out the secret to selling managed services.

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