Saturday, September 01, 2007

Managed Services Doesn't Work For Me

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

From time to time I talk to someone who says "Managed Services isn't working for me." In general, they mean that they tried something and that thing didn't work.

So let me ask you a few questions.

First, what does managed services mean to you?

Second, what have you tried? More importantly, did you jump in with both feet, or just try a thing or two?

Third, how long have you tried the new plan?


First, what does managed services mean to you?

I define managed services as Technical Support delivered under a service agreement that provides specified rates and guarantees the consultant a specific minimum income. In other words, if you have service agreements and clients agree to purchase at least X hours per year, you become their outsourced I.T. department. You run the client's "I.T. Department."

How you do that is a separate question.

Monitoring and patch management are separate questions.

Flat fee services are one payment method, but not the only one.

Remote support is a separate question.

Having said that, I've appeared on stage many times with Amy Luby and Erick Simpson. They define managed services a little differently. To them, managed services consists of any services that are delivered remotely for a flat monthly fee.

There are, in a sense the two ends of the spectrum. What they have in common is:
- Prepayment for services
- Guaranteed minimum income
- Control of the I.T. function at the client's office
- Service agreement that formalizes your relationship with client

In reality, the services we provide look very much alike. What has been thrown under the tent of "managed services" is really modern consulting practices and tools for the SMB space.

We all run our business with a professional services administration program (e.g., Autotask). We all use monitoring, patching and reporting tools (kaseya, zenith, level platforms). We all get the bulk of our revenue from flat fee services. We all do as much work as we can remotely.

We all leverage "automated" processes to reduce labor costs and provide a higher level of service.

So, what does Managed Services mean to you?

And that leads us to . . .


Second, what have you tried?

More importantly, did you jump in with both feet, or just try a thing or two?

Be honest with yourself. What have you tried?

Many people tell me they've bought Erick Simpson's book, but haven't implemented any of it. They've bought my book but haven't written a service agreement. They read all Vlad's stuff but they haven't invested in Shockey Monkey.

So I ask what have you done? Some have bought Kaseya but bought too many licenses and can't figure out how to sell it. Some have looked at all the management tools (like Autotask), but haven't made a commitment. Some are pre-selling commitments for X hours per month.

A few have started working on pricing plans of flat fee services. But 99% of their business activity looks exactly as it did six months or a year ago.

You can't take one piano lesson, say "I suck" and then say that you've given piano a chance.

Which brings us to . . .


Third, how long have you tried the new plan?

If you're stuck and don't know how to proceed STOP NOW.

This is very serious business. This is your livelihood. Take it seriously and don't screw around.

Stop making changes to your business until you know what you're doing.

Here are the basic steps you need to go through:

  • Start making a plan
  • Create a three-tiered pricing structure
  • Weed your client garden
  • Finish the plan
  • Write a service agreement and have it reviewed by an attorney
  • Print up your new pricing plan
  • Meet with each of your clients and have them pick one of the new plans. Drop any client who does not sign a new agreement.
  • As the money starts rolling in, begin buying the practice management and service delivery software that will make you even more profitable.


I'm not saying any of this is easy, but LOTS of people have done it and you can, too.

One of my user group members flew to Anaheim to attend the Managed Services Provider Universtiy. He loved it, but one thing pissed him off:

He has been in business as long as he can remember. But he ran into a guy who got into the technology field this year and has sold a million dollars worth of services using Erick's techniques. His response was, "We have to this as quickly as possible."

You can do this.

Robin Robins' monthly member newsletter always seems to have another story of someone who sold a million dollars worth of services using her techniques.

You can do this.

The tools and help are out there.

To make managed services work, you need to commit to it.

There's nothing particularly complicated here. You just have to make a plan and make it happen.

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