Ziff Davis Internet
News & Resources for the IT Reseller
NewsReviewsTech AnalysisCommentarySecurityLinux/Unix
My Account |  

Repetition Is Key for MSPs, Even if It Means Saying No
By John Hazard

News Analysis: The sales team at Ntirety Technologies, a managed service provider based in Boston, turns away business nearly every day.

So do the folks at Everon Technology Services, another Boston-based MSP.


It’s the key to their success, principals at both companies said.

“If you want high margins, you can’t do it if everyone is a one-off,” said Michael Corey, Ntirety’s CEO. “If you want to be scalable, and leverage the assets you have, you have to come up with standard offerings and never deviate from them.”

“We tried Burger King approach—’Have it your way.’ It doesn’t work. That got us into a lot of trouble,” he said. “Scalable, repeatable, standard service offerings. It’s cut and dried. This is what we do, this what we don’t do, here is the cost. Can we help you?”

PointerRead more here about the first major managed services shakeup, at N-able Technologies.

As the MSP model matures, practitioners are realizing the profit margin is based on the economy of scale a provider is able to leverage. By standardizing the process and automating as much as will be allowed, an MSP is able to leverage resources across multiple customers, driving efficiency in the delivery and boosting the margin, MSPs and vendors said.

Using that approach, Ntirety is able to run the same process for all of its managed Database Service customers, maximizing the efficiency of its Database Administrators, who can monitor and maintain multiple accounts remotely.

Even more impressive, removing wiggle room from the sales pitch reduced the sales cycle from three months to three weeks, and even 48 hours in some cases.

PointerClick here to read to about the unique legal pitfalls MSPs face.

Ntirety found smaller companies, though reaping smaller contracts, made for faster sales. “Instead of making the pitch to seven database administrators who are afraid I am taking their job away from them and holding the contract over my head when I win, I sell right to the CEOs, the presidents, the business decision makers,” Corey said.

No-touch approach

Everon, a general IT MSP, goes a step further, to what CEO Michael Cooch calls a “no-touch approach.”

Everon is able sell to and service clients nationwide without ever leaving the office. The company maintains continuous relationships by phone and deploys partners to remote customers only when absolutely necessary, Cooch said. Everything else is done remotely and automated, as often as possible.

The Channel Insider Special: Managed Services in the Channel

“It is much more cost-effective than driving to every client,” Cooch said. “If you’re adding people every time you add clients you’re eating into the margin. You can’t do that if everyone who walked through the door needed customized solutions; I wouldn’t make any margin.”

MSPs essentially oversubscribe themselves, to maximize use of their resources, Corey said.

“You’re banking your sales and delivery method on the fact that not every one will have an emergency at the same time,” he said. “You’re also banking on the fact that if you do the proper maintenance, you won’t ever have an emergency.”

Saying no

This strategy requires Cooch and Everon to say no to many customers, he said. The MSP maintains a list of services and prices on its Web site and never alters either to land a customer, something that took discipline, especially early on, when sales were scarce, Cooch said.

The Channel Insider: Solution Builder

Following that approach, Everon has driven margins near to 45 percent, Cooch said.

Saying no can be a smart decision, said Robert Scott, an attorney and partner with his brother in the Dallas law firm of Scott & Scott. Scott represents IT firms and often finds himself picking up the pieces when relationships go sour.

“The customer has to be the right one,” he said. “There are things a customer does that can influence the profitability of the service provider.”

By keeping exhausting records and measurements of sales, employees and delivery, MSPs will be able to judge which clients work and which ones shave margin, Cooch said.

“That’s how you create value,” he said. “If it doesn’t fit, we don’t do it.”



Free Hands-On Training Lab
Find out how key features of SBS 2003 can help you open up a new line of revenue. Register now >>

SBS 2003 Sales Reference Card
This handy reference card contains features at a glance, sales objection handling, pricing guidelines & more. Get it now >>

Microsoft Empower for ISVs rewards your big idea with big benefits and support.
Access key development tools at a low cost to help you develop that idea into an innovative application. Learn more >>

Autotask makes your IT business run. Better!
  • Manage your entire business from a single integrated system accessed over the web
  • Track and control service tickets, and efficiently dispatch field service techs
  • Monitor and analyze project profitability by project, customer and type
  • Bill by fixed price, time & materials, block hours or retainers
  • Set up workflow rules and automated notifications
  • Nothing to install. Easy to use. Affordable.
Click here ONLY if you want a personalized demo via the web
(North America only, please)

Attention Microsoft Solution Providers!

Want to gain a competitive edge? Try Microsoft Watch – FREE!

Each week you receive:
  • Microsoft News and Insider Information
  • Expert Analysis
  • Code Names of Upcoming MS Products
  • Year-Ahead Calendar, updated monthly

    Click Here to sign up now for your FREE 14 Day Trial to Microsoft Watch.
  • Microsoft files new piracy lawsuits.
  • Add up to $1,200 of value with the new BONUS PACKS.
  • Learn how the power of cool can affect your servers.
  • High Performance Storage That Blows Away Competitors.
  • Adaptec Adaptec SATA II RAID Outperforms LSI, Promise, 3Ware
  • Create, manage, and archive all content with EMC

    •Catalog Publishing
    •Dealer Management
    •Order Configuration
    •Price Management
    •Sales Management

    View All >

    Search the jobs you want & get the info you need – post your resume here today!

    Powered by Dice
    White Boxes
    MS vs. IBM
    Linux in the Channel
    Stay in the Zone
    Put The Channel Insider on your desktop.
    Subscribe to The Channel Insider: Channel News, Reviews, Resources and more.

    Make your selections below:

    Contract Watch

    The Channel Insider Update

    Preferred e-mail format:

    Enter your e-mail:

    view all newsletters >>
    Channel Insider Quick Links
    Ziff Davis Footer Logo