Project Management

Signs a client may not be ready for managed services

Warning bells should go off in your head if you spot any of these items indicating managed services are not a priority at a prospective client's site.

Most IT consultants should have migrated their business operations to emphasize managed services. Unfortunately, many clients still live in the much more stressful, inefficient, and disruptive break-fix world. When meeting a prospective client and working to ensure the organization's ownership values IT investments as a means of powering business operations and injecting cost efficiencies, telltale signs (which are not foolproof laws) often reveal whether this is the case.

No receptionist desk

Organizations that once maintained a full-time receptionist but no longer staff the position because they were forced to eliminate the role due to cost-cutting requirements are likely to have reduced spending in other critical areas, too. These firms often possess neglected IT infrastructure as well.

Such clients often suspect they're due for an overhaul and fear systems failure is imminent. Some may already be experiencing unplanned outages and business disruptions due to unmanaged servers, obsolete network equipment, and aging desktops.

No consultant can correct years of technological mismanagement and neglect quickly and easily -- returning to a reliable baseline of operation requires far more than just implementing a managed services contract. You're challenged to document the older infrastructure, explain the deficiencies, and recommend corresponding replacements and upgrades to help break the costs into more manageable stages.

Generic white box PCs

When I encounter white box or generic computers, a host of issues are almost always present, too. Microsoft Office and even server OS software is frequently licensed improperly. Free consumer-grade antivirus applications are often deployed in violation of the manufacturer's licensing terms. Residential-grade routers are often the sole link to the Internet (more on that later). Backups often aren't in place, haven't been working, and were never monitored.

Generic computers usually indicate the organization's ownership is resistant to making reasonable IT investments that are necessary to ensure proper business-grade equipment is in place and intended product lifecycles aren't exceeded. That's how the generic systems ended up being deployed in the first place.

Before turning the attention to costs and expenses associated with upgraded equipment, you need to resolve any bugs first.

Consumer-grade routers

Consumer-grade routers on a business network are never a good sign. I've lost track of the number of times customers have complained of poor wireless performance, the lack of remote (VPN) support, and bad network performance, only to discover the business was running off an $89 router that a consumer might purchase from Target.

Organizations that must secure their systems, empower reliable wireless networking, and enable optimal performance need better. No business or nonprofit should deploy anything less than an entry level business-class router; this is especially true for any organization possessing credit card information, protected health information, or sensitive client or business information. You must explain the logic and justification of deploying a business-grade firewall that supports running perimeter-based gateway security services and enabling intrusion prevention, an often arduous and uphill battle.

Analog phone system

The presence of an antiquated analog phone system at a prospect's site isn't necessarily a sign the client doesn't value or understand the importance of basic IT investments, but it is worrisome. The client has been working with an incapable IT provider that didn't bother pointing out the potential efficiencies of switching to VoIP, or the client didn't make such an investment because they couldn't afford it. Your challenge becomes clear: assist clients who are desperate to implement technology upgrades.

When analog phone systems are found mated to outdated T1 data circuit contracts, sometimes you must identify opportunities where the client can reduce costs and free up funds for investments in other areas. By replacing the obsolete telephony system with a VoIP platform and a more cost-effective broadband connection, it may free the client of hundreds or even thousands of dollars a month needed to upgrade servers, network equipment, workstations, and software applications.

About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

7 comments
secondstartech
secondstartech

As the owner of a small MSP I have to disagree with the premise that any client would not benefit from a managed service agreement. Some clients need a little convincing and we have found a way to bind certain aspects of our MSP SLA with the Break / Fix model, with the intention of moving clients up the ladder to higher end contracts. Yes, this is more profitable for me than a standard Break / Fix only model. Yes, my company was originally founded as a Break / Fix only provider. Yes, there is a marked improvement in the performance of the managed clients systems all around since moving them to the full MSP model and Yes, I have been able to drastically reduce the amount of time that it takes me to respond to repair requests. Fortunately, having implemented the model after a year of study and research, we managed to get it right the first time. Managed services does not automatically mean price gouging nor does it automatically guarantee quality. Having read this article and many of the comments I noticed a specific section missing from the discussion. That being ROI and TCO. A client with 'white-box' PC's and servers, retail SOHO routers, etc., was probably managed poorly from the get go. With MSP reporting it is fairly simple to identify choke points and show the client how they can reduce management and production issues with a financial investment into new hardware and services. This reduces production problems and management overhead. More specifically, the computers 'just work' and the client is able to go about their business without their network being a constant problem that they have to deal with. A properly qualified and competent MSP will be able to custom fit their agreement with the client and should be able to vet out problematic clients before they sign them on. I have managed clients with 50 systems and I have managed clients with 3 systems. Some have receptionists, some have old servers, bad backup solutions, questionable security policies, etc. I educate my clients, get everything in writing, and work with them on ways to improve their network that fits into their vision and, more importantly in many cases, their budget. Tiered service models combined with a good vetting equation will usually generate a service level and monthly contract cost that the client will find acceptable. You still have to perform up to expectations though. I believe this is where the conflict arises. MSP's that just take the money, make a lot of promises, fail to deliver, and then fall back to contract terms when there is a client dispute. That cannot possibly, reasonably be laid at the feet of a service model. That is the fault of shady business practices and the failure of the client business to properly research the investment their company was making into the managed service relationship.

IT_Lunatic
IT_Lunatic

... is not an option with servers or high demand workstations. I have clients who can lose hundreds of thousands of dollars up to millions simply because they cannot complete deals that would drive the revenue; so making sure they are up and functioning is their primary concern. I suppose it depends on the industry. For example, the CFO of a private equity firm will have more reliance on his machine than the small lawn company will. Proactive maintenance is a must in order to maintain service up time and reduce loss of productivity. Good article!

jbrunner007
jbrunner007

My firm, Affirmed Systems, provides mostly datacenter Managed Services but we still have a few office clients left from the early days... these rules below apply equally... I'll give some new MSP's ideas (we have been at this 5 years now). 1. There are 2 type of customers - "growth companies" where the focus of the business is on growth and "life style companies" where the sole purpose of the business is to give the owner a fabulous lifestyle. Being in NYC, we see lots of these - $50 Million dollar apartments, kid has a yacht, yada yada. Generally, we look to put growth companies that will make a continued, sane, well budgeted IT spend on our Managed Services plans. Life Style companies are NEVER worth it - its always a fight. There are good companies out there that value a person on call 24 x 7, 24 hour monitoring and non-stop monitoring and care of their backups, etc. FIND THEM to succeed! 2. We start the managed services bar at $4,000 a month. We are not interested in dedicating valuable time and resources to "hobby" style businesses and home offices - they NEVER turn out to be good customers either. $4,000 per month insures the company has a stable, well funded business, an IT infrastructure and a business case to outsource IT to our firm. Any less and you probably are going to trip over a lot of headaches. Of course NYC is a very expensive place to do business - pick a reasonable number for your locale. But it should NEVER be less than 1 junior full-time desktop resource in your neck of the woods. 3. I agree with the owner's above points - whitebox pc's are NEVER worth the hassle - hell we have even seen whitebox servers... each had different raid cards and motherboards!!! 4. D, H, I - Dell, HP or IBM. that is the only system worth supporting on MSP. Supermicro is junk. RUN like hell from them or DEMAND hourly rates above basic monitoring and backups. We had a $5,000 supermicro server fail last year (2012)... it was hell getting any support on it. They sell to "kit companies" like Facebook with 10,000 low paid geeks standing around with nothing to do. MSP's need fast, rapid support from a hardware vendor. "DHI" is the order I would say you would want your MSP customers to use for quick and painless parts replacement and on-site service calls. We do not cover "white box" anything on managed services. this includes Routers! a "Vyatta server that routes" will blow up and die also - not a good fit for managed services. 5. Bring the customer monthly reports - if you do not - they will QUICKLY forget why they pay you every month and your managed services invoice will become "one more thing" they will cut. Thanks and happy servicing!

info
info

First of all, 'Managed Services' aren't the be-all and end-all for an SMB environment. For an IT Consultant, I'm sure pushing these services would help to line your pocket with higher commissions and kickbacks from Managed Service providers...which I suppose is in-line for the thinking of this website. Most businesses I've seen that have Managed Services also seem to have the extra cash for lavish company cars, the best of equipment, etc...etc... A lot of 'up and comers' that are struggling to match that company's 40%+ profit margins don't have that luxury. The ROI of 'break-fix', especially with more reliable newer gear, far exceeds that of managed services. The few I have that ARE managed continue to give us back NOTHING in terms of services rendered (these are good, REPUTABLE companies) while soaking us repeatedly for every dollar they can manage. If the pay-back and claimed benefits of these services were there, I'd be first in line. They simply aren't. At least if you have an IT staff that know what they're about and don't cost an arm and leg... 1) No Reception Desk - 'Walk-in' traffic is on the decline for most businesses, where most people prefer to do things on-line or over the phone. The phone system will usually have an auto-attendent, so why need a receptionist? The owner of our company still wants to keep such things, and have that position manually answer the phone when possible, for a personal touch, but there are companies that offer that as a relatively cheap service now... 2) White Box Computers - I'm half with you on that one. As a one-man IT department, I migrated most of our machines over to a Tier 1 vendor a few years back. Easier to work with third-party support companies when I'm away, although I'm struggling with a 5 year system turnover because they work so well. However, our white boxes were built, like most, 'on-the-cheap' with the cheapest consumer-grade components. Had these been built like a few of our super-high-end workstations that I put together, with high-quality components, they'd be as trouble-free as the Tier 1s. 3) Consumer-Grade routers - I won't even mention how some of these with 3rd-party software loads can perform as well as business-class gear. Even stock, they're fine for small offices, but you're preaching to the choir. We've had business-class networking gear for years since it requires less upkeep. 4) Analog Phone System - Last I checked, my VoIP PBX was running just fine on analog external lines. If I hadn't been concerned with the age of our old analog key system, and the poor performance of the telecom-provided internal analog lines, it would still be running like a top. It's providing VOICE SERVICE, not interplanetary data transfer. For those that cling to the VoIP bandwagon, you listen in when I talk to some top tier Fortune 500 companies. With static, and dropouts, and Mr. Roboto voices...etc... I'll pass for a bit, thank you. I also love the concept of having to pay a 'license fee' to use a company's phone with their phone system! Nice revenue generator. Car companies could have a field day! "Yes, you bought the car. Now you have to pay us a $500 licensing fee in order to actually drive it on the road..." *rolls eyes*

auroratc
auroratc

Kind of goes with the white-box pcs, but when the prospective client has 90 plus percent of their computers running Windows XP HOME edition..... you know they aren't ready.

a.portman
a.portman

Of course, a management change may be why they are hiring you. To clean up the Walmart router and 15 brands of computers. Just an aside on the questionable licensing of software. I once did a job for an attorney who would gladly defend his client's IP rights with a pirated version of WordPerfect.

peter_b123
peter_b123

...and they work, if implemented correctly. If all you're seeing are results from a MSP firm that simply deploys Kaseya agents, and some base-line reporting, but does not acutally work for the client on those guaranteed hours as promised in their agreement or contract (you have one of those, right? Service Level Agreement? SLA? Guaranteed uptime/response/...?) I can tell how you would not believe in them. But I can say I am a believer as I own a managed services company, and I didn't buy someone's prepackaged box. Kind of stubborn, perhaps, but I think of it as more concientious. If you're going to promise something, do so in writing. Have a blanket insurance policy. Write it into the contract. Have your insurance provider provide copies to your clients. Create performance guarantees you're comfortable delivering for all your clients, document them extensively, and deliver them along with reporting, and meetings showing these deliverables. Simply not easy to do without CRM software or RMM software. You might be able to patch together some features, but not all of them and certainly not as well as other CRM and MSP companies can. And of course, the $64,000 question: does it work better than having a hired gun with a break & fix skillset? Yes. I was one of those once.

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