16 Questions Every MSP Should Ask During IT Nation

Roughly 1,600 VARs, MSPs and channel vendors are expected to attend IT Nation and related sub-conferences in Orlando, Fla., next week. Many of the attendees will be exploring new technology solutions (remote monitoring, cloud storage, etc.) and new business strategies (marketing, sales, etc.). Within dozens of vendor booths and during private meetings, you’ll hear plenty of sales pitches. But before you ink any deals, here are 16 questions every managed services provider should be prepared to ask during IT Nation.

They include…

For VARs and MSPs evaluating new vendor solutions…

1. Partner Retention: Many vendors will talk about their growing installed bases. But what percentage of customers/partners actually stick with the solution over the long haul? Key question: What’s your annual partner/customer retention rate?

2. Financial Stability: Yes, plenty of MSPs are seeking answers as Zenith Infotech works to navigate its recent debt default. But that brings up a bigger issue: Many software and cloud companies serving MSPs are privately held and don’t need to disclose quarterly results (net income, earnings per share, cash on hand, etc.). The key questions you should ask:

• How are you funded (private equity, venture capital, self-funded, etc.)?
• When was the last time your company raised cash and why?
• Do you need to raise more cash to continue business in 2012 and beyond?
• Who actually owns the company?

3. Cloud Exit Strategy: No, I’m not talking about how you — or a vendor — plan to sell the business. Instead, I’m talking about your plan for abandoning a cloud service if it doesn’t work right, goes dark or doesn’t fulfill your needs. The key questions you should ask:

• Let’s assume my business signs up for your cloud service. How do I get off the service if I don’t like it?
• How do I make sure my customers’ data can be retrieved if your service goes out of business?
• What are my financial obligations if I abandon your service?
• Can I get all those answers in writing?

4. Scalability Examples: Thousands of MSPs generate $500,000 to $1 million in annual recurring revenues. But mid-size MSPs (say, $5 million to $100 million) and large MSPs ($100 million and above) frequently run into scalability issues. One reason: Many vendor solutions were designed with smaller customers in mind. The key question you should ask: Can I speak with three of your MSP partners that are at least 20 percent to 35 percent larger than my business?

5. Integration Questions: Many vendors offer APIs and integration strategies, to help MSPs plug various software and cloud platforms together. But sometimes the integration is poorly written and poorly supported. The key questions you should ask:

• Who oversees your API and integration strategy?
• How are integration issues escalated and resolved?
• Can you give me three examples of peer MSPs that have successfully integrated the platforms you’re trying to sell me?
• If vendor A integrates with vendor B, which vendor has primary responsibility for the integration?
• Do you have phone, email, online chat and other support services for the integration?
• How long has the integration we’re discussing existed, and how many MSPs have successfully leveraged the integration?
• Is it two-way integration (allowing data to flow in both directions between the two platforms) or one-way integration, where one platform is the system of record?

For VARs and MSPs evaluating cloud solutions

6. The Nuts and Bolts: Start with the basics when learning about potential cloud partners. The key questions you should ask:

• When were you founded?
• What is the executive team’s background and track record?
• How were you funded and how long will that funding carry you forward?
• How many partners are on your platform and what’s your annual partner retention rate?

7. The Profit Model: So, how exactly does the cloud service generate revenues for the MSP or VAR? The key questions to ask:

• How much does the service cost?
• What’s the margin for the partner?
• Can the partner set end-customer pricing?
• Who controls end-customer billing?
• How has your pricing evolved over the past one to three years?

8. Service Level Agreements: Get beyond the “nines discussion” (99.9 percent to 99.999 percent avaiability). The key questions you should ask:

• When did your cloud launch and what’s been the availability so far?
• How much planned downtime do you have each month and annually? When does the planned downtime typically occur?
• How can I monitor the SLA to make sure you’re holding up your end of the bargain?
• If you fall short of the SLA, how am I compensated?

9. Compliance Issues: From basic security to privacy issues here are the key questions you should ask:

• Where are your data centers located and where is my customer information stored?
• Which federal and state regulations do you comply with? (Don’t mention the regulations by name; instead, test the vendor to see if they can rattle off a list of key compliance and privacy regulations.)
• Which verticals do your partners typically serve, and how is your cloud service designed to meet the needs of that vertical?

10. Customer Ownership: Can you guarantee that you’ll never contact my customers, and guarantee that my company ultimately owns the customer relationship?

For VARs and MSPs seeking sales, marketing, business development and coaching services:

11. Been There, Done That: Many coaches and consultants claim they previously built an MSP or VAR before moving on to “share their expertise” with peer VARs and MSPs. The key questions to ask:

• What business did you build, when did you exit and why?
• What metrics for success do you use to prove your worth to my company?
• Are you working with any other VARs or MSPs in my region? If so, are there potential conflicts of interest and what assurances can I receive for confidentiality?

12. Sales and Lead Generation: A growing list of consulting firms assist VARs and MSPs with sales and lead generation programs. Among the questions to ask:

• How many leads are you guaranteeing and what exactly does the guarantee offer? What if you fall short of the guarantee?
• What marketing lists are you using, renting or buying to assist with lead generation? What steps are you taking to ensure those lists are not suffering from marketing fatigue?
• What steps do you take to “discover” my ideal customer targets? And how do your target your lead generation services to reach those targets?
• Can I speak to three references who have benefited from your lead generation services? And can you guarantee that those references don’t have any direct or indirect ties to your company?

13. PR, Marketing, Branding and SEO Services: Numerous consulting firms now serve this market niche. Among the questions to ask:

• For SEO, how will you optimize my web site and marketing campaigns to attract a local, qualified audience?
• What metrics can you offer to prove that your SEO services actually work?
• Can you prove that the services you offer — such as web site development or email marketing — involve truly unique content, truly unique messaging and truly unique design, rather than cookie-cutter approaches and stock art that make me look like every other MSP on the web?
• For PR, what industry relationships do you have in place that can help to raise my company’s visibility?

For VARs and MSPs considering “special offers” that are only available from vendors during the conference

14. What’s the Rush?: Why is this offer only available now? Isn’t my business valuable to you if I sign up next week?

15. What’s the Value?: Some vendors will spread fear, uncertainty and doubt (FUD) about rivals’ platforms during the conference. But don’t change just for the sake of changing. Instead, ask the vendor why it makes business sense to make such a change. Ultimately, what’s the upside — other than “escaping” from another vendor’s product?

16. What’s the Process?: Ask to speak with three customer references at the show. And ask each of them:

• When did you move to this vendor’s platform and why?
• What did the vendor promise and what did the vendor actually deliver?
• What platform did you switch from and why?
• How long was the migration process and what were the hidden problems?
• Would you make the transition again? Why or why not?
• What are the hidden costs?

See You At The Show

I realize I likely overlooked dozens of additional questions you’ll raise during the conference. I look forward to learning more and hearing the chatter in a few days. See you at IT Nation.