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                        Seven
                        Secrets to
                        Managed
                        IT Services
                        Success
                        Selecting the right technology is only one piece of the overall puzzle.
                        Here’s how to snap together an effective MSP strategy.


                        W
                                     hen it comes to succeeding in the         Seven Steps to Success
                                     managed IT services market, Jenaly        Still, MSP success can vary from one company to
                                     Technology Group Inc. is outpacing many   the next. To fully optimize their performance, leading
                        of its rivals.                                         MSPs have largely mastered seven secrets to
                           The Portsmouth, N.H.-based solutions provider       success:
                        and CompTIA member ranks among the top                   •     Executive leadership
                        20 percent of all managed IT service providers,          •     Blending new talent with existing talent
                        according to the annual MSPmentor 100 report –           •     Sales training and compensation plans
                        which has culled business and financial data from        •     Customer education                               Generally speaking,
                        more than 700 MSPs worldwide.                            •     Marketing and PR                                 the move to
                           Jenaly’s recurring revenue strategy has largely       •     Proper service level agreements                  managed IT
                        protected the company from the economic storm            •     Key technology considerations                    services will stall
                        that threatens to capsize so many traditional VARs                                                              or fail completely
                        and resellers.                                         Here’s a closer look at each secret to success, and      without a top-
                           Jenaly isn’t alone. CompTIA’s Managed IT Services   the implications for aspiring MSPs.                      down management
                        Executive Forum includes numerous members                                                                       approach.
                        that remain strong amid the weak economy. As a         1. Executive Leadership
                        whole, progressive MSPs have generated stronger        Generally speaking, the move to managed IT
                        financial performance than traditional technology      services will stall or fail completely without a top-
                        resellers from 1Q 2008 to 1Q 2009, according to the    down management approach.
                        CompTIA MSP “Best in Class” Benchmark Report,             “If your top brass doesn’t show a commitment
                        released in May 2009.                                  to managed services, the rank-and-file employees
Art Credit: Doug Ross




                           But that’s not all. Top MSPs surveyed tended        won’t get with the program,” affirms Rich Forsen,
                        to hold their profits longer even as the economy       co-owner of Network Depot, an MSP in Reston, Va.
                        headed down; and began their recovery sooner,             To be clear, CEOs don’t have to fully master MSP-
                        CompTIA survey results revealed.                       related technologies. Instead, they must continually


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                          evangelize key themes to staff members – such as:
                            •    Promoting recurring revenue engagements
                                 rather than quick-hit, break-fix project work.
                            •    Tracking and improving customer satisfaction
                                 levels rather than billable hours.                The company now has recurring revenue options as:
                            •    Scheduling face-to-face visits and quarterly         •    PC management and helpdesk services
                                 in-depth meetings to advise customers on             •    Server management
                                 service levels, and to discuss emerging              •    Network management
                                 technologies that can further improve                •    Virtual CIO services
                                 business performance.                                “In many cases, we’re seeing VARs create a new
                            “You’ve got to sing the same tune over and over        position – either director of managed services or VP
 “You’ve got to sing      again. Otherwise your staff will drift back to doing     of managed services,” notes Ed Golod, president of
 the same tune over       what they’ve always done – selling technology            Revenue Accelerators Inc., a consulting firm in New
     and over again.      products instead of being a true managed IT              York that assists technology companies through
Otherwise your staff      service provider,” says Dave Sobel, CEO of Evolve        business transformations. “Sometimes it requires
    will drift back to    Technologies, an MSP that serves customers in the        outside talent to fill that spot. But many times, the
 doing what they’ve       Washington, D.C. area.                                   talent can be found within your existing staff if you
       always done –                                                               look hard enough.”
  selling technology      2. Blending New Talent With Existing Talent
   products instead       Within the MSP industry, there’s a myth that you         3. Sales Training and Compensation Plans
       of being a true    may need to fire or replace most of your staff as you    In the traditional channel, sales teams are
managed IT service        push into the managed services sector. Generally         accustomed to being paid a one-time commission on
            provider.”    speaking the myth isn’t true.                            specific project engagements. But in the managed
   —Dave Sobel, CEO of       At Jenaly, company president MJ Shoer has             IT services market, recurring revenue models create
    Evolve Technologies   been able to generate more and more recurring            new opportunities – and new challenges – for sales
                          revenue with his existing staff. Similarly, BlueWater    professionals and their managers.
                          Communications Group – one of North America’s               The big challenge frequently involves keeping
                          fastest-growing solutions providers – intends to         sales professionals focused on longer-term,
                          leverage its existing sales and technical staff as the   ongoing engagements – rather than quick-hit project
                          New York-based company explores the managed              work. “Without the proper compensation plans in
                          services market.                                         place, your sales team may wind up making half-
                             Still, there are cases where solutions providers      hearted managed services pitches without you even
                          augment their staff with a dedicated managed             knowing it,” says Golod. “That means your sales
                          services champion. For instance, Northwest               team may wind up pitching a customer a new email
                          Computer Support of Tukwila, Wash., in 2008              server rather than a managed email service.”
                          recruited an outside expert to lead the company’s           In order to keep all of its employees focused on MSP
                          push into managed services.                              success, Jenaly’s Shoer uses a quarterly bonus pool
                                                                                   based on net profits. During each quarter at Jenaly:
                                                                                      •	 Two-thirds	of	the	net	profit gets reinvested
                                                                                           in the company to fund growth.
   FAST FACTS:                                                                        •	 One-third	of	the	net	profit goes into a bonus
                                                                                           pool.
   In	terms	of	profits,	MSPs generally out-performed traditional
                                                                                      •	 Each staff member earns a specific
   technology resellers from 1Q 2008 to 1Q 2009, according to the
   CompTIA MSP “Best in Class” Benchmark Report, released in May                           percentage of the total salary of the pool. For
   2009.                                                                                   instance, if your salary represents 5 percent
                                                                                           of the total company payroll, you’re eligible for
   Revenues associated with managed services market will reach                             5 percent of the bonus pool.
   nearly $43 billion in 2013, up from $30 billion in 2008, predicts Insight          •	 After quarterly bonuses are calculated,
   Research.                                                                               they are paid out in weekly increments the
   The vast majority of successful MSPs started with managed storage                       following quarter.
   and managed security services, according to the annual MSPmentor                   •	 As staff members get used to earning bonus
   100 survey.                                                                             pay, it keeps them focused on the MSP recurring
                                                                                           revenue (and bonus) model, notes Shoer.


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                                                                FOR YOUR ROLODEX
   Also of note, Jenaly uses four criteria to set
individual bonuses:                                             The following experts work closely with CompTIA on various
   1. Utilization rates                                         managed IT services activities:
   2. Compliance (getting time sheets in on time, etc.)
                                                                Tracy Butler, president and co-founder, Acropolis Technology Group
   3. Client satisfaction (based on client feedback)                          (www.acropolistech.com)
   4. Individual contributions to team success
   Of course, compensation plans vary from company              Stuart Selbst, trusted business coach, Virtual Administrator
to company. But generally speaking, the best MSPs                              (www.VirtualAdministrator.com)
have clearly communicated compensation plans                    Jim Bakic,      director of business development, Midwest Strategic IT
with well-defined goals and priorities.                                         (www.mwsit.com)

Don’t Forget Sunset Clauses                                     Dave Sobel, CEO, Evolve Technologies (www.evolvetech.com)
In some cases, successful MSPs discover their best
                                                                Erin Arnold, president, Next Step Networking
sales professionals get a little lazy living off recurring                   (www.nextstepnetworking.com)
commissions from 1Q and 2Q, and aren’t motivated
enough to close new business toward the end of a
fiscal year.                                                 5. Marketing and PR
   To mitigate that problem, some MSPs have                  Progressive MSPs push beyond basic elevator
embraced “sunset clauses.” With a sunset clause,             pitches and sales collateral. In many cases, they
each piece of current-quarter business earns a high          develop ongoing marketing and PR campaigns.
commission, but customer engagements that are                   Many old-line resellers rarely excelled at
three- and four-quarters old gradually fade to zero          marketing and PR. But times have changed.
commission rates. That approach motivates the                Today’s modern MSPs are hip to press releases,
                                                                                                                     When it’s time
sales professional to hunt for more business (with           customer endorsements, viral marketing campaigns
                                                                                                                     to describe
established or new clients) as older commission              and a healthy dose of Web 2.0 marketing tactics.
                                                                                                                     your managed
pipelines dry up.                                                                                                    services portfolio
                                                             A few examples:                                         to customers,
4. Customer Education                                          •   Jenaly’s web site (www.Jenaly.com) includes       remember three
When it’s time to describe your managed services                   embedded video, a blog and other content          simple words:
portfolio to customers, remember three simple                      that attracts Google’s search engine.             Less is more.
words: Less is more.                                           •   Evolve Technologies (www.evolvetech.com)
   In some cases, aspiring MSPs get bogged down                    has easy-to-navigate content that includes
in technical jargon during customer meetings. Within               Twitter, RSS and Facebook feeds for industry
your own business, terms like PSA (professional                    peers and customers.
services automation), RMM (remote monitoring and               •   VirtualAdministrator (www.VirtualAdministrator.
management), SaaS (software as a service) and                      com) and its full-time coach, Stuart Selbst,
cloud computing are commonplace.                                   constantly evangelize MSP trends and
   But when you’re seated across the table from a                  developments across personal and corporate
potential customer, it’s wise to skip the high-tech                blogs, plus private networks like Facebook.
acronyms and instead focus on business benefits.
   To stay on message, many successful MSPs
have developed one-page handouts for customers.                 JOIN THE CONVERSATION
The handouts describe the benefits of predictable,              CompTIA has a range of opportunities to help you join the managed IT
flat-rate, pro-active managed services. Instead of              services conversation including:
zeroing in on price, the single-sided documents
emphasize the value of managed storage, managed                 1. Managed IT Services Summit, Oct 7-9, 2009
security, and other services that keep a business               Your Potential Role: Participate in education and how-to tracks
online and productive.                                          http://www.comptia.org/summit
   Ultimately, the goal is to communicate reliability,
dependability and improved productivity, according              2. Managed Services Executive Forum
to Stuart Selbst, a trusted business coach at Reston,           Your Potential Role: Help us to define and standardize industry best
Va.-based Virtual Administrator, which offers hosted            practices http://www.comptia.org/membership/communities
MSP solutions to VARs and aspiring MSPs.


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                                                                                                     software, which blends such functions as
                                                                                                     CRM (customer relationship management),
   ABOUT CompTIA                                                                                     sales force automation, customer billing and
   The Computing Technology Industry Association (CompTIA)                                           trouble ticket management into a single,
   represents the global IT industry. Its membership includes resellers,                             comprehensive platform.
   IT vendors, distributors and educators. The organization hosts                                •   Remote monitoring and management (RMM)
   communities including IT services and support, managed IT services,                               software, which allows MSPs to proactively
   e-business, software, IT security and small business forums.                                      maintain and troubleshoot customer systems
   CompTIA also provides a CIO Executive Council. CompTIA seeks to                                   and networks from afar.
   promote the industry’s growth through educational programs, market                            PSA and RMM software are widely available via:
   research, networking events, professional certifications, and public                          •   On-premise offerings, installed within an
   policy advocacy. The organization’s Breakaway conference targets                                  MSP’s network infrastructure.
   the IT channel. For more information, visit www.comptia.org.                                  •   SaaS (software as a service) offerings,
                                                                                                     accessed by an MSP over the Web as part of
                                                                                                     a monthly subscription service.
                                                                                                 Software requirements vary from MSP to MSP, so
                              6. Proper Service Level Agreements                             it’s impossible to recommend a one-size-fits-all PSA
                              Generally speaking, MSPs are developing service                or RMM solution to readers. However, most of the
                              level agreements that are strong enough to ensure              major PSA and RMM software providers offer free
                              customer faith -- but vague enough to ensure minor             previews or low-cost trials to help you evaluate their
                              service issues don’t become major distractions for             software.
                              all parties involved.
                                 “You don’t want to go in and guarantee five-                Staying Plugged In
                              nines reliability if all your customers really want are        Long term, aspiring MSPs and established MSPs
                              reasonably reliable networks and systems,” notes               face similar challenges: The IT landscape continues
                              Golod. “Chances are, most of your customers will               to evolve at a frantic pace.
                              accept a bit of planned network downtime on the                   Early MSPs mastered basic PC and server
                              weekends a few times a year. You’ll never go wrong             administration. Now, those same MSPs must master
 CONTACT US                   if you stick to a strategy of under-promising and              cloud and SaaS management, tapping into such
                              over-delivering.”                                              systems as Amazon Web Services (AWS), Google
 For more                        CompTIA itself is helping MSPs to address the               Apps, Microsoft Windows Azure (a cloud operating
 information                  SLA challenge. For instance, the association is                system) and Microsoft Business Productivity Online
 about CompTIA’s
                              developing online tools that help MSPs to develop              Suite (BPOS), just to name a few emerging options.
 commitment to the
 managed IT services
                              SLA documents tailored for their specific business                Keeping pace requires constant networking with
 market please                goals. Details about the effort will arrive incrementally      thought leaders and industry pundits. With those
 contact us.                  over the next few months, with preliminary details             challenges in mind, CompTIA continues to develop
                              set to debut at the CompTIA Managed IT Services                the industry’s most comprehensive MSP-focused
 Phone:                       Summit in October 2009.                                        research, seminars and executive conferences. And
 866-835-8020                                                                                CompTIA’s membership continues to include many
 Email:                       7. Key Technology Considerations                               of the world’s most successful MSPs.
 membership@                  On the technology front, MSPs face a range of                     CompTIA is the largest, most progressive non-
 comptia.org                  considerations.                                                profit organization serving managed IT service
 Web:                            Generally speaking, the most successful MSPs                providers. Not by coincidence, many of those
 www.comptia.org              run at least two types of software solutions:                  CompTIA members are following the seven secrets
                                 •    Professional Services Automation (PSA)                 to success in the MSP market. �



Produced by Nine Lives Media Inc.
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