www.mspbusiness.com Doing Break/Fix Well By Chris Martin
About the author www.mspbusiness.com A self-professed technical guy with an entrepreneurial spirit, Chris Martin founded GFI MAX Remote (formerly HoundDog Technology) with Doug Wilson in 2003. Chris began his career in corporate IT as a software engineer before moving into infrastructure support and consulting. He went on to start, run and exit two successful IT support companies. The first, a labour of love, was based on a Break/Fix business model. The second concentrated on recurring support contracts (Managed Services) and was one of the fastest growing IT support companies in the United Kingdom during his reign. Chris is currently involved in marketing, product management and developing programs and materials to help GFI MAX customers improve their businesses. Chris can be contacted on email at cmartin@gfi.com.
Definitions www.mspbusiness.com For purposes of this document we define: Break/Fix - A flexible IT Support arrangement. Customer billed in arrears after exercise complete. Demand most likely to be initiated by customer, e.g: My emails not working can you fix it please? Contract/Managed Services - Provision of IT Support on a fixed monthly/annual contracted basis. IT Support Company contracts to provide services defined by Service Level Agreement (or Contract). The challenge for the IT Company is to deliver the contract profitably as they bear the risk for overruns/etc. Differences, advantages and challenges are defined more fully in another GFI MAX whitepaper.
Content www.mspbusiness.com Introduction... 1 1.0 GFI MAX Research on Break/Fix... 2 1.1 Why is Break/Fix still the dominant arrangement?... 2 1.2 IT Companies Perspective... 2 1.3 Customers Perspective... 3 2.0 Running Break/Fix Well... 3 3.0 High Speed Support... 4 4.0 Excellent Communication... 5 5.0 Profitable Break/Fix... 5 5.1 Record Your Time!... 5 5.2 Use a Remote Support Tool... 6 5.3 Do the Whole Job... 6 5.4 Focus on First Time Fix... 6 5.5 Connect HelpDesk and Billing System (or get a PSA)... 7 5.6 Decide on Un-Economic Repairs Quickly... 7 5.7 Bill Monthly... 7 5.8 Absorb Cost of a Tool in Return for Extra Hours, Equipment Sales... 8 5.9 Establish Pre-Agreed Activities... 8 5.10 Use Scheduled Visits... 8 5.11 Play Hard Ball... 8 5.12 The Now Fee... 8 5.13 Use Break/Fix to Build Customer Intelligence... 9 6.0 Conclusion... 9
Introduction www.mspbusiness.com On balance we think focusing on delivering profitable IT Support Contracts or Managed Services is a good idea. That said, contracts aren t for every IT Support Company, or indeed every customer. So, that leaves most IT Support Companies with a significant (and it is significant) amount of Break/Fix work. This whitepaper discusses possible reasons and ideas to deliver great service to Break/Fix customers profitably! Please Note: Other GFI MAX whitepapers outline strategies for building contracts and managed services. Page 1
1.0 GFI MAX Research on Break/Fix www.mspbusiness.com Our research indicates a large portion of support revenue is still derived from Break/Fix and may remain so. Authors Note: slight difference in UK/US - UK tends to have a higher percentage of revenue derived from IT Support Contracts. 1.1 Why is Break/Fix Still the Dominant Arrangement? IT Companies I worked in, have run or talk to tend to operate a mixed model, e.g: Operate arrangements with some customers on Break/Fix AND Operate some customers on contract (or Managed Services). Our most recent research (Jan 2011) shows that even now, the bulk of arrangements with customers are Break/Fix. Why? 1.2 IT Companies Perspective Some customers might be too risky to take on for a fixed price, this might be because: Their equipment s complicated or approaching end of life A particular customer is price sensitive or very taxing There are too many unknowns to enter into a fixed price. Page 2
And, in general, some IT Companies prefer to retain some Break/Fix: www.mspbusiness.com IT companies are unsure or inexperienced about how to move towards or scale Managed Services and worry about risk in offering a fixed price. IT company wants to maintain a particular ratio of Break/Fix and Contract Revenue. 1.3 Customer s Perspective Attractions to Break/Fix from customer side might be: They are still evaluating your service They don t like fixed cost aspect They don t think they ve they need the workload you propose They don t understand the value of pro-active work and/or might think they ll pay less on Break/ Fix. All things considered, there are some customers who will remain on Break/Fix for time to come. As mentioned, other GFI MAX whitepapers outline ideas for moving customers to contract but remainder of this whitepaper will focus on running break/fix arrangements well & profitably. 2.0 Running Break/Fix Well I guess well is defined by customer s version of well, so here goes If you were to ask a Break/Fix customer what he values about an IT Support Companies service, it might go something like this: Fix my problem/requests fast! Fix them first time! Tell me what you did! If there s a long term recommendation, tell me that too! So, basically: Speed & Communication. Authors Note: In fact, I interviewed all of our customers and boiled this down from that exercise. Our IT Company then went onto to focus delivering these measures; we redesigned our operation to deliver on them and grew profitably and quickly with lots of customer referrals. I ve actually a further hunch on above, speed is only important until customers think you re working on their problem or request. Time to actually fix it to completion is less important. Predominantly, customers want rapid service as opposed to a rapid fix. Page 3
3.0. High Speed Support www.mspbusiness.com Firstly, measure & manage it. Secondly, understand that speed is relative to customer s need for speed. Sometimes they want fast, sometimes they need slow. Here s what I did - I simplified our Help Desk system to categorise expected speed as follows (when a request was raised our technicians were trained to agree a speed expectation with the customer): Now Must be commenced immediately ASAP Must be commenced as soon as possible (NOW queue empty) Then Can t be started until a particular date or event. I wanted to ensure high throughput of each request in each queue relative to customer s expectation so I staged requests as follows: Stage 1 - Reported, Requested or Detected Stage 2 - Customer knows we re working on it Stage 3 - Work around in place and communicated (if any) Stage 4 - Final solution and long term thoughts communicated. Authors Note: Step 3 was optional - if an interim workaround was preferred and quicker than waiting for final resolution. Consequently, I ended up with a view of our jobs which looked something like this: Page 4
www.mspbusiness.com Authors Notes: Numbers refer to the helpdesk Ticket Number assigned. Green jobs didn t show on my screen as by this point as far as I was concerned the job was complete so no need to measure further. I was interested in watching throughput by team/ by tech and any tickets that weren t moving fast enough. I focused on throughput rather than lagging measures, such as productivity/utilisation. However, productivity was enhanced as we removed conditions that hindered throughput. Billing went up & customers were happier. Authors Note: This focus on understanding what customer s value, throughput and removing conditions which hinder throughput is from a concept known as Lean service, adapted from Lean Manufacturing. It s a very different strategy from tradition professional services thinking. Wikipedia definition for Lean Service. So we delivered on speed by measuring it and removing things which prevented it, e.g: not having most common parts in stores, jobs bouncing around within our company, having to travel to customer sites, etc. 4.0. Excellent Communication We delivered on communication by only considering each ticket was complete when communication was complete. It was that easy. As above, our technicians had to email customers a recommendation to prevent the problem from reoccurring (from our help desk) and from time to time I d check. As a VERY IMPORTANT consequence, Sales increased greatly, because we ensured we always gave a genuine long term beneficial recommendation as part of the process. So we delivered on communication by building it in to the process and measuring it. Authors Note: Actually, we also made finding technicians who could usefully communicate a key criteria when recruiting technicians. 5.0 Profitable Break/Fix Previous ideas help you deliver what your customers want and they ll have the effect of keeping jobs/ requests going through the system fast. As a consequence technical utilization will be high and it will have a good effect on profit. But in order to squeeze further profit you might consider some of the ideas below. 5.1 Record Your Time!! It goes without saying that you can only effectively bill your time if you record it and are able to justify it. Page 5
www.mspbusiness.com You MUST use a system which tracks problems through to completion and records technical effort against a request. In my experience if you can transparently demonstrate amount of work you ve done for a customer in a time period, there s seldom a problem with payment or a price for a contract. 5.2 Use a Remote Support Tool Use a Remote Support Tool that allows you to make quick, stable connections to customer Workstations and Servers. This will save a fortune in time, travel expenses and deliver faster support to customers. In many case you can work on two or three requests at once and effectively double/treble bill. Please bear in mind you should balance this with on-site visits to key customers to maintain relationships. 5.3 Do the Whole Job Any IT guy worth his salt knows that fixing stuff fast is only half the battle. In order to make system work better, pro-active work is also required. Here s what we did to deliver that: When we were quiet, holidays, etc or looked like we needed some extra revenue to hit targets, team leaders had a rolling program of offering fixed price pro-active work to Break/Fix Customers. It went something like this Hey Andy, Your kit needs patched and tuned - We d like to do it out of hours, so not to get in the way. How about we do it next Tuesday - you ve 10 machines @ $40 per machine, that will be $400 you ok with that? Yeah, it will help them run faster and be less clunky. Ok, no problem We ll organize that. Now: I could automate using GFI MAX Remote ($400-$2 = $398 profit Nice!) I could use my beginner tech s to do it remotely but manually. I could use my beginner tech s to do it on-site. I even used this to try new techs to see how they worked in the team. $400 in the Bank Account, for doing the right thing for customers! And, that work could be out of hours. It suited them and suited us. 5.4 Focus on First Time Fix. Look back at situations where you had to have two or three cuts at fixing a problem. Ruthlessly eliminate hindrances, e.g: you didn t have spare parts or the job went to a support technician without the skills to fix it first time. Page 6
www.mspbusiness.com Authors Note: In actual fact, I d argue that the best technicians in your company should be on the phones ready to go off-piste with customers and the lower skilled ones doing projects, etc which is the opposite to most structures I observe. 5.5 Connect HelpDesk and Billing System (Or get a PSA). If you use separate systems to track requests and time spent and accounting, consider a PSA system or integrating helpdesk and accounting software together. It will make invoicing much faster and reduce invoices being lost or forgotten about. 5.6 Decide on Un-Economic Repairs Quickly. Educate your technical guys to quickly evaluate if a repair is likely to be un-economic and if it is, call the customer and suggest you call a halt to it. Propose a different course of action and let them decide. There s nothing worse for an IT Support Company (and a customer) to be landed with a bill for $300 for a printer they can replace for $100. 5.7 Bill Monthly Instead of sending out multiple invoices, aggregate all work/equipment together into a detailed monthly invoice. I d suggest you also want to add small consumables (printer media, hard disks, etc) onto this monthly bill (subject to credit check). I actually supplied PC s on monthly credit and kept two or three of them in our Vans so our guys could say yeah, I can replace the PC, I ve got one in the van. You pay at the end of the month. It made making money on PC s much easier because we could charge more and customers weren t inclined to go on the internet to compare cost. 5.8 Absorb Cost of a Tool in Return for Extra Hours, Equipment Sales. Some IT Companies baulk at providing their software tools/workstation agents/etc for their Break/Fix customers but in my experience you ll recover the cost and some by being able to monitor, support and automatically collect customer information to provide evidence for upgrades & replacements. 5.9 Establish Pre-Agreed Activities For Break/Fix customers I established some activities which we could go ahead and fix if our monitoring detected, e.g: Backup Failed, Internet Down, Exchange Down, etc. I d simply notify them that we were on it and customers were happy as it reduced delay. Page 7
5.10 Use Scheduled Visits www.mspbusiness.com We used scheduled visits, for example we d organise with a Break/Fix customer to come on site for one morning every week. This had a fantastic effect: The customer batched up minor jobs which reduced hassle to us and they were happy to wait without phoning in checking what the progress was. Technician could do them all in one focussed effort we d get all of the jobs sent over in advanced and ensure we had all the bits and bobs we needed to complete. 5.11 Play Hard Ball After three years of running our business I grew a bit bolder and played hard ball with new customers and existing Break/Fix customers. I made Monitoring Customer s Servers our minimum package. So we d monitor their Servers & Networking for a small monthly fee (say $50) and allow them to continue with Break/Fix as before. In a way, I guess they respected that we wouldn t take them on unless we could at least be assured that they re data was backed up and AV was running. I believe it sent a message that we were serious about data and helped us position ourselves against competitors. So, they happily paid for that, we secured the relationship and reduced risk to customers and our company. 5.12 The Now Fee We were very fortunate that we provided 2/3rd line IT Support to some our towns biggest businesses. We introduced the concept of a Now Fee for the biggest clients. It went like this: Hi, yes of course we can fix your Exchange Server, but unfortunately, our tech s are busy working on other problems right now. How many users are without email? 250, ok, I hear you. We ve a slight problem though, all our senior techs are busy. However, we do have a Now Fee option of $200, this covers their overtime tonight to catch up if we pull them off what they are doing and on to your problem. You re OK with that, great! Now clearly, the $200 can become $400 or more depending on the impact of the problem, and because our techs were always busy, we always offered and frequently charged large Break/Fix customers for it. The Now Fee : Earned us lots of money easily (it was more costly for more value) Had the effect of making our fixed monthly cost support arrangements become more attractive If customers elected not to pay they waited (and didn t complain). Page 8
5.13 Use Break/Fix to build Customer Intelligence www.mspbusiness.com It may be that after a few months you ll be happy to move a Break/Fix customer to a contract. By working with them on Break/Fix you ll get to know them and their systems much better. You ll then be in a position to offer a sensible contract and you may well have fixed many issues before you start a contract. WP/0006/v1.0/EN 6.0. Conclusion Break/Fix isn t going to go away. If you decide that you want Break/Fix business there are many ways to ensure you can deliver profitable break fix support services while increasing customer s IT performance and security and deliver really rapid support. It s a great place to start a customer relationship, learn about them, learn about their equipment and often a small monthly monitoring contract parks the relationship where you want it until you re ready to offer them a contract. Also, it s very possible to do a great job for your Break/Fix customer profitably. It largely depends on extra revenue you can drive from the relationship and how profitably you can deliver Break/Fix Support Services. GFI MAX Remote is a great tool for driving extra revenue from Break/Fix customers. Many IT Companies absorb the cost of the GFI MAX Agent on both Servers & Workstations in return for extra revenue. It also has many tools you need to deliver Break/Fix services efficiently and it fits commercially for Break/Fix arrangements, which is quite different from competing RMM products whose commercial model only works for Contract Support. GFI MAX takes a more pragmatic view, Break/Fix will always be run alongside Contracts or Managed Services and consequently our pricing and packaging fits both cases. is a collection of real-world tips and resources to help busy IT support companies and Managed Service Providers grow their businesses profitably. It is brought to you by the GFI MAX team because we want to simplify the business of managed services and IT support. For more information please visit www.mspbusinessmanagement.com/about. 2011.. All rights reserved. Page 9