Josh sent in the following email regarding something I wrote in Managed Services in a Month.
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I've finished reading your Managed Services In A Month book and really
enjoyed it. Very thorough and insightful. Brutally honest and I appreciate
that. Something I needed to hear.
One question I have: on Pg.180 you mention "some LOBs require a good deal of
training in order for you to support them properly".
Are you inferring that the LOB application training expenses should be
passed onto the client? If so, how would you approach the client to request
Would there be a difference (in cost) if the client was new or if the client
was existing (they add on a new LOB application that I have no experience
Is it kind of like the managed services contract setup fee: good clients
waive the setup fee, bad or new clients charge the amount you want?
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1) This is your focus. For example, if you support Dentrix or American Contractor as your primary business. If that's the case, you should be completely responsible for your own/your staff's training. This is similar to focusing on Microsoft. You train yourself on MS products on your own nickel because it's central to what you do.
Having said that, you should also charge more as a specialist in this software than other LOB software. If you really are an expert in something, then charge expert prices.
One advantage to niching a market is that you can subscribe to their newsgroups and forums. You can answer questions online to user problems. You can learn to speak their language and be sought after. Who knows how to migrate this specific high-end system? You do. So the clients come looking for you.
2) Your largest client uses a specific LOB. If you get a big chunk of money (10% or 20% or more of your gross) from a client who relies on a specific LOB, you need to know something about that product.
In some cases, you'll do some one-the-job training and be able to document processes for setup, upgrades, and migrations. But occasionally you'll need to get some real training on a product. If that's the case, then you need to decide who's paying
Some of these LOB software packages require training that's in the neighborhood of $10,000. Others are $1,500. At the low end, it's probably worth doing to keep your largest client. At the high end, it's worth having a discussion with the client that involves a split on the cost of training plus a long-term commitment to services.
The really good news about expensive training is that it never goes to waste if you become an expert in the field. Let's face it: There aren't many companies willing to spend $10K on training for a single product. That means that the LOB company will start referring people to you because there just aren't that many people who have made that kind of commitment.
3) You can't know everything. The third scenario is the most common. You might have one dentist, one real estate agent, one property manager, one construction contractor, one printer, etc.
You can't know every line of business application out there. THAT's why we require that client have support for their line of business applications. We can solve problems really fast if we can get a technician on the phone and talk nerd-to-nerd.
If you tried to get training and be competent on five LOBs, if could cost you a fortune. But it costs each client the cost of maintenance to have top-shelf support available to them. This is a pretty easy sell because you're not asking them to give you more money. You're asking them to spend money, but you don't get any of it.
The Manage Service Approach
I am happy to include "vendor management" in our platinum level plan. That means we manage the LOBs, we contact tech support, and the client is not involved in that piece of support.
We have the documentation. We're not going to let them screw up the security in active directory. We're not going to let them access the system as administrator whenever they want. And we're not going to let them apply a conflicting IP address to a piece of equipment on the network.
Remember: you are the first line of defense against LOB vendors. If they come in and screw things up, you will be the one that gets the call. So it's in your best interest to help them NOT mess things up in the first place.
I hope that answers the question. Feel free to leave comments here or email me if you have other questions.