The Best Way to Tell If Your IT Managed Service Provider Is a Good Fit

Transcription

1 The Best Way to Tell If Your IT Managed Service Provider Is a Good Fit A key factor in selecting a managed service provider is its service model. Does the way the MSP price, structure, and deliver services seamlessly blend with your business and technical environment? Just by looking at their websites you might think all MSPs (managed service providers) are alike. All claim deep knowledge and experience in information technology. All claim to work as a partner to an organization s internal IT staff. All claim to reduce the cost, complexity, and risks of owning, operating, maintaining, and upgrading expensive IT assets. So how do you tell MSPs apart? Here s one quick way: look at an MSP s service model and see if it aligns with your environment. Does the way it prices, structures and delivers services make good business sense given your service needs, internal organization, and cost pressures? And, can it adapt its service model so that it seamlessly blends with your existing policies and procedures? Looking at an MSP s service model prior to engagement offers two key advantages: First, the features that define how an MSP serves clients should be obvious. Second, a service model is not something providers can reinvent overnight just to win a prospective client. In fact, loyalty to a certain model of service delivery as measured in years of experience is itself a key model-defining feature. Bottom line: it should be easy for you to understand an MSP s approach to the business of serving customers and you should feel confident that this approach will in fact meet your needs. To vet the MSP, simply ask them how long they have been providing MSP services, how often they have needed to adapt to client specific needs, and how they were able to adapt to specific client needs so easily. Then ask more service-specific questions like: Do they provide most support remotely or onsite? Do they charge fixed fee or time and materials? Are they geared more for forklift system implementations or more for ongoing maintenance and support? Are they focused on middle market clients, i.e., ones big enough to have robust IT needs but too small to have robust in-house IT staffs? Or are they looking to support organizations of all sizes? Case in point is DSI s remote collaborative service model. It features: Remote service delivery for greater scalability at lower costs Collocated IT specialists for enhanced collaboration among team members Engagements that are more collaborative than transactional (e.g., no tickets ) Fixed fee services (either by project or block of hours) Deep experience three ways: functionally, technically, in the delivery model itself Primary and secondary contacts so you always speak with the same people!1

2 It s a model ideal for clients in all market sizes. For large organizations, the MSP will typically provide project engagements on a fixed fee or time and labor basis. These companies face relentless cost pressure and want an MSP to help gain maximum leverage from both system users and IT. That happens by focusing on those IT operations comprising the vast majority of IT activity, cost, and risk but also at the same time that lend themselves best to the economy and scalability of remote service delivery. It s a model that is easy to identify (once you know what to look for) but impossible to fake. And it solves the most difficult IT problem companies face, how to plan service levels when the workload varies. The Hard Problem No One Talks About Most companies hardest IT problem is also the one most likely to keep them from reaching their sales, profit, and market share goals. This problem is not very sexy, so it goes under-reported in the business and technical press, a fact that makes the problem even worse. For most companies, their hardest problem is not how to migrate to the cloud. (Forbes: Only three in 10 SMBs will adopt a public cloud strategy by 2018, according to IDC) nor is the problem how to mine social networks for market intelligence, or how to implement a virtual computing infrastructure. The hardest IT problem companies face, as measured by percent of IT budget, is how to maintain legacy ERP and database systems the core systems they already own. These systems are core because companies rely on them so heavily to operate day-today. Hire an employee, look up a customer record, check an order status and these core systems go to work. They are also core because of how they wire functions together across departments. Unlike the pre-erp days when functions like accounting, sales, human resources, and order administration were stove pipe applications, today s core apps more closely reflect how most tasks actually get done as interdependent processes that cross business functions. Greater interdependency means less redundant data entry, lower labor costs, fewer errors, and more streamlined workflows. But the downside is greater risk of ripple effects across the company when something happens incorrectly, such as when a tax table or algorithm not updated properly. Companies don t have much of a choice about whether to maintain core systems. Change happens constantly on all fronts. On the technical side there are vendor software updates, custom software updates, system software updates, and hardware updates. On the business side there are mergers and acquisitions, new product and service offerings, changes to existing offerings, new regulations to comply with, and so on. Companies must work hard just to run in place, never mind run ahead of the competition. An Accenture 2014 study found that up to 60% of software spend goes for maintenance. And according to a October 2013 Computerworld article: In a recent Forrester Research survey of IT leaders at more than 3,700 companies, respondents estimated that they spend an average 72% of the money in their budgets on!2

3 such keep-the-lights-on functions as replacing or expanding capacity and supporting ongoing operations and maintenance. Of course, if companies don t maintain core business systems, the companies will go out of business. They won t be able to update products and services; they won t continue to serve customers efficiently; they won t stay compliant or do any of the thousands of other things companies must do just to stay even. And the fact that they have to spend so much money just for maintenance means there is less money available to invest in new projects that actually can move companies ahead. Furthermore, the problem of how to maintain core systems is getting worse over time. That s because the main resource needed, i.e., people, is also the most expensive. In addition, the people with the talent to maintain core systems are getting scarcer, for at least two reasons: Younger IT professionals (recent college grads included) would rather work in up-and-coming areas like cloud computing, cyber security, and mobile apps than on maintaining legacy systems Older IT professionals (the baby boomers) who do have the relevant skills and experience are becoming less available because they are retiring or were eliminated during the Great Recession If a company is very large (say, over a $1 billion in sales) it can defeat scarcity though sheer size. Large companies can leverage IT talent over enough divisions and locations so that the unit cost to sustain each qualified IT professional becomes affordable. It s an advantage a smaller company can t duplicate on its own. Yes, a smaller maintenance team can live off fewer total revenue dollars, theoretically. But a smaller team is also less likely to have all the talents in both technical and functional areas needed to support all the various systems the organization owns. For example, the skills needed to update a tax schedule in a database system are different from the skills needed to assess how the new tax schedule may affect equipment depreciation decisions. If there are too many IT professionals, the business won t be big enough to support them all. But if there are fewer IT professionals, the team may not have the proper skills necessary to keep busy. Yes, there may be legacy IT chores available for everyone to do, but the people available to do them may not be qualified even though they re still receiving a paycheck. And the problem gets still worse. It would be one thing if a $500 million company faced half the problems, or half the kinds of problems, that a $1 billion company faces. If that were true, then the smaller company might only need half the people (or fewer) than the larger company. But that s not the case. The number and variety of problems of the two companies would actually be much similar so their support needs would be too. One of the reasons companies invest in information technology in the first place is because the incremental cost of supporting business growth keeps getting smaller as!3

4 the business grows. The costs to support a database serving 1000 employees are not much different from the costs to support a database serving 500 and that goes for other parts of the legacy IT infrastructure as well, such as ERP. So even though an SMB can t afford the same dedicated IT staff a bigger company can, it still faces most of the same problems plus the problem of how to solve them cost effectively. That s why MSPs exist. They provide an IT resource pool (albeit with assigned resources for each client) that SMBs can share so they don t pay a penalty just for being small. At least that is how it is supposed to work. Where MSP-client relationships often break down is where most business relationships break down when customers don t feel they are getting all the value they deserve. That is a sign the resource pool an MSP is providing does not scale well probably because it is not built to scale well. Signs of an MSP Misfit Here are four signs your MSP isn t built to deliver services just right for you: Attitude is everything. Does your MSP make you feel like you re intruding on their time whenever you contact them? Are most of these contacts about putting out a fire that could have, should have, been proactively avoided in the first place? Are your MSP s financial incentives misaligned with yours? In other words, are they better off if you have more problems and bigger problems rather than fewer problems and smaller problems? You re paying too much for things you don t need. Is your MSP charging you for unnecessary travel and associated expenses that don t directly contribute to your business success? What about opportunity cost, like waiting a long time for consultants to arrive on site or respond to needs in a timely manner costs that don t appear on financial reports but impact your business anyway? You re constantly ramping up your MSP. Do your MSP s consultants understand the business function your systems perform? Do they avoid talking about the current challenges confronting your business? Are the resources consistent or always changing? You really don t have an MSP team. Does the idea of calling a team meeting with your MSP s consultants seem like a foreign concept? Do you feel like members of your MSP s staff never communicate with each other about your account? How often do they ask you to describe an issue you have already told them about? The bigger the MSP s client the less often these signs tend to show up. No surprise most MSPs pay a disproportionate amount of attention to bigger accounts. These are the accounts likely to receive concierge service. That means dedicated teams are assigned to those accounts, not just whoever happens to be free to take the next call. These teams will also likely hold team meetings both internally and with the client to address cross-functional issues. And it s very likely that people on both sides of the relationship will likely know (and call) each other by first name.!4

5 Of course, giving only big accounts special treatment defeats a key reason MSPs exist so all firms get the same cost advantage big firms enjoy. Take the concept of a dedicated team. Most MSPs can t afford to provide dedicated teams except for their biggest clients. One reason might be that MSP staffers are remotely distributed and only interact with each other virtually. That makes collaboration difficult unless consultants are focused on only one or two big accounts. It s just too difficult to mix and match skills across multiple accounts unless consultants are in the same room. Or, alternatively, the MSP likes to place consultants at the client s site. That makes it easy to bill a full week s worth of consultants time. But that also makes it difficult to share skills across accounts. The lesson here is that if you want to cut IT support costs while improving support then you d better know how the MSP expects to make its money. If the only way the MSP can earn a living is by sending out big invoices, it will keep trying to send out big invoices. For them, the only other option is to push back with trouble tickets and a disproportionate lack of attention. For the client, another option is selecting an MSP with a better service model. Select the Remote Collaborative MSP This model, pioneered by DSI, puts all clients regardless of size on the same footing when looking to access IT resources: SMBs (even smaller ones) don t pay a size penalty A dedicated team supports each client Team members know both the client s business issues and its IT issues MSP and client are financially aligned both succeed if there are fewer and problems rather than more and bigger problems This model works because what is good for the MSP is good for the client. A natural winwin synergy drives the relationship. That synergy comes from five key features: 1. Remote service delivery yields higher scalability at lower cost The vast majority (over 90%) of a company s IT service requests relate to core legacy system that consultants can handle remotely. They use technology that allows them to logon to local systems, share screens, run applications, inspect sys files forensically, and more. The obvious advantages include lower cost and faster responses. Clients are paying much less for things that don t contribute to their business, like unnecessary travel, while the opportunity cost of system outages is also significantly less. 2. Collocated IT specialists enhance team collaboration!5

6 Even though consultants are remote from the client, they should not be remote from each other. Ongoing face-to-face contact means consultants don t have to make appointments to talk to each other, so it is easier for them to talk to each other, which increases collaboration on client problems and cross learning about client environments, and business challenges. They are also more prone to talk rather than just use or text chats. In many cases talking offers higher bandwidth communication so that more information gets shared. Physical proximity also increases the chances that clients will actually talk to a team at the MSP, not just a single person. MSP team members will also more likely hear about issues first hand and sooner rather than second hand and later. 3. Engagements that are more collaborative than transactional As mentioned above, remote collaboration makes it more likely that there will in fact be collaboration. Having a transactional (help-desk like) business model will make for more of a transactional relationship, like buying a can of soup at the store. Once the transaction is done (i.e., the problem is fixed ) everyone can go back to doing what they were doing before. An MSP provider that takes the time to ask key questions (who? what? where? why? and how?), understand issues and participate in dialogue to challenge and empower the user and other client team members adding significant value to the relationship. 4. Fixed fee services (either by project or block of hours) Keeping clients out of the ER is also a key principle behind how clients get charged. The financial incentive on both sides should be that the client ( patient ) stays healthy. A collaborative model charges fees designed to focus on client needs rather than how many hours can be billed. Clients either pay for services at fixed cost (routine tasks, i.e. monitoring and preventative maintenance) or they pay for a fixed number of hours to be utilized at the client s discretion based on actual planned workload and unexpected events. Either way, the goal is to encourage clients to use MSP resources proactively and in a manner that they will actually save money in the long run. 5. Deep experience three ways: functionally, technically, in the delivery model itself One of the biggest complaints companies have about their MSPs is: They don t understand my business! But having functional (i.e., business) experts on your team, such as human resource professionals or financial planning experts, can be very expensive. That is another reason the remote collaborative model is better for SMBs because it spreads the cost of those more expensive resources over more clients, making them more affordable to all. And since lower costs drives demand higher, these functional experts will also tend to be more highly experienced in general and also more highly experienced in a wider array of specific industries making these experts even more valuable. Deep experience is also something that is difficult to fake making it one of the best indicators of whether a particular MSP is actually remotely collaborative and therefore can meet both your service needs and your cost objectives.!6

7 Not All MSPs Work this Way So, yes, telling MSPs apart can be difficult. Many MSPs tell a similar story when it comes to skills, experience, and services. But not all MSPs are remotely collaborative. Not all can provide the five key features listed above. Most have a trouble ticket, transactional-like mentality. Most are financially incentivized to fix things after they break rather than proactively prevent problems in the first place. Most do not support each client with a dedicated resource(s) consisting of both technical and functional experts. Realistically, most MSPs are not set up that way. Nor is it easy to change their basic service model to accommodate you. An MSP who is highly skilled and EXPERIENCED at delivering in a remote-collaborative manner, etc. can help save valuable time, money and effort. That also makes it one of the most important factors in deciding if a particular MSP is a good fit for you. Sidebar 1: Beware of Hidden MSP Agendas You don t want your MSP s success to come at your expense, which is why you want your MSP s service model to align with yours. In other words, you want win-win rather than win-lose. Remote collaboration is win-win because it lowers the cost of robust IT support and is more proactive than reactive (which also lowers costs). That s obviously better for the client but is also better for the MSP. Remote collaboration lowers the MSP s costs too so it can offer more talent, which attracts more clients, which can support even more talent and so on and so on. If you want to see what a win-lose model looks like, read our blog post 7 Key Things to Look for in a PeopleSoft Upgrade Specialist. Some of the things to look for are things an MSP may not want you to find. Those include tactics like using subcontractors rather than direct employees and pushing services on the client that the client does not really need. An MSP won t advertise when its financial incentives directly oppose yours. So ask the MSP why a business relationship makes sense for both parties. If the MSP sounds like it wants to do you a favor, it probably doesn t. Sidebar 2: Functional Knowledge Matters More IT support obviously requires technical knowledge, as in the ability to diagnose, fix, and prevent problems related to software and hardware performance. But even if an application s hardware and software are working as specified the business will still have problems with the application if the specifications are wrong. Knowing whether an application is performing as needed requires functional knowledge, not just technical skills. For example, with PeopleSoft s HR, financials or supply chain applications require knowledge about benefits, taxes, contracts, regulations, and more. Implementing technical changes without taking functional impact into account carries great risk. That s why blending technical and functional knowledge is paramount in!7

8 providing successful system and end-user support. Because, a misbehaving application doesn t just affect the business function, often it hurts the whole organization.!8