Monday, July 17, 2017

What is Project Labor?

We get email. Craig asks, "What is project labor?" But then he gives an example (cleaning up a rat's next of wiring) that may not be a project at all. Here are some thoughts.

First: Please review two recent videos on dividing and bundling labor. Part One is here: https://www.youtube.com/watch?v=MDGYct8AE48

and Part Two is here: https://www.youtube.com/watch?v=G8SRx3OyaU4

Second, create clear definitions within your company for three different types of labor.

Maintenance Labor consists of all those things you do to maintain systems and prevent problems. You might call this preventive maintenance labor. This includes patches, fixes, updates, testing backups, installing service packs, reviewing event logs, defragging databases, etc. Anything that improves daily operations and staves off problems is considered "maintenance."

The goal of managed services is to sell all "maintenance" labor for a flat monthly. Ideally, you will include everything you can in maintenance labor so that the client is very clear when something is not maintenance. "Not maintenance" is either add/move/change or a project.

Your mileage may vary, but here's what we came up with: We estimate about 1.5 hours per month to maintain a server to our standards. And it takes about .25 hours per month to maintain a workstation. So if a client has one server and 20 desktops, we would estimate about 6.5 hours per month to maintain their systems. Assuming a reasonably trouble-free network, you might round this up to seven hours per month (84 hours/year) on average to maintain their entire environment.

Note that you CAN calculate how much labor it takes to perform maintenance labor over a year's time. Assuming you provide the same level of maintenance across all your clients, you'll find that the amount of labor needed to maintain a server or workstation is within a very predictable range.


Break/fix or miscellaneous hourly labor is labeled "Add/Move/Change" in our system. This title helps clients and employees draw a nice line between what's covered under maintenance and what is not. An addition of a user or workstation is not maintenance.* Changing out a switch for a newer switch is not maintenance.* Moving equipment around the office is not maintenance.**

For me, A/M/C or B/F labor is just normal stuff that comes up from time to time in any office. In other words, it's not a project. If Outlook opens in safe mode, fixing that is maintenance. If a machine does not have Outlook installed, then installing Outlook is an Addition and therefore billable.

We used to estimate that A/M/C labor was equal to about 25% of managed service labor. But, with newer equipment, business-class equipment, and cloud services, this number has gone way down. For the average cloud service client, A/M/C labor is between 0% and 10% of the monthly managed service labor.


Project Labor refers specifically to a job that is a little larger and takes more than one step. For example, installing a new server involves setting up the hardware, installing the O.S. and software, joining the domain, migrating data, and configuring everything so it's accessible to clients who need it. Because it's many steps, the project is large enough that it should be handled separately from basic A/M/C service tickets.

I highly encourage you to quote projects for a flat fee. This requires that you have some pretty good estimates of how long it has taken you to do these things in the past and what it will cost you to deliver this project. For the client, a flat fee guarantees a known price and gives them the comfort that there won't be cost overruns. For you, it forces you to quote the job profitably and motivates you to be as efficient as possible to maximize your profit.

When we're honest with ourselves, we have to admit that any project can experience a labor increase or decrease of ten percent just due to circumstances outside our control. With a flat fee, you can take that potential increase into account and then focus on controlling things as much as possible, almost forcing yourself to greater profitability.

If you haven't read Project Management in Small Business by Dana Goulston and myself, please check it out. If you're rigorous, you can guarantee that no project is ever unprofitable again.


So let's get back to Craig's specific question: The Rat's Nest. He says, in part:

"They have a running network but the network cables look like a rats nest and they want me to straighten it up.  The thing is the network is fine, so I see this as a project because this is a request that although it’s needed, it’s not required for them to have a running network.  I came into this situation I didn’t create it."

The good news is: 1) The client wants you to fix this, and 2) They know you didn't create it. As you said, the network is working, so this is really just ugly, sloppy work that needs to be cleaned up. I also assume the place could benefit from a few labels here and there, and maybe even a bit of color-coding if the network wiring includes Internet wiring, data wiring, and telephone wiring. But even if it's just unplugging and re-plugging everything so it looks professional, it's definitely a billable job.

The good news is: If you haven't signed a managed service deal yet, you can include the cost of this in their "setup fee" and it will appear to the client that it's just included in your service. So you might have that option.

As for whether this is Add/Move/Change or a project, I would go with a project simply because a job like this is perfect for flat-fee service. You can do it over a series of days if that makes sense (e.g., one hour per day at 5-6 PM until complete), or do it all at once during a time when they can afford downtime. Make sure you include cables if needed, and Velcro ties (not zip ties) in your price estimate.

You could decide to simply create a ticket and charge by the hour. But remember that things like this are a great way to build rapport with a new client. So even with a ticket, I'd work very hard to stay within your time estimate so the client knows they can depend on your word.

Hope that helps. If nothing else, there's plenty to think about.

- - - -

* Unless it is. Of course you can create managed service agreements that include new desktop PCs at regular intervals or hardware-as-a-service contracts that include new equipment from time to time. You can create any deal that makes sense for you.

** There really is no exception here. But since the last two had asterisks, I thought you might be expecting one here.

:-)

Friday, July 07, 2017

Join me in London, Manchester, Edinburgh, or Dublin - August 2017

My big SMB Roadshow is heading to England, Scotland, and Ireland next month. Please join me!

You can find out all the details at www.SMBRoadshow.com.

This six-hour seminar is jam packed with great information about bundling, selling, implementing, and maintaining cloud services. We've hit about half the cities we're going to visit this year.

This will be my only visit to these cities this year:

- London - 15 August

- Manchester - 17 August

- Edinburgh - 22 August

- Dublin - 24 August

I put together an 8-minute video that spells out all details of what you get with this Roadshow seminar. It also explains in some detail what we're doing and how this seminar will prepare you to make a lot of money selling Cloud Services:



Check out the video -- which includes a discount code -- and plan to join me in August.

Questions welcome.

:-)


Thursday, July 06, 2017

SMB TechFest Innovates with "Power Talks"

I love it when conferences innovate to keep things fresh and invite more ideas into the conversation.

Dave over at SMB TechFest has come up with a great way to get lots of new ideas and discussions into the mix. This quarter, SMB TechFest will include a stage dedicated to ten-minute Power Talks.

I will be presenting the following topics - with handouts.

We might have some time to debate and discuss while on stage. If not, we can certainly do so at lunch and during the cocktail party.


Easy Cloud Service Documentation

As we move more services and data into the cloud, it becomes very important to keep track of all that. In this 10-minute Power Talk, author Karl Palachuk presents a simple method for documenting all your clients' cloud services.


Resolved: Break/Fix Support is Immoral

Karl Palachuk is a well-known advocate of the managed services business model. In this 10-minute Power Talk, Karl takes his belief a step further, arguing that it's wrong to offer tech support without managed services. See if you agree.


Attitudes Toward Money . . . Tips on nickels, dimes, dollars, and stray dogs

What separates those who "make money" from those who build wealth? In this 10-minute Power Talk, author Karl Palachuk argues that the different is attitude - an attitude toward money. He elaborates with entertaining and educational examples.

Join us July 20th
Register at SMBTechFest.com/Karl

:-)

Wednesday, July 05, 2017

Join Harry B and Me July 18th - Q2 MSP Analyst Webinar - Free

Don’t miss SMB Nation's popular quarterly report for MSPs, consultants, resellers and IT Pros. The only thing constant is change and we’re right there with you.

This analyst briefing will look back at 2Q and make forward looking statements for 3Q.

July 18th
12:00 Noon Pacific / 3 PM Eastern
Register at: https://register.gotowebinar.com/register/6094108451817984001

I will join Harry Brelsford for this live one-hour webinar.

Topics include:

  • Microsoft updates: Report from Inspire (formerly WPC) 
  • Cloud Advisor to Cloud Services Provider 
  • Gap Fillers 
  • This Disappearing MDF Pot of Gold 
  • Is the MSP marketplace ripe for disruption? 
  • Shadow economy (hint – feet on the street at a UPS Store) 
  • Is the time right for an Azure vs. AWS debate? 
  • Vacation poll (what pool are you hanging out at?) 
  • Hey George – what should I do? 
  •  Harry’s Recommended Summer Reading 
  • Karl’s Success Secrets – Lessons Learned from the Road 
  • The Next Great Thing – Niche Security Opportunities including SharePoint 
  • And much more…
Mark your calendar and plan to join us live on the 18th.

:-)

Tuesday, July 04, 2017

Be My Guest at SMB TechFest July 20th

I try to hit every SMB TechFest. I generally manage to make three per year. This is always a great conference. Good content, good networking, good vendor hall.

Attend for free with this link: http://www.smbtechfest.com/Karl



  
Be my VIP guest and see me live at SMB TechFest.  SMB TechFest Q3 is coming up on July 20th.  See me present along with other industry experts in sessions to grow your business.  Also, engage in the IT Mixer, Expo Hall, and prizes included in this exclusive no-cost VIP pass for you. 
You can attend onsite in Anaheim, CA or online from anywhere worldwide via the live video broadcast.  In-person allows you to network better so join me live.  I have a limited number of complimentary VIP passes and they’re first come first serve. 

Limited free passes so register now

SMB TechFest Highlights Watch the 2 minute video


Accelerate at SMB TechFest
Accelerate your business and experience high-speed exotic cars
Car onsite.  Don’t miss this raffle
McLaren 570S



 Multiple Speaker Topics

·        Sandler Sales techniques
·        Panel: Profitable VOIP for Today's Business
·        Marketing Strategies That Work
·        Panel How to Thrive being a MSP
·        Security as a Service
·        Ransomware & Business Continuation
·        CompTIA Market Hot Trends & Solutions
·        More topics and sessions 




Rated a Top 50 Channel Conference


  • Expand your solutions at the Expo Hall
  • Network with 250+ partners and Technical Professionals
  • Win Prizes
  • Hosted Bar and appetizers
  • McLaren onsite.  Raffle.  130+ mph experience.
  • Mega Mixer.  Network with Industry Peers.
  • Parking Included
  • Includes breakfast, lunch and more
  • Great for Partners & IT Pros of all industry focus
  • Always a high-value packed agenda
  • Any doubts?  View our 200+ testimonials


One Day
Thursday July 20, 2017
8:00am - 6:00pm
Sessions, Expo Hall & Large Social Mixer

Onsite in Sunny California
EXPO CENTER
1960 S. Anaheim Way Anaheim, CA

U.S. Wide & International
Remote Live Video Stream
All Sessions


See you at the Event!