Net@Work sees VDI, Windows OS upgrades, and the transition from SBS as areas of opportunity, but stresses that MSPs have to get the deal—and the pricing model—right.
By Ronnie Parisella
October 18, 2013
Funny story: I get a call from a customer in 2001, a cigar manufacturer in downtown Brooklyn for whom I’d built out offices. He says, “Ronnie, every morning we come in and the server is rebooting. We turn the lights on and there it is.” I went into the office with him and I see that he’s moved the server to the power outlet with switch control, so at the end of the day he was turning off the lights and the server. That was a quick fix, but I got yelled at by him, then he apologized because it wasn’t my fault, and then we had a good laugh—all in five minutes.
A lot has changed in the managed services space since that time. For one, it’s easier to sell managed services today than 10 years ago. Most customers have already worked with an MSP, so they know what we’re pitching before we sit down. We don’t have to explain, just negotiate. But there are some areas of new opportunity if you’re looking to grow your business, and some tips if you’re still moving to a recurring revenue model.
One area of opportunity is VDI—virtual desktop infrastructure. Costs are coming down, and every time you have a faster processor or the server supports more RAM you can run more virtual machines on the same hardware. I think clients will have money to put VDI into the businesses. For almost all of our new projects, we’re considering VDI every chance we get; mostly Citrix, but we’re considering VMware and Microsoft.
The risk is bandwidth; it’s not increasing the way it used to. We’re running into a lot of sizing and configuration issues. I think the industry undervalues bandwidth.
If you do make VDI part of your offerings, partnerships are very important. You need relevant certification from a vendor such as VMware or Microsoft. But once you pick a vendor, don’t deviate. Standardize on one hypervisor to start, and be a champion. You will not succeed if you are a jack of all trades but a master of none. Sometimes you need to go deep.
Then, build a marketing campaign around VDI—have events, do demos. Also do some pro bono work to build a following around the technology. It makes the customers happy and provides you with referral accounts to leverage.
The one pitfall to avoid is not having the in-house skill set for VDI. You have to make sure you can support what you’re selling—a lot of people forget about that.
Two other opportunity areas are upgrading customers from Windows XP and transitioning them away from Small Business Server. In six months your SBS clients will not be able to get support. For us, 90 percent of our customers have not moved from Windows XP. It’s a huge problem for us, and a tremendous problem for the industry.
The user community doesn’t understand the issues, so we lead with an out-of-warranty approach. If we see a system with XP, it’s a good excuse to upgrade it. We’re offering customers lower hardware costs to get them to upgrade the software. We’re moving them to Windows 7, and waiting for Windows 8.1. Always wait for the first service pack.
PROCEED WITH CAUTION
Some MSPs are expanding into telecom, but it’s a different world, with different technology and different vendors. I’d advise partnering or acquiring a VoIP company. You can outsource or buy the expertise, but don’t try to do it yourself.
A final word to the wise: The biggest mistake MSPs make is to jump into a deal too quickly before it’s vetted. Once you buy an onion it’s too late to peel it back and check inside. Before you close the deal make sure it’s the right opportunity. And make sure you’re charging enough. A lot of MSP CEOs just look at the revenue coming in, but it will cost you revenue if that customer starts eating up your time.
So how do you find the right pricing model? Copy someone else’s—I mean it. If you see a model that works and you think you could charge what the other company charges, use it. Also, build automatic increases into your client agreements.
As MSPs, we do a lot of our work behind the scenes—patching, monitoring, etc. But when a client has an issue or a project, we jump on it. I tell our clients, if it plugs in, you call me to fix it. If it’s got a plug, I’m your guy. Just don’t move that plug to another outlet!
Director of Information Technology
Number of employees: 180
Location: New York
Company focus: We are a full-service IT and managed services company with a very strong presence in accounting integration, as well as penetration in a variety of other verticals.
Favorite part of my job: Finding solutions and answers to problems for my clients
Least favorite part: Legal contracts and agreements
What people would be surprised to know about me: I recently lost 200 pounds through diet and exercise; there are no shortcuts.