Sunday, September 16, 2007

Managed Services in a Month - Part Eight

[ KP Note: The entire "Managed Services in a Month" series has been collected, collated, and indexed. Still free. You may access it now at ]

We're almost done!

I hope you've signed a deal or two. Many people have been emailing me with their successes: Keep it up!

If you haven't inked a deal yet, keep working the plan.

It will happen.

Do it. Do it. Do it.


Topic Nine: The Right Tools for the Job

I can't leave you hanging.

When you've got five clients on Platinum, three on Gold, and seven on Silver, how are you going to get all that work done?

Managed services is not about flat fee pricing.

Managed services is not about all you can eat.

Managed services is not a fad that will disappear in the next year or so, allowing you to go back to being break/fix and disorganized.

Managed Services means that you use modern tools to provide a higher level of support that un-professional, un-trained, un-connected, techno-goobers cannot provide.

Managed services involves using top-notch tools to run your company and to provide a higher level of service than you could before. The more automated the better. It means leveraging these tools to make more money with less labor than before.

People ask "Why do you use Zenith?" Well, we make money with Zenith.

Why do you use Autotask? What do you think? We make money with Autotask.

The basic model is this:

1) Provide clients with a higher level of preventive maintenance,
-- and monitoring
-- and patch management
-- and quick response.

2) Automate all of those to the extent possible. So clients either don't know there's a problem, or find out after it's fixed.

3) Increase your profit margin by using remote tools, automated patching and fixing, and reduced overhead.

4) And change your financial model to one of recurring revenue.

Remember way back at the beginning of the series, I asked you to set up your simple but powerful categories in QuickBooks. If you did that, you started tracking hourly labor on one line and recurring MSA revenue on another line. Recurring Revenue started out as zero. Then you signed a deal. And another. And another.

Recurring revenue went from zero percent of your income to 1%, 3%, 5%. With luck it will go to 50%.

It is an awesome thing when 60% of your labor revenue is invoiced automatically on the first day of the month! It's even more awesome when all that is expected to be paid on the first day of the month. So, with credit card settling, you've got more than half your cash for the month in the bank on day three.

That's the future, baby! Let's go do that.


Let's Talk Tools

I said that, in this series, I wasn't going to try to be balanced. So I'm not going to mention Shockey Monkey, Autotask, Level Platforms, etc. Ooops. Okay, I'll mention them. But I won't TALK about them because I don't know anything about them.

Here I'm going to tell you about the tools we use.

When I started buying these tools, I was concerned with getting the best tools out there. That mattered more then than it does now, particularly with the "delivery" tools.

Here are the tools you need:

- A Money Tool. (QuickBooks)

- A Practice Management tool or Professional Services Administration (PSA) tool.

- A Delivery tool (to deliver monitoring, patch management, etc.).

- Added bonus tools.

Let's examine them in turn.

First, A Money Tool.
--> Use QuickBooks.

Everyone else does. End of discussion. That was easy.

Second, A Practice Management tool or Professional Services Administration (PSA) tool

[update: In Q4 2008, KPEnterprises switched to using Zenith Infotech and Autotask. We no longer use Kaseya or ConnectWise.]

[I originally wrote that switching PSA tools would be a big pain. But we switched to Autotask in late 2008 and found it surprisingly easy. See]

[Way back when, ConnectWise was the best tool out there. Now they have lots of competition.]

We did some research with other tools. They all sucked out loud at the time.

Now, that's not the case anymore. Many of the other tools have apparently grown up and do a great job. Plus we have a new category of "Starter" tools. For example, Shockey Monkey is designed specifically to get you started, but not intended for a ten-person shop. And my understanding is that it's also designed around the concept that you will move to a bigger product when your business grows.

But I don't know the details, so I'm not saying anything else.

Today, we use Autotask and we love it.

Some people say these tools are expensive (I'm one of those people). Yeah, they cost money. But it's an investment.

I have a project management book that costs a lot of money. Oh, and a network documentation book that costs a lot of money. I buy Robin Robins' stuff and it costs a lot of money.

But they also save you money. One project and the book's paid for. One client documentation and the other book's paid for. One more client and RR's paid for.

A new PSA license pays for itself the first month it is used. It keeps technicians scheduled and productive. It keeps track of time so we don't give it away. It keeps track of progress so we can tell the client exactly what we did.

Believe me. Do it.

Third, A Delivery tool

I was well-known, awhile back, for pushing Kaseya.

Again, when I fished around for tools, I wanted the best. I asked people what they used.

At the low end, people did what we were doing: A little hfnetcheck, SBS monitoring, ServersAlive, RDP. It was the exact "roll your own" model I mention in my Service Agreements book.

A tiny percentage used some other product.

And everyone else used Kaseya. Why? Well, everyone else's sales pitch was "We're just like Kaseya, except . . .." What about this feature? "We'll have that in the Fall [or next Spring/next release/some day]."

In other words, Kaseya was clearly "it" and everyone else wanted to be it.

We tried Level Platforms because it was less per month, but was not ready for general release at the time. So we dropped it.

And we bought Kaseya.

It took years for the rest of the industry to catch up. I think most patch management, monitoring, and remote control tools now do 95-98% of what Kaseya does.

So, depending on the need, it became clear that we may not need Kaseya for all clients or all circumstances. As a result, I have become much more agnostic about service delivery tools.

Beginning this year we have added Zenith InfoTech to our toolbox. In addition to some awesome monitoring and reporting, they add an actual "back office" support capability. We can ask them to do chores for us and they will fix the problems. We can set clients as monitor only or monitor and fix.

[Again: We dropped Kaseya in late 2008 and now use Zenith exclusively.]

We can assign tickets to them in Autotask and they will work the tickets. If it's a billable event, we charge our clients for that.

What we do:

Originally, we put both Kaseya and Zenith agents on our servers. We put Kaseya only on desktops.

If you don't have a delivery tool, get one. Remember that this is an easily reversible decision. But here's an important safety tip: Look at total costs for the first three years. This is always a good calculation to do with any business decision (telephones, employees, building maintenance, managed service tools, etc.).

Kaseya licenses are flat fee. Once you finish buying the license you own it and can use it forever. You just need to pay maintenance. So lay out initial fee, monthly fees, and maintenance. What's the total price for three years for 100 licenses?

Zenith is $8/desktop/month. So that's easy: $8 x 36 months. Times 100 licenses.

Other plans are a bit more convoluted. Doesn't matter. Figure out all total outlay for 100 licenses for three years.

In every case we've looked at, Kaseya is the least expensive in the long run. The trouble for most people is that 1) they can't see making a "big" payment every month. I'll do a separate posting on this some day. 2) Kaseya's sales model is to screw the client for the highest possible number of licenses at every opportunity. It's just like printing envelopes. $100 for 1,000 envelopes; $125 for 2,000 envelopes; $250 for 5,000 envelopes; $400 for 10,000 envelopes.

I've talked to SO MANY people that got talked into 1,000 or even 10,000 Kaseya licenses before they had any use for them. Don't do this. If the salesman wants Chrome Spinners for his Lexus, he's going to have to get them off of someone other than you. Buy the minimum number of licenses you can (100?). Get a great discount by being an ASCII member.

Buy what you need. Even today, we only buy 250 Kaseya licenses at a time. I could easily drop the cost per license below $100 if I bought more. But I only buy what I need. Why make payments for three years on licenses that aren't bringing in money?

Nuf said.

Fourth, Added bonus tools

If you plan to include additional services in the Platinum plan, you'll have to pick them carefully. Remember, your life will be easier if you have the same products on all client machines and the same services on all clients.

The two most popular add-ons are anti-virus/anti-spyware and spam filtering. We don't include the AV/AS. But we do include Exchange Defender spam filtering.

Actually, we include Exchange Defender for more than fighting spam. One of the greatest advantages for small businesses is caching of email offsite. Barracuda, in addition to being massively expensive, caches the email onsite. So if your server is down, it saves email and delivers when the server is up. But if your ISP is down, your email bounces.

With Exchange Defender, email is cached off in the ether and no one gets bounced. It also makes moving to a new ISP or a new building a lot easier. So much easier that we can afford to include that labor in the Platinum plan!

Exchange Defender is also a selling point for us. We sell it at $4 per mailbox per month. So if a client has ten mailboxes, they pay $40/month. "But if you sign platinum today, that $40 charge goes away!" For ten clients, the difference between Gold and Platinum is $150/month. Take $40 out of that and you're down to one hour of labor per month.


Whether you work on cars, work in the garden, or provide managed services, having the right tools makes all the difference.

These are my biases. The right tools for me may not be the right tools for you.

But, once again, do not delay because you need to find the right tools. Get out there and ink a deal. Then you'll have to get off your butt and make a decision about tools.


This is the last "real" post in this series.

Hope you enjoyed it.

I will have one more "blah, blah, blah" final summary post.

Then I'll go do something else with my life.



  1. Anonymous8:33 AM


    have you looked at N-able? I have looked at the costs of Kaseya and N-able and N-able wins hands down. Also the N-platform does have deep business process tools to help you change your business model. I would welcome your feedback

  2. I haven't looked at N-able in some time.

    Remember, I started this series with a note that I wasn't going to try to be unbiased here.

    I am just describing the tools we currently use.

    If we were to start over today, we would seriously consider whether we would go with Kaseya or antoher tool. When we signed up with Kaseya there was no real competition.

    If you consider the cost of a K license ($120-150, depending on volume) plus maintenance, the cost is about $7 per agent per month over the first three years. It is cheaper after that (maintenance only).

    Anyway, I'm a lot more agnostic about tools than I used to be.

  3. We are also looking at N-able can you tell me who is their competition beside Kaseya and if you could give me some feed back


  4. Paul, checking out the whole Managed Services strategy. So far you are reinforcing some ideas that I thought were good but literally had no way of knowing for sure and either didn't implement them or half-assed them as a result. Even with the custom reports in QB, the parallels are crazy!

    I started as a tech working for people I knew on a break fix basis without service agreements and it was the worst (for everyone). As we grew, we did so without service agreements and it just stretched us thin. We now require all clients to be on a service agreement and we are working on managed services. We need to make this happen now!

    I'm still reading, but I'm wondering if you mention your employee to customer ratio. There are only three of us now, I wonder how many customers we should be able to support.


Feedback Welcome

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Disagreements welcome!