Wednesday, October 28, 2020

Meet Richard Tubb - A True Community Resource

 One of my longtime friends in the IT business is Mr. Richard Tubb. You might know him from the Tubblog (https://www.tubblog.co.uk/).

[Side note: I wish I could do that, but Palachukblog just doesn't cut it.]

I like following Richard's stuff because he's smart, he's passionate about the industry, and he always seems to be having a good time. Richard and I have met up in many, many cities in Europe, the UK, and North America. He really is a genuinely nice guy to hang out with.


In addition to being a bit of a Dr. Who fan, Richard also collects interesting people. His friends list is an impressive collection of even more great people.

The easiest way to connect with Richard is via his primary web site:

Resources for MSPs - https://www.tubblog.co.uk/resources/


I particularly encourage you to sign up for his weekly newsletter - MSP Insights - https://www.tubblog.co.uk/nl


You can check out his blog over on my blog roll, or go direct to https://www.tubblog.co.uk


Richard also has a fun podcast for IT Consultants called TubbTalk - http://tubb.co/TubbTalk


. . . and a YouTube (TubbTube) channel at  http://tubb.co/TubbTube 


And last, but not least, Richard has written several books, which you can explore at https://www.tubblog.co.uk/books/

Richard and Karl Podcasting in New Orleans

As you can see, Richard is a bit like me in his non-stop creation of content. He travels around, interviews people, posts podcasts, creates videos, and writes blogs. Richard has owned an IT business and has worked with many business owners to help them drive their success.

You may not be able to consume everything Richard puts out there, but I encourage you to add his stuff to the mix. I think you'll find it entertaining and educational!

:-)



Tuesday, October 27, 2020

Coming Nov. 11th: The Cheeky Sales Coach!

 Over on my brand new Relax Focus Succeed YouTube Channel (subscribe now), I am starting a new 

50-Week Video Series

called The Cheeky Sales Coach.

This will be totally free. My goal is to build up the new channel while providing useful information.

One of my long-standing pet peeves is that people confuse marketing and sales. So I'm going to hit that theme pretty hard. Many companies do a lot of half-baked marketing and wonder why they don't make sales. Some even do great marketing and wonder why they don't make sales.

As regular readers here know, I do all kinds of marketing, using a variety of media. But marketing is not sales. In order to keep my lights on, I need to do sales. I'll be honest: I don't like sales. But I like paying my rent, so I have to do sales.

Since about 1992, I have owned a few businesses and managed a few I didn't own. And somehow, in all of that, I have sold many millions of dollars worth of products and services. But I don't think I've every used obnoxious, sleazy sales techniques.

There's a great book that I read through about once every five years called How to Make a Buck and Still Be a Decent Human Being by Richard C. Rose and Echo Montgomery Garrett. Not sure it's still in print, but read it if you can find it!

Rose is a car salesman, of all people! And he has many lessons for how to reach your sales objectives without lying, cheating, and appealing to the dark side of humanity.


Anyway . . . Here's what I'm up to . . .

The Main Thing: A 50-Week video series on sales. It will be both informative and fun. Free, of course. Subscribe on YouTube.

The Other Thing: For those who prefer podcasts to videos, we're turning the video series into a podcast series. I've created a started podcast so I can start promoting on the podcatchers. Check it out at cheekysalescoach.com/podcast.

The Web Site: We're creating a new web site that will do three things for this project.

1) We're creating an Index to the Videos, so you can gain quick access once we have more than a couple of videos posted.

2) The web site is the home of the podcast just mentioned.

3) If you have questions, you can post them in a form on the Cheeky Sales Coach web site. I might answer them in a blog, by email, or in a video. But eventually, I'll answer your question somewhere.

4) For those who want to jump in with a premium option, we have a members-only page as well. I'm building some workbooks and special materials there. But don't worry: I promise you'll find great value in the free video series. That's what it's all about, right?

Note: This not an IT-centric series. There's a serious focus on online sales and modern sales techniques. But the emphasis is not on how to sell BDRs or managed services.

Another Note: Members of the Small Biz Thoughts Technology Community can access the premium content at no additional charge. Check out the discount code inside the community (soon).


Call to Action: 

Subscribe to the new YouTube channel today so you won't miss a thing!

:-)

Friday, October 23, 2020

SBT Roundtable: Jay McBain on Research that Reveals Surprising Truths

I am VERY excited to announce that Jay McBain from Forrester Research has agreed to join us on the SBT Roundtable, October 28th at 9:00 AM Pacific.

Jay is the principal analyst for global channels, partnerships, and alliances at Forrester – one of the most influential global research and advisory firms in the world.

Our topic is: How to Do Research that Reveals Surprising Truths


This is a members-only event. If you are not a member of the Small Biz Thoughts Technology Community, that's okay. Join us and you can join us for the Roundtable.

Members sign up here.


Our goal with the SBT Roundtable is to look at interesting things from a different perspective. That fits perfectly with this month’s guest. If you don’t follow Jay’s blog, you should. Check out https://go.forrester.com/blogs/author/jay_mcbain/.

(Note, also, that Jay's blog is one of the blogs I have on my "blog roll" to the right.)

Jay has been in and around our community for a long time . . . even though he looks very young. And, unlike anybody else I know, Jay jumped into the SMB IT community by trying to define the greater community from a “macro” level. He wanted to know who the biggest employers are, who the biggest influencers are, what the definitive list of news sites is, what the major companies are, and so forth. He wanted to understand all the details of all the variables that make up our community. As a result, he probably understands the greater SMB/MSP community than any other person on earth!

And the really scary part is that he has a lot of this information immediately available at his fingertips.

Please sign up for this Roundtable and send in your questions.

And, of course, join us live!

—–

Jay McBain is one of the most visible and respected thought leaders in the global channel. Named to the Top 40 Under Forty by the Business Review as well as numerous channel magazines top influencer lists, he is often sought out for industry guidance and future trends. He has spent his 26-year career in various executive channel sales, marketing, and strategy roles within IBM, Lenovo, and ChannelEyes.

—–

For more information on the Small Biz Thoughts Technology Community, please visit https://www.smallbizthoughts.org.

:-)

Thursday, October 22, 2020

The Way You Do Anything . . .

“The way you do anything is the way you do everything.”

— Tom Waits


I love this quote—even if it’s not always true. It goes hand in hand with “You can’t judge a book by its cover.” Everyone does judge a book by its cover: That’s how we decide which books to buy. 

And by default, your clients and prospects will believe that the way you do anything is the way you do everything. If your sales process shows you to be inaccurate or difficult to communicate with, they will believe that that’s how you are in other things.

That’s why I put so much emphasis on process (You can’t control people, but you can control your processes). When you think about “your way” and your SOPs, it’s important to note that everything you do in your company falls into one of two categories:


1) Behaviors you created with intention

2) Behaviors that emerged on their own

It’s extremely important that more of your behaviors fall into the first category. This includes technical processes as well as culture and the softer (human) side of your business. There are three periods during which you need to be attentive to that long list of “everything” you do: Before the sale, your first job for the client, and your ongoing relationship.


Before the Sale

Whether you realize it or not, your sales process tells a story about how you will be to work with. Do you have pre-printed forms? Do you give a written estimate? Are you easy to get ahold of by phone or email?

I intentionally mention that we have a process for everything when I’m in a sales cycle. I always use the phrase “We like to see . . .” to describe what we would do with the prospect’s network. We like to see a business class firewall. We like to see a monthly test of the backup. And so forth.

This casually lets the client know that we have a process. And it subtly says that we expect them to follow it.

Whether you like it or not, you will be judged very broadly based on your sales process.


The First Job

In the Managed Services Operations Manual, I have a whole chapter on the first job. Basically, this is the most important job you do for the client. It sets the tone for everything that will follow.

This will be the first time you show up for a work order. How do you show up? What do you wear? How do you greet the client? How do you explain what you’ll be doing? How do you manage the money and the paperwork?

If you’re working from a quote, it’s very important that you charge what you said you would charge. Avoid a change order at all costs, if you can. 

If you haven’t thought about it, you should. What do you normally do on a first job? How does it go? How do you control as much of the process as you can?

It’s particularly important that you don’t let the first job morph into a big, messy, catch-all job. Do exactly what you agreed to and make it as successful as possible. Then create a service ticket for each additional item the client wants to add to the list. You don’t need to say no, but you do need to say, “Not now.” If you allow scope creep on the first job, you can expect it on many jobs after this.

I know some of you are thinking that this is “bad” service because I’m not running around trying to get ten hours’ worth of work into a two-hour visit. But there’s a good reason for this policy: You need to establish a pattern of support that is sustainably profitable.


The Ongoing Relationship

This is where the real payoff is. You need to practice consistency in all things. This is very important as you grow your company. When you are a small shop (five or fewer), every client gets to know every technician. As you grow, that becomes harder to do. 

One time I was talking to a former client and we were discussing the various technicians we experienced over the 20 years they were my client. She mentioned one guy who really stood out—for the wrong reasons. Apparently, when he started, people in her company weren’t sure they liked him or his personality. 

“But,” she said, “we know you and we know the kinds of people you hire. And we had faith that he would do a good job.” And, over time, he won them over. More importantly, the consistency of our performance over time won them over.


In all these things, you need to steer the ship. Wherever you are right now, you need to make sure that you are attentive to the “everything” and move it in the right direction. If a process is well-defined and exactly what you want going forward, make sure it’s documented and everyone is trained on it.

If a process is poorly defined, or your company doesn’t consistently do it the way you want, then you need to define how it should be, and train everybody up on that. Little by little, all processes will improve over time. Documentation and training are your best tools.

I have said on many occasions that employees and clients are like dogs: They will do whatever you train them to do. This includes training by not training. If you train employees to do whatever they want at the client’s office, that’s what they’ll do. If you train clients that they can call you in the evening, they will. 

I highly encourage you to have a formal documentation process. Keep your documentation in a place where everyone can get to it. Train employees to look for a written process first and to follow it. Train them to update the process if necessary. The last item on every checklist should be to update the checklist.

I guess the way you document anything is the way you document everything.

:-)


— — —

The Absolutely Unbreakable Rules of Service Delivery
Absolutely Unbreakable Rules

For more great tips on your personal and business success, please check out my new book:

The Absolutely Unbreakable Rules of Service Delivery

Available on Kindle or in Paperback.

More information at

www.absolutelyunbreakablerules.com


Wednesday, October 21, 2020

Why You Should Join this CompTIA Community


I am honored to be on the Executive Council of the CompTIA Advancing Tech Talent and Diversity Community.

CompTIA is always helping technology professionals to increase their skills. (Everyone knows about the CompTIA exams, and they're even used as curriculum guides for many schools.)

There are plenty of communities at CompTIA. I belong to several. After all, I want to see what's happening with managed services, security, drones, emerging technologies, etc. But I'm on the EC Advancing Tech Talent and Diversity Community because I want to be actively involved in helping people get into tech jobs, move up in tech jobs, and promote a more inclusive environment all around.

Some people believe there's not much you can do about "diversity" in a very small company. But as an industry, there's a lot we can do. It starts with making sure we have good training programs and onboarding. But the most important piece is making sure that talented people stay. When talented people feel that tech jobs and tech conferences are "not for them," they take their talents somewhere else.

I personally know several people, including people close to me, who have chosen not to go into tech-related fields because they didn't want to feel out of place. These are people with great skills, high SAT scores, and amazing ambition. Personally, I think we as an industry lose out when we close the doors and make people feel unwelcome.

Please check out the videos below. Nothing too exciting, but we're trying to let folks know what we're up to.

And then wander over to our page at CompTIA: https://www.comptia.org/membership/communities-and-councils/advancing-tech-talent-and-diversity-community

Join us! Get on the list and stay informed about upcoming events, webinars, podcasts, and more.


Meet Community Leader: Yvette Steele, Directory of Member Communities

https://www.youtube.com/watch?v=A4MwomVP8nk


And here's a quick "Why we joined the EC" video with Paige Reh and me.

https://www.youtube.com/watch?v=a8Pl96dRk_s


Feedback welcome.

:-)


Tuesday, October 13, 2020

Managed Services in a Month - 5-Week Course Starts Oct. 20th

 

Managed Services in a Month - Applying the Book

Instructor: Karl W. Palachuk



- Five Tuesdays: Oct 20 - Nov 17 -- Register Now

- All classes start a 9:00 AM Pacific

You're guaranteed to learn something that will make or save you the price of admission!

This course will cover the process outlined in the book - to build your managed service practice in a month. In this case, five weeks. :-)

Managed Services in a Month is the best-selling guide to turning your "computer consulting" business into a recurring revenue machine!

This course is designed to walk you through the process outlined in the book. AND your registration includes a free copy of the book in the format of your choice.

Updated Information on Tools, Cloud Services, Per-User Pricing, Creating Bundles, and MORE!

For more information on the book, see www.managedservicesinamonth.com.


It's not too late! YOU can get into Managed Services -- in a month.

Even if you decide not to become an MSP (managed service provider), this course will help you establish some great best practices when it comes to running your I.T. business.

Whether you're a new "Computer Consultant" or an experienced Managed Service Provider, you need to create successful processes that will propel your company forward. Nothing is more critical to making profit than having the right processes and procedures in place!

You will learn


  • Computer Consulting in the 21st Century
  • What’s Different About Technology Consulting Today?
  • Cloud Computing in the Small Business Space
  • The Managed Service Model
  • New Consulting Business vs. Existing Business
  • Managed Services in a Month
  • Integrating Cloud Services
  • Making A Plan
  • Starting Fresh with No Clients to Convert
  • Create A Three-Tiered Pricing Structure
  • Bundling Services
  • Per-User vs. Per-Device Pricing Models
  • Putting Your (New) Business Together
  • Weed Your Client Garden and Finish The Plan
  • Write a Service Agreement; Have It Reviewed
  • Overcoming Objections
  • Desktops and Managed Service
  • Executing the Plan
  • Client Sit-Downs
  • After The Sale
  • Key Points to Remember for Profit
  • Running Your New MSP Business
  • The Right Tools for the Job
  • Your Standard Offerings (Your Catalog of Services)
  • Building an Action Plan that works
  • and MORE!

Includes five weeks of webinar classes with related handouts, assignments, and "office hours" with the instructor.

This course is intended for business owners and managers. It is particularly useful for the Service Manager or Operations Manager.





A Few Details . . .


  • Each course will be five one-hour webinars
  • There will be handouts and "homework" assignments
  • If you wish to receive feedback on your assignments, there will be instructor office hours
  • Class webinars will be recorded and made available to paid attendees only.
  • All calls start at 9:00 AM Pacific Time

Questions? Email concierge@smallbizthoughts.com

:-) 

Monday, October 05, 2020

You May Have Missed This . . .

If you only read this blog, you may have missed some of the other stuff I do. I put a list of recent activities in my weekly newsletter (signup here)


But here's the really weird part: I estimate that about 10% of those who follow something I do are subscribed to my weekly email. So for all the rest of you, here are a few things you may have missed . . .


Small Biz Thoughts Blog:
https://blog.smallbizthoughts.com/

The ASCII Group Appoints Jessie Devine as Director of Channel Development 

Documentation and the E-Myth  

Is Upgrading a Line of Business App Included in Managed Service? 


Relax Focus Succeed Blog:
https://www.relaxfocussucceed.com/category/all/

Never Stop Learning 

Success is a Habit 

You Need Rules for Success


SMB Community Podcast:
http://www.smbcommunitypodcast.com/

How Security Awareness can Finally Start Working for MSPs 

Vendor Fatigue? Here’s a better way to manage your technology stack

Monetizing the IoT opportunity through monitoring connected devices and IoT systems


The Killing IT Podcast:
https://killingit.smallbizthoughts.com/

Episode 79 – Dark Web Arrests, Underwater Servers Update, and Microsoft RMM

Episode 78 – Disrupting higher ed, expanding broadband, and Section 230 revisited

Episode 77 – Smart Devices in Court Evidence and Bitcoin Electricity Usage


Small Biz Thoughts Technology Community:
https://www.smallbizthoughts.org/

SBT Technology Community News - October (video)

2021: Year of Intention – Class and Workbook – Members Only

Jay McBain Joins Us for the Next SBT Roundtable!


YouTube Videos for IT
https://www.youtube.com/user/smallbizthoughts

SOP: Financial Reports - Weekly, Monthly, Annual

SOP: Do You Really Need That Tool?

SOP: Registering Client Software and Hardware


YouTube Videos for Relax Focus Succeed
https://www.youtube.com/watch?v=uBubYfkP0og&list=PLC8KYKhZTqAOVjWAPS3UYSeIUVfI63ddW

Expose Yourself to New Ideas

Balance Never Happens by Itself

Thinking Differently About Success


Classes! Great Little Seminars - 5-Week Classes
https://www.greatlittleseminar.com

Managed Services in a Month - Applying the Book - Starts Oct. 20th

Automate Your Accounting with QuickBooks Online and Integrated Apps - Starts Nov. 24th

Powerhouse of One: Be a Super Successful Sole Proprietor - Starts Jan. 12th, 2021



. . . More to come!

There's always more to come. Connect with me on all these platforms.

. . . And have a great October.

- Karlp

:-)


Friday, October 02, 2020

The ASCII Group Appoints Jessie Devine as Director of Channel Development

BIG congratulations to ASCII for bringing Jessie Devine onboard as Director of Channel Development. Jessie is one of my favorite people, and ASCII is one of my favorite groups. So this is totally awesome!

Here's the official press release:


Bethesda, Maryland – October 2, 2020 – The ASCII Group, a membership-based community of independent North American MSPs, MSSPs, VARs and solution providers, is pleased to announce the appointment of Jessie Devine as Director of Channel Development. In this role, Jessie is responsible for developing key alliances while creating new channel strategies for ASCII’s vendor partner program.


A recognized face in the channel community, Jessie previously held a customer facing role with MSPs as Community Engagement Manager with QuoteWerks.

“Jessie is a terrific addition to the ASCII team, and she brings a blend of channel experience along with customer success to both our members and partners,” said Jerry Koutavas, President, The ASCII Group.  

“ASCII continues to create and deliver services that help the IT solution provider community grow and improve their businesses,” said Devine. “I am thrilled to join the ASCII team and to continue to build on the solid foundation that they have developed over the last three decades.”


About The ASCII Group, Inc:

The ASCII Group is the premier community of North American MSPs, MSSPs, VARs and solution providers. The Group has over 1,300 members located throughout the U.S. and Canada, and membership encompasses everyone from credentialed MSPs serving the SMB community to multi-location solution providers with a national and international reach. Founded in 1984, ASCII provides services to members including leveraged purchasing programs, education and training, marketing assistance, extensive peer interaction and more.  ASCII works with a vibrant ecosystem of leading and major technology vendors that complement the ASCII community and support the mission of helping MSPs and VARs to grow their businesses. For more information, please visit www.ascii.com. 

:-)


Thursday, October 01, 2020

Documentation and the E-Myth

Perhaps the luckiest thing that happened to me in 1995 is that I read The E-Myth Revisited by Michael Gerber for the first time. (I have re-read it many times since then.)


A friend heard that I was going to quit my job and go into business for myself as a contractor. He recommended the book. It was very consistent with how I had managed departments and corporate offices in my job, so it made perfect sense to me. But it also starts out with a story about a one-person company and tells the tale of how you set up that company for a successful future.

Gerber looks at why companies fail and, more importantly, why some companies do not fail. Most (like 80%) small businesses do not last five years. And of those who survive, most don’t make it another five years. So, if you’ve been in business for five or ten or fifteen years, you must be doing something right.

Overwhelmingly, one key to success is documenting your processes.

Perhaps the most important element in my success, with every business I have built or managed, is my insistence on documentation. My writing career has been dominated by helping people document their processes. Some related books include:

  • The Network Documentation Workbook
  • Managed Services in a Month 
  • Cloud Services in a Month
  • The Network Migration Workbook (with Manuel Palachuk)
  • The Managed Services Operations Manual—four volume set
  • Project Management in Small Business (with Dana Goulston)

All of these are filled with forms, processes, and procedures.

One time, I was flying home and sitting next to a friend of mine. I was writing a chapter for The Managed Services Operations Manual on how to use Velcro.

She looked at me as if I was from Mars. “Your readers don’t know how to use Velcro?”

Well, I suppose everyone can figure it out. But to me, there’s a right way and a wrong way. 

Little things like this truly separate the pros from the newbies. Every profession has “little things” that you learn over time from trial and error—or working with a pro. Clients may never notice the little things. But they will benefit from the little things. And sometimes, as with Velcro, they will notice if you do it wrong.

Velcro has two components—one is scratchy and one is soft. The single most important rule of using Velcro to mount equipment is that you ALWAYS put the soft side on the bottom of the equipment. I go into more detail in the SOP, but the primary reason is that if the equipment is ever placed on a wooden desk or other “nice” surface, it won’t scratch it up.

Also, from time to time, you will need to stack some equipment. When you do that, you will always need to have one side of the Velcro on the top and another side on the bottom. Whichever side is on top must always be on top. And whichever side is on the bottom must always be on the bottom. That way, anything can be stacked on anything and you don’t have to think about it.

Similarly, if you are mounting equipment on a shelf of a wall, the same side must always be on the shelf of the wall. And thus every piece of equipment can easily be moved to any shelf or any wall—because it’s consistent.

The only reason I point this out here is to make the point: Everything needs to be documented—no matter how small it is! If you have Your Company Way of doing something, that needs to be documented.

And it gets better!

You can never document one hundred percent of everything, but you can get close. The world changes too much to ever maintain one hundred percent, even if you could reach it. If you can document eighty or ninety percent, then the rest can often take care of itself.

If your employees understand and follow your SOPs, they will understand a bigger picture that represents your company. So, when they are faced with a new, undocumented task, they will probably do what you would have done. They know how you operate, how you approach service delivery, how to talk to clients about it, etc.

So when they have to make something up on the fly, the chances are very good that they will make the right decisions. 


Processes Are Branding.

Branding Is Everything You Do.


I have done a lot of work with franchises. There are good franchises and bad franchises. The best franchises have the most detailed handbooks.

One of my favorite examples is Subway sandwich shops. How did Subway get to be the largest food franchise in the world—run by a bunch of seventeen- and eighteen-year-olds? Standard Operating Procedures.

Let me finish this post with another great book by Michael Gerber: E-Myth Mastery. In this book, Gerber spells out the mindset that will help you build a truly great organization. The key element is simple but profound: Build a business that is bigger than you are.

What does that mean? It means that your business won’t die just because you do. It means your business will hum right along when you go on vacation for two weeks, or two months. It means that your processes and procedures are so well-defined that any single person in your company can be replaced and the organization will still be successful.

And brings us right back to where we started: Documentation.

A great organization documents what they will do and what they have done. They document how things are done, and why things are done that way.

Think about the evolution of a business. Here are some stages to consider.

1) Nothing is documented. Therefore, things are not very standardized. Clients and employees do not expect consistency. The owner makes all the decisions.

2) Some things are documented. Some things are standardized. Clients and employees expect some consistency. The owner makes almost all the decisions.

3) Most things are documented. Most things are standardized. Clients and employees expect consistency. The owner makes sure the process is followed.

4) Everything is documented. Everything is standardized. Clients and employees rely on consistency. The owner checks in with the managers who make sure the processes are followed.

I hope you see why I insist that “branding” is everything you do. It’s not just that you greet people in a friendly way, but that both customers and employees understand that there’s a certain way you do business.

The Way cannot be locked inside your head. The Way permeates every aspect of your business. It can be known. It can be shared. It creates your culture. It is your brand.

:-)

— — —

The Absolutely Unbreakable Rules of Service Delivery
Absolutely Unbreakable Rules

For more great tips on your personal and business success, please check out my new book:

The Absolutely Unbreakable Rules of Service Delivery

Available on Kindle or in Paperback.

More information at

www.absolutelyunbreakablerules.com



Tuesday, September 29, 2020

Is Upgrading a Line of Business App Included in Managed Service?

We get letters .  . .

John asks, 

I understand that your definition of managed services includes operating system and software maintenance only. We have a client with a line-of-business application that has a client-server structure. When the software vendor releases an update for the application, it requires significant installation time (multiple hours) on the server and on every workstation. Would you include this in MSP as “software maintenance” or would you recommend charging an hourly rate for the work?


This is a great question because it gets to one of the biggest problems I hear about making Managed Services profitable. Rule number one is: You need to be profitable! Managed services is not intended to make you poor or make you struggle. In fact, it's intended to make you more profitable, and more predictably profitable while providing better tech support.


I always tell people: You need to draw clear, dark lines around what's included in your plans!

That will keep you profitable. This one step is all you need to know to avoid so-called "all you can eat." AYCE means there are no lines around profitability.

There has to be a limit on what's included and what's excluded.

As John mentions, I believe managed services is based on maintenance of the operating system and software. Maintenance is important for a couple of very important reasons.

First, clients understand the concept. Maintenance is to keep things working. That's why we change the oil in the car and rotate the tires. Other work is either a project or add/move/change. Replacing your ugly stock wheels with fancy, expensive chrome spinners might be important to you, but it's NOT maintenance.

Second, you can get pretty good at estimating the amount of time and money you will spend on maintenance. For example, you might estimate 60-90 minutes per server per month, averaged over twelve months. Some will be a little more and some will be a little less, but you won't lose money if you use that estimate. (That's an example; use your own estimates based on your experience.)

But you cannot estimate project labor months or years before a project pops up. And you cannot estimate adds/moves/changes. One project might be ten hours and one might be fifty. On a whim, a client can ask for thirty hours of changes. That's hard to guess months in advance across all your clients.

Maintenance is included. It is limited by its nature. It is predictable. There is NO excuse for a maintenance contract to be unprofitable.

So . . . the question about drawing nice clear lines is all about profit based on predictability.


Software Updates and Line of Business Applications

The obvious question becomes: How do we draw the line between tiny, easy, simple, patches/updates and long, complicated, major upgrades? Remember, rule number one is to be profitable. So you need to think about this before it happens.

One of the core components of maintenance is keeping things patched and updated. After all, if you have a problem with any hardware of software, the first question is going to be: What's the version level or service pack level? In other words, is it up to date? If not, tech support says to go apply all the patches and updates before you call back.

Why? Very simply, we all know that patched, fixed, updated systems have fewer problems. You probably won't call back because the problem will probably go away.

Okay. Here's where we are: Patches and all those little updates are included in managed service because they're part of maintenance. And, since these things generally require you to check for updates, apply updates, and maybe reboot, this process is small and know-able. So you can predict the time it takes, and you can roll that into your estimates when you create your plans.

But we all know there are major version updates. Whether it's a big service pack or "R2" update, these big changes take a lot more time. They may involve taking the system offline. Sometimes, you have to uninstall a previous version of either the core software or a database engine. You need to back up the data and potentially re-import it.

Sounds like a project, right? And you probably don't have a good idea if this will be a one-hour job or a three-hour job until you've gone through it. So you can't easily include these updates in the maintenance part of the agreement. Major upgrades, such as version upgrades or annual upgrades should only be included if you have a very good idea of how long they will take!


Line of Business (LOB) applications fall into this category. Examples include American Contractor, ATX MAX tax software, Autodesk, and every other kind of "practice management" software. 

For an LOB with significant work on the upgrade, there are two basic options. One is to estimate the number of hours this takes each year and work that into the overall annual cost. This works great for software with regular, annual updates. For example, the MAX software used by some accountants must be updated every year for tax season. 

The other option is to say that major upgrades (for example, Microsoft’s “R2” updates) are not included. So little patches are fine, but major version updates are outside managed services. This would apply to most line of business apps, in my opinion.


Notes

If you have a really good niche market, you may see a certain software package a lot. That gives you a better idea of what their upgrades involve and how long they take. After you go through several years of these updates, you will be able to work that time estimate into your managed service contracts and still guarantee profitability. But be very sure that you have good estimates!

In my Service Agreements book, I require that the client maintains a maintenance contract on all major software, so I can talk to the LOB tech support at times like this. This limits my need to know the details of a product, especially the un-knowable problems during a version upgrade. Without a maintenance contract, 100% of my labor is billable.

Finally, remember that the goal of managed service is NOT to provide 100% flat fee service. That will always reduce your profitability and we want to increase your profitability. The legitimate goal is to provide flat fee maintenance. The client should always know that there's a flat-fee component and an un-knowable component. 

Remember, in all pricing, to make sure you have nice, dark lines around what's included and what's extra!

Questions welcome.

 :-)