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Pioneering IT services consultant Gary Pica tells of an email he received recently from one of the managed services providers (MSP) he advises through his 11-year-old company, TruMethods.
In the message, the MSP was gushing with gratitude, crediting the Moorestown, N.J., consultancy with helping stem losses of $47,000 on $680,000 in revenue during one recent quarter.
For the first quarter this year, the company was on track to do about $1 million in business, with roughly $200,000 of that falling to the bottom line.
“When people ask what we do, we like to say we make grown men cry,” Pica said.
He launched TruMethods in 2006, after a decade running a successful MSP.
“When I started, we had a lot of success scaling the MSP,” he said. “Our net margins were double the rest of the industry.”
“There was one specific thing I did in my business: What was holding us back is we had too many tickets and alerts,” Pica continued. “We were getting buried in noise.”
The answer he decided was to develop a rigorous set of standards and a process for doing continuous alignment of the business with the standards.
“We reduced our reactive noise 60 to 70 percent,” he said.
IT process by the numbers
He recognized an opportunity in rolling that operational expertise out to other MSPs.
In the early days, TruMethods produced instructional videos that MSPs consumed online.
“We hit on something that people were looking for,” Pica realized.
But the business kicked into high gear with the advent of myITprocess, an online platform designed to walk MSPs through the complicated but essential tasks of developing their own standards and continuously working to align their businesses accordingly.
Using the tool, participating MSPs literally build an IT process.
“We have this role, we call it the ‘net admin,’” Pica explained. “That’s the program manager of your monthly offering.
“They visit clients and they build this template.”
“There are hundreds of questions,” he continued. “’Are complex passwords enabled, yes or no?’"
“It gives it to you when you need to ask the question and it flags when you have something out of alignment.”
Reactive versus ‘high-value’ hours
Coaching of MSPs that seek out TruMethods often begins with understanding why they’re actually there in the first place.
“Why they come to us is not why they need us,” Pica said. “They come to us because they need to sell more (but) sales isn’t their problem. It’s a symptom of the problem.”
“The problem they have is a value problem,” he went on. “They look like every other MSP.”
One of the major concepts he teaches involves RHEM, which stands for “reactive hours per endpoint per month.”
“You have a certain amount of time, total,” Pica explained. “How much is left for your high-value stuff if you’re spending 45 minutes out of every hour being reactive?
“We need to get you down to 15 minutes,” he said. “It’s hard (but) you’re going to sell more because you have so much more value to offer.”
Another concept revolves around teaching MSPs to focus on five aspects of their service delivery models: professional services, centralized services, support, network admin/standards and alignment; and virtual CIO.
“Basically, what we do is we get them to look at the business differently,” Pica said. “We’re going to tell you, for each of those, how much revenue you should be able to touch and what the drivers are.”
“Then we’ll help you turn that into an average cost per seat; target 70 percent gross margin,” he continued. “They see where they’re out of alignment.
“Once they get going with it and they start to see the results, then you see the sales contact.”
‘Small cost for major change’
This year, TruMethods expects to work with about 1,000 MSPs.
Some pay the entry-level rate of $349 per month for access to the platform and a wide range of online training assets.
“It’s a really small cost to them relative to making a major change in their business,” Pica said.
Companies looking for more intensive consultation services can pay for personal coaching from one of the company’s industry veterans.
And then there’s the peer groups program.
“It’s called the Winners’ Circle,” Pica said. “Everyone is implementing the True Methods framework.”
The TruMethods approach can help an MSP’s bottom line in a variety of ways.
“There’s a process for (the MSP) to offer this rich relationship with the customer,” he said. “They’re investing more in technology because they understand why they’re doing it.”
Reducing the volume of tickets also contributes to returns.
“If you’re a customer of mine and you are only dealing with half to a third of the number of issues, right there there’s value,” Pica said. “Right off the bat, lowering noise makes you more productive."
“If you have a customer with 20 employees, the difference between paying (the MSP) $2,000 versus $3,000 isn’t a big deal if I can show I can improve their business.”
Whether or not MSPs turn to TruMethods, Pica is a big believer in the philosophy that virtually every IT services provider could stand to gain from some outside advice.
“I feel like everybody should either be part of an industry peer group or working with an industry expert,” he said. “It’s a really hard business to try to figure out in an office by yourself.”
This article is the first in a series entitled “MSP Whisperers,” which looks at the distinct approaches of top consultants in the MSP space.