There’s been such a groundswell under this podcast that we’ve decided to extend Frankly MSP into different areas. I mentioned briefly a couple of episode ago that we’re launching a Franky MSP Live conference in 2020. I’ll have more details on that in February.
We’ve also launched a Frankly MSP Community. This is a place on LinkedIn where you can come hang out with your fellow MSPs and talk about anything and everything to do with running or working in a managed service provider business.
Over the last 36 episodes in the podcast, we have had some incredible guests on the show sharing advice and insights. But with a podcast, it’s pretty much a one-way flow of information. With the community, we’re hoping to bring you into the conversation.
Hear an episode and have questions for the guest? Go to LinkedIn and pop your questions into the Community—we’ll do our best to get the experts in there to answer.
Also feel free to ask or share about anything on your mind. The Community is yours to leverage and it’s open to any MSP or IT service provider. You do need to request to join and we do that just to give you some privacy for your conversations. Come on out. We’d love to hear from you.
Today I’m joined by DJ Forman, co-founder and CTO of MSP ITque based in the California Bay Area. DJ’s here to tell the story of how his firm transitioned from almost exclusively break-fix to 100% managed services. It took 2 years, and as you’ll hear, it was a painful process—but DJ says totally worth it.
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1 Thing (#MSP1T)
First, our new 1 Thing segment, where we hear from an MSP about 1 thing that’s made a difference in their business. Today we’ve got Jamie Warner from eNerds based in Sydney, Australia. This is an excerpt from Frankly MSP Ep029.
[02:24] One of the things that set our MSP apart in terms of growth is a singular focus on signing up new support deals.
[02:46] A customer is not a customer unless they’re paying me a monthly fee for support.
[03:03] Focus on the most profitable line item in your business as the first thing you’re selling to market.
[03:25] Have that singular focus on the core product that’s the most profitable and your business will grow and grow.
We want to hear about your 1 Thing! Was there a book you read or a process you implemented that really changed things for you? Maybe a speaker you saw or a tactic you tried had an impact. Let us know.
Tell us about your 1 Thing in a voice memo and email the recording to [email protected]. Not only could you be podcast-famous by being featured on the show, we’ll also send you a much-coveted #franklymsp t-shirt.
Interview with DJ Forman – This Transition to Managed Services Was Hard—But Worth It
[04:31] ITque was formed out of two separate companies. DJ’s partner and he had worked on a project together and it went well. They decided to join forces and make one company, combining all of their clients and technical assets.
[05:10] DJ really noticed the break-fix model was flawed when he started seeing sophisticated hacking attempts (and successes!). Technology requires constant care to prevent those.
[06:12] DJ and his business partner kept all of their staff when they merged their companies.
[06:37] One of the challenges they faced when shifting to managed services was getting their techs to change their mindset about logging hours. It was no longer about “proving” the hours they put in so they’d get paid. It was about logging notes to help the client and the rest of the team.
[07:36] ITque was very evangelical in explaining how the new business model was better for everyone. They used graph and numbers to explain it both to their staff and to new customers.
[08:44] Once people got used to the new method it was a release of pressure. Using the proper tools means processes can be streamlined and outcomes can be predicted.
[09:38] Having calls and tickets managed and dispatched in a central fashion also helped eliminate pressure on the techs.
[10:35] The structure and onboarding process makes hiring new techs easier.
[11:10] They got initial push back on the shift from clients. They had to present the client’s current spend over time and present that against a flat-rate service and show clients the added value.
[12:05] They didn’t lose any clients in the transition except for a couple that went out of business.
[12:38] The process of moving from break-fix to managed services took a little over two years.
[12:52] The approach they took was explaining the numbers properly to the clients. It took time to get the numbers to make the point clear.
[13:31] Making the transition was very difficult—they had to do Iron Man IT with all hands on deck working both break-fix and managed services while things switched over. One thing that helped was converting employees from hourly pay to salary.
[14:17] Staff still had to do the time entry but it eliminated the associated stress of getting paid for the work.
[15:46] They had to offer a whole new pricing structure as well. Bundling was incredibly important.
[16:40] The biggest pitfall not to fall into is having too many services categories. Make it simple.
[17:24] It took them three iterations of their pricing structure to get it right. Once people were converted, it was much simpler having new pricing conversations.
[18:06] If DJ had to do it over again, he would build in more redundancy at the beginning and lean on an outsourced NOC and SOC.
[19:01] Even though it was a painful process, it was completely worth it to make the conversion. Their ability to scale is night and day compared to break-fix. Tools allow them to scale up almost instantly.
[20:11] If you’re interested in making the shift, DJ recommends picking your favorite vendor and going to their conference. Talk with other MSPs like you.
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