Tuesday, January 11, 2011

Eight Lessons from the MSP Vendors

As you look forward to cloud services, what are some of the lessons from that the past that might be relevant? In addition, are there some lessons you can use to grow your own business?

Between about 2003 and 2008, the "managed services" business sprang forth and consumed our industry. The buzz has died down, but huge, permanent changes have been made in the way I.T. services are delivered, and they way I.T. companies are run.

Yes, there are plenty of break/fix shops left. But virtually all of them use tools and techniques in common with MSPs.

As a casual observer of this space, here are eight lessons I've noticed from the MSP wave:

1) Lesson From ConnectWise: Teach a Technician to Fish

Many companies have adopted this strategy, but few of them as successfully as ConnectWise. Basically, they taught their partners how to be successful Managed Service Providers when that industry was young. They showed people how to adopt a new business model and make money with it. This allowed them to sell a very expensive product into a market that was able to make money from the product.

2) Lesson From MSPSN: Build A Community

My friend Amy Luby and her partners did something amazing with a simple Yahoo Group (http://tech.groups.yahoo.com/group/SMBManagedServices/). She started this group and built a community who helped educate each other and address the key questions that arose in their businesses as they moved to the MSP model.

Many of these people became true friends online. They also became a great launching point for Amy's Managed Services Provider Service Network, which has since been sold. This is a great strategy for building a community.

3) Lesson From Autotask: Honest, open engagement with your clients creates an amazingly loyal and supportive following.

I'll never forget the first Autotask Community Live event. There was one discussion after another about how *this* could be improved or *that* could be better. But none of the discussions were negative. It was literally as if the partners were engaged in a discussion about how they and Autotask were on the road to a common good. Any company has good and bad experiences. But few companies can boast the kind of absolute openness and honesty that marks Autotask's relationship with their users.

It has served them well and allows them to embrace even more openness as they go forward. Their success builds upon itself.

4) Lesson From Zenith Infotech: Very profitable products make very loyal (and patient) customers.

Sometimes, when you look at new products, you get engaged in a discussion of features/benefits. Sometimes you're looking to fill a niche. And sometimes you look at the profit. Zenith has all these discussions. But when they get to the profit part, they blow the doors off the competition.

Certain products, like the BuDR (Backup and Disaster Recovery) have been so profitable for partners that they have resulted in large bank of good will that's hard come by these days. Despite many delays in the Smart Style cloud offering, Zenith partners hung in there because they knew the profits would be spectacular.

Profit doesn't have to mean less expensive. Profit on expensive things is just as good! :-)

5) Lesson From SMB Nation: You don't have to keep doing the same thing!

My friend Harry B started out writing books and doing consulting. Then he started a conference. Then a few road shows. Then a conference here and there. Then a magazine. Then a video venture. Then more conferences.

Harry employs one of my favorite techniques for success: Do a bunch of stuff and keep doing the things you enjoy the most, and those that make the most money. Too many companies go out of business because they get stuck doing what they were created to do. Sometimes it is best to re-formulate what you're intended to do.

This is particularly true in the world of technology. Things change fast. Examples include managed services and cloud services.

6) Lesson From Microsoft: At the end of the day, you need to drop things that don't work.

A lot of people got bit in the butt because they signed up for the Response Point VOIP program and invested their future in Microsoft's offering to small biz. I'm certainly sorry for those folks, but all successful businesses need to do this from time to time.

Sometimes businesses (especially large ones) change for change's sake. They don't like to sell things that aren't seen as "new" even if they're hugely popular. But they also need to prune their branches strategically in order to maximize growth for the rest of the plant.

You need to do this in your business too. Remember when we made money selling power supplies and other spare parts? Today that's a rare occurrence. We used to sell time by the hour, now it's by the month. We used to sell expensive servers into client offices. Now we sell cloud services.

To add new things and stay profitable, we need to drop some things we used to do.

7) Another Lesson From Microsoft: Embracing the community consistently over time has huge rewards.

Very few companies (and even fewer large companies) have had the kind of amazing success that Microsoft has enjoyed in the SMB market. One large part of this is their commitment to embracing the community, participating int he community, and supporting the community.

The MVP program gets lots of air play, but Microsoft has several other programs in place. Most notable are the SBSC program, the PAL program, and the Local Engagement Teams. Unfortunately, VERY few partners are taking full advantage of these programs.

But the partners who have engaged tend to be very active and very successful. As a result, Microsoft has been able to push one marketing program after another through this part of the channel, and maintain some hefty profits in the middle of a recession.

If you sell into a community, consider a level of involvement that you can use to improve your long-term economic picture. If you participate in a community, make sure you're totally aware of the power it yields.

8) Lesson From CA: Sometimes it's possible to screw up so bad that you can never be forgiven.

This is a sad note in many ways. CA (former Computer Associates) had a great backup product in the 1990's and early 2000's. But they basically stopped supporting it even as they continued selling it. Support got worse and worse.

We used to sell 50% Brightstore (CA) ad 50% Backup Exec (Symantec). Then it became 25/75. And eventually, after one too many negative experiences, it became 100% Symantec. We *wanted* to have an alternative, but at the mid market there just wasn't another alternative.

CA re-engineered their product AND their support system. They re-introduced their product (2005?) and pushed it heavily in the SMB space. They gave copies to everyone who wanted them. They pushed and pushed. They begged and pleaded. They bundled. They trained.

And then it just faded away.

Because sometimes a horrible treatments just so bad that you're not willing to go through it again. We had a brand new NFR copy of the revised CA backup suite on our shelf for three years before we gave it away. Unopened. Apparently, many others did the same thing.

Good customer service and support is great for business. Occasional screw-ups happen and can be forgiven. Consistently bad service will eventually bite you in the butt. You can lose clients forever.

One of the worst customer service experiences of my life was from Tech Data. So I stopped using them and will never go back. Every once in awhile some poor sales rep calls me and wants me to give them a whirl. What I say is "Your company worked really hard to lose my business. I don't want all that effort to be for nothing."

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These aren't immutable lessons or anything like that. Just some musings from the SMB space.

I hope your business does great in 2011. I'm working to make it a great year for mine!


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