Tuesday, December 23, 2008

The Economy is No Excuse!

Officially we're 12 months into this recession, and let me tell you there's one thing I'm already very tired of - people using the economy as an excuse! Yes, times are bad. Yes, credit markets are tight, financing is more difficult. Yes, more people are unemployed, and exponentially more people are anxious about the future. Some industries are struggling, particularly some real estate, automotive, and tourism-related areas. Some geographies are struggling, particularly parts of Florida, California, Michigan, Ohio, and some pockets around New York City and Washington DC. If your business is heavily dependent on these factors, then you are being impacted by the bad economy, and there are few if any businesses entirely unaffected right now. And there is certainly no doubt that businesses and individuals are hurting right now, and I'm not meaning to minimize that pain.

But I've been in this industry for three recessions now (four if you count the post-9/11 downturn), and even though this situation is unique among all of them, one thing is still the same - people like to blame things on the economy. Having a bad sales month? It's not your lack of marketing or a bad sales staff - it's the economy! Need to let an unproductive employee go? It's not you making a management decision - it's the economy! Going out of business? It's not poor management, it's the economy!

It came to me this morning when someone sent me a news item about one of our competitors, who is reporting their 7th straight annual loss (this one nearly $5 million), is being sued by 10 of their franchisees, and had to report that their auditors expect them to run out of cash and potentially shut down operations within 6 months. In their regulatory filing do they accept responsibility for the problems? Of course not - it's the economy! They mention the "current financial turmoil" in the banking industry, and blame the lack of franchise sales on the inability of candidates to get financing. If they do go under, as appears likely, will they apologize to the orphaned franchisees for not running a healthy organization? I don't think so - the economy is too easy a scapegoat for that.

The thing is, anyone who scratches beneath the surface can see another picture. They haven't ever had a profit - ever, not since they started in 2001. Their fiscal 2008 operating expenses were $5 million more than their revenues, and their revenues were $2 million less than the previous year. (Just for comparison's sake Computer Troubleshooter's franchise network is double theirs, and our total franchisor operating budget is a comparatively miniscule $600k/year - apparently we're the "lean & mean" franchising system here!). What exactly in today's economy caused them to lose money in 2001, 2002, 2003, etc? And how exactly, if we were not in a recession today, would spending $5 million more than you bring in look like a smart move?

No, the economy gets the blame but the economy is just the magnifying glass today, showing all the faults in the systems people previously claimed were healthier than perhaps they really were. Today's recession gives management teams carte blanche to escape any personal responsibility in the failings of their businesses, and that's doubly-unfortunate since its' that same lack of responsibility on a larger scale that seems to have gotten us into this mess!

Now I'm not intending this diatribe to make it sound like I'm the perfect manager. Lord knows I'm not! In fact we just got the new Entrepreneur magazine with the Franchise 500 rankings for 2009, and for the first time since 2001 Computer Troubleshooters is not ranked. At all. Even though we're by far the largest in our industry, even though we grew by 5% last year, we got no ranking at all. Why? Entrepreneur doesn't disclose their formula for rankings, but I'm sure it's based on our financials, and because the rankings are done in July they use the financials from our last full year, which for us was fiscal 2007. And in fiscal 2007 we posted a substantial financial loss - well, substantial for us anyway, since we lost $111k that year. (By comparison our parent company, MerryMeeting, posted a nearly $4 million profit, so we're definitely the small fry in the family as far as financials go). Still, a loss is a loss, and our $111k loss was due entirely to a write off of $198k in bad debt - old receivables that we never cleaned up or monies that we didn't do a good job of collecting. As the CEO for Computer Troubleshooters that loss is entirely my fault, and thus our lack of Entrepreneur ranking for 2009 is entirely my fault as well. (But our 2008 financials are strong, and we're seeing a TON of new folks opening new CT franchises, so watch us bounce back strong in next year's ranking!)

My point though is that business is business and management is management, and if you want to run a business you have to be prepared to manage it during economic booms and economic busts. The world has not stopped turning just because unemployment has hit 7%. The economy has changed, in some ways temporarily and in some ways perhaps permenently, but there is still an economy, and that means people are buying and selling goods and services right now. Some of the buying patterns have changed, and a good manager needs to adjust for that.

For example what we're seeing with Computer Troubleshooters is that nervous business owners are less likely to buy our "all you can eat" BEST plan (managed services), which is normally our best seller. But we offer 4 plans, and we're finding that there's good demand for our next plan down the ladder, so we're adjusting our monthly marketing upates to focus more on those. We're also seeing that as people cut back on discretionary spending on things like vacations and eating out, they're exhibiting traditional "nesting" patterns by spending more on things they can enjoy at home - so we've ramped up our focus on our residential managed service plans and home entertainment offerings. I can't give away all our secrets of course, but things like flexibility, customer choice, and clear productivity enhancement are the buzzwords that are driving a lot of our marketing development for the first half of 2009.

Today's economy is an opportunity. It's an opportunity for stronger, healthier companies to distinguish themselves and grow, sometimes by acquiring other less healthy companies (and yes, CT may do some of that as well). It's also an opportunity to make excuses for poor performance, but don't fall into that trap. Use this opportunity to start or grow your own business - there are customers out there right now who need you. And the economy needs you too.

Sunday, December 7, 2008

Choosing your Managed Services platform, part 1

Lately it seems the whole managed services industry has been turned upside down. Major vendors have suddenly changed how they operate - not so much changing prices as much as adding, changing, or outright removing key features. Frankly it's caused more than a little frustration for those of us who depend on those platforms for our managed services offerings. Computer Troubleshooters is in the midst of reviewing all our managed services partners, so I thought it would be helpful to share what we're looking for.

First, let me clarify and expound on one of my great pet peeves. "Managed Services" doesn't mean anything. Or, rather, it means so many different things to different people that the term is meaningless. It's like saying "IT industry", as if software developers and hardware manufacturers and network consultants were somehow a homogenous group. (I know, I know, most non-IT folks think they are, leading to the popularity of things like this.) Those of you who have been through CT's training on our managed services program (B.E.S.T.) have heard me talk about watching the video discussion among three people identified as the industry's top managed services gurus, and how midway through the discussion they began arguing about things like whether or not managed services as a concept even applies to desktops and notebooks.

For Computer Troubleshooters, our target clients are small businesses (another vague term which I'll probably expound on in another posting later), specifically those in the 5-25 seat area. That's not to say that we don't service smaller clients with 1-5 computers, because we do, and some CT's have been known to service networks of 100 or more. But as an organization we've always targeted the 5-25 seat business, because as a market those small businesses (which are most small businesses) have a high demand for outside IT support from people who understand their needs. So when we talk about "managed services" for this market, we're talking in general about a program that does 4 things:
  1. Provides a baseline for "best practices", showing our clients how their systems compare to our combined wisdom on how computers and networks should be configured for maximum productivity and minimum downtime.
  2. Provides proactive support via 24/7 monitoring, alerting, and management tools.
  3. Redefines the traditional financial relationship, where the service provider was only paid when their client has problems, to one where the service provider is paid to prevent problems from happening, and where the client's budget (and service provider's income) is more stable.
  4. Once the client's technology infrastructure is stabilized with parts 1-3, look for new technologies which can enhance the client's business. This means going beyond the basic recommendations like which anti-virus or backup solution to use, into more complex but more beneficial technologies like search engine marketing, IP Telephony, electronic document management, or hosted CRM solutions.
Now if you are targeting different sized clients, like mid-sized businesses or enterprise businesses, your definition of "managed services" will be radically different. And even among those targeting similarly sized businesses you may not agree with all four of our points. But this is the strategy Computer Troubleshooters adopted for our BEST program, and it's worked very well for us and for our clients.

But in order to make this work, we need vendor partners who can supply critical parts of the managed services strategy. In this post I want to look a the basic pieces of a managed services platform today, and in my next post we'll look at what new pieces might be added in the near future. At the moment, these are the pieces of our managed services platform which we look for from our vendor partners (including internal CT vendors/departments as well):

  1. Remote Monitoring & Management tool (RMM): This is the most fundamental piece of any managed services strategy. In theory you could sell managed services without RMM, but it would be like selling a car with no wheels - it sort of missses the whole point. A good RMM tool should be easily installable at a client site, and provide a good range of monitoring and alerts for all desktops and servers on the network, including mobile machines (laptops, and optionally smartphones as well). It should be easy for the technician to use, provide reasonable diagnostic & remote support abilities to allow the tech to quickly respond to any alerts produced, and it should generate easy to read executive reports for our clients.
    The RMM tool market is the most associated with managed services, and includes vendors like Hyblue, Bird Dog, Zenith Infotech, Level Platforms, N-Able, Kaseya, IT Control Suite, LogMeIn IT Reach, Paragent, and MSP Center Plus. (As well as others I'm sure I've forgotten to mention).

  2. A NOC (Network Operations Center) partner. As managed services has evolved, so has the dependence on a NOC for maximum support. Using a high-quality 24/7 NOC partner allows local service providers to guarantee high levels of service to their clients, without the high expense of hiring excessive technical staff themselves. Some NOC partners work specifically with one RMM tool, others may support a variety. Ideally you want a NOC partner who will not only help you manage the alerts which come in, but who can also accept work on-demand, particularly for work which is best done after normal business hours. NOC examples include Zenith, Seismic, MSPSN, NetEnrich, ITVista, and others.

  3. Integrated Anti-Malware. This was not originally part of the managed services model, but Zenith started it and it worked extremely well in our models (unfortunately Zenith no longer supports this in the small business market). And when CT started offering residential managed service plans, integrated anti-malware became essential. Including anti-malware (anti-virus & anti-spyware) with managed services is a great bundle for any clients, and can be done a la carte using hosted McAfee options, licensing Trend Micro on a monthly basis, or via vendors who integrate the protection directly into their RMM products (Kaseya, Hyblue, or Zenith for larger businesses).

  4. Integration with industry-leading PSA (Professional Services Automation) software, including Autotask or CT's own TOPS program. Having one ticket system which interfaces with the RMM system and the NOC is a great time saver and productivity enhancer.

  5. Helpdesk. Most MSP's include unlimited telephone support in one or more of their service plan offerings. In our case it's included with BEST Proactive and BEST Trouble-free. For smaller service providers it can be money well spent to hire an outside helpdesk to handle those incoming calls for you, thus providing your clients with faster access to qualified telephone support. Helpdesk vendors include Dove Helpdesk (my personal favorite), MSPSN, Zenith, PC Helps, and more.

  6. Advanced Management Tools. In this category I would include things like software deployment, employee activity tracking, internet traffic control, and desktop imaging. In the small business world these are nice to have, but not essential.

Those six make up the bulk of almost any managed services platform today. Individual service providers can "roll their own" solution by combining any of these, but in a franchise like Computer Troubleshooters we're able to do some screening and negotiating internally to make sure we're picking the best partners for our market, and to negotiate group volume discounts as well.

What's missing in this list? I haven't talked much about backup solutions, including NAS options or online backup. I haven't talked about virtualized environments or hosted (i.e. "cloud computing") solutions. There are also anti-spam options to be discussed, and even more advanced management tools. These aren't technically part of "managed services" today (although they're often added to or included with BEST plans), but they may play a larger role in the next generation of managed services. I'll talk about that more in my next post.

Agree or disagree with me? I'd love to hear your ideas on managed services, and how your implementation fits with (or doesn't fit with) the structure I've outlined here.