“Seismic” Events in IT Services

Economic Crisis – A Rare Opportunity by Justin Crotty

Also published and originally appeared on MSPMentor.net in Feb 2009 as participating sponsor guest article.


 I saw an old proverb once that said of economic opportunity or commerce, “Be scared when others are greedy and be greedy when others are scared.”  Fitting advice for any MSP these days.


The current economic crisis is a monster – no doubt about that.  If you are under the age of 80, this is shaping up to be the worst market downturn of your life.  Cautious and prudent fiscal, managerial, and operational policy in our personal and business dealings is critical.  But what many companies and managers, in the midst of a crisis like this, may not recognize is this: Downturns are significant opportunities that don’t come along very often.


I am not suggesting that the current economic situation is anything other than an unmitigated disaster – it is.  Blame whoever or whatever you want for the mess we are in – government, mortgage brokers, Wall Street, hedge fund managers – everyone had a hand in it.  We didn’t ask the hard questions when times were good.  Home values were up, stock funds were delivering strong returns, money was cheap, and debt skyrocketed.  We turned a blind eye to the fundamental economics that govern markets.  Only after those very fundamentals reminded us just how far we had drifted did we stop and look around and ask each other, “how did this happen?”


Now we’re in a mess and the question everyone needs to ask themselves is: What am I going to do about it?  How am I going to grow my company?  Win new clients?  Retain current clients?  Make money?  Grow revenue and profits?  Invest in innovation? 


HP’s was born during the Great Depression.  Amazon, ridiculed and left for dead in the wreckage of the dot com bust, rose from the carnage to become the innovative, industry behemoth it is today.  IBM, during the downturn of ’79-80, bet big on a thing called the PC.  Microsoft, a small software company that successfully weathered the downturn in ’90-91 emerged to become a household name around the world.


What did these companies have in common through tough economic times?  Innovation.  Vision.  Risk-taking.  Market awareness.  Confidence.  Belief in self.   


It is critical to the current and future success of our collective businesses and companies to continue to innovate during challenging times.  No IT channel companies are better positioned for innovation than MSP’s.  MSP’s have been on the bleeding edge for years.  Now is the time to capitalize on those innovations and attack your competitors who have not made such investments relentlessly. 


Be prudent and manage carefully, but do not abandon the innovation and aggressiveness that is required, not only to persevere through the downturn, but to emerge from it stronger, faster, and further ahead of your competition.  Don’t succumb to the temptation to hunker down and wait it out – let your competitors make that fatal mistake.  Focus on your value proposition to your clients – reduced costs, high quality, predictable budgeting.  The downturn plays to your value as an MSP – companies need what you have to offer.


In the book Outliers, Malcolm Gladwell illustrates that successful people and companies, through years of preparation and dedication, capitalize on that preparation when they find themselves in the right place at the right time.  We, as MSP’s, have spent the past few years investing, building, and learning.  Suddenly we are confronted by a significant challenge, but one that we are well prepared for with a killer value proposition to leverage. 


We are in the right place at the right time.


Another UMASS Alumn Making Things Happen by Justin Crotty
December 3, 2008, 2:19 pm
Filed under: Miscellaneous, People | Tags: ,

From the “UMASS Alum Making Things Happen” File:

As I come across UMASS Alum of interest, I will shout out to the Alma mater and recognize a fellow UMASS grad doing good things.  In this case, Derek Kellogg, a former UMASS basketball player who was on the team while I was attending school there, has returned to Amherst as the head coach. 

Derek played under coach John Calipari, now the Memphis Head basketball coach and still an Amherst legend.  Derek also mentored under Coach Cal at Memphis, so not only does one of our own return to campus, but he brings the Calipari DNA with him.

Nice to see.  Rock on.

Tough Economic Times Aren’t The Apocalypse by Justin Crotty

Though nobody can question the fact that tough economic times are upon us, there is reason for optimism.  I shook my head yesterday as the Fed “announced” we have been in a recession since last December and stocks took a major dive.  Tell us something we didn’t already know.  Amazing – the fed tells us something we’ve known for months and suddenly we lose confidence and stocks tank.  I will never understand the stock market.

But I digress.  The good news for managed service providers and other IT solution providers who are pursuing recurring revenue services and software offerings is that tough economic times give us all an opportunity to present a strong value proposition to end customers who are having a difficult time. 

Here’s how:

1) Managed delivery models reduce costs for end users to deliver quality IT management with solid SLA’s.  The ability to reduce the monthly spend for a prospect will get them to listen to you today.

2) The predictability for the end user to consume IT services in the managed form factor allows for fewer surprises and an ease of budgeting that many end users will find helpful in these times.  If I know what my spend will be each month over a contract period, I feel better about making decisions today, especially if that spend is less than what I am paying now.

3) Marketing and differentiation are more important than ever.  Solution Providers who are not focused on marketing and selling their unique value proposition are missing a key opportunity to take business.  Sell the value prop and sell your capabilities – why are you unique?  Why should the end customer work with you?  What do you bring to the table that nobody else does?  It tough economic times you can win business by demonstrating value and properly marketing it.

Focus, effort, and creating value are always key drivers of success in the IT space.  Those are still the tools to use to win business in a tough market, and tough markets present opportunities to those who take advantage of it.

Successful VARs Understand the Importance of Hiring by Jason Beal / Ingram Micro
August 5, 2008, 10:38 am
Filed under: Uncategorized | Tags: ,

There is an old expression that says, “If you pay peanuts, you get monkeys.”  Although there is a good amount of humor in this metaphor, there is also a great amount of truth in it.  Having worked with many solution providers on their staffing strategies in recent years, I’ve seen the hiring (and compensation) strategies of VARs of all sizes and shapes.  There are some solution providers who are willing to pay (and want to pay richly) for high-end, specialized talent at higher-end salaries.  Conversely, there are solution providers who reject good resume after good resume because they are unwilling to pay a market-appropriate rates for highly-qualified, hard-to-find talent.  With the trends in the IT channel towards high-end, emerging technologies focus and solution provider specialization, uniquely qualified talent is becoming one of the most critical success factor for VARs. 


One local solution provider in Southern California, KnowledgeCentrix, embodies the hiring, compensation, and benefit practices of successful organizations. Chris Andreozzi, Founder and President/CEO of KnowledgeCentrix, only wants to hire highly-qualified, uniquely-skilled talent. He strives to find those diamonds in the rough; he knows what he needs to pay to recruit and retain them.  KnowledgeCetrix’s benefits and “total compensation” package is on par with Fortune 500 companies. It is not a coincidence that his business is growing astronomically fast. He has a solid management staff and a team of unbeatable engineers.


A well-qualified Cisco engineer who is appropriately paid $30,000 higher than another less qualified, less certified Cisco engineer will certainly yield multiples more than $30,000 in billable profit to his or her company.  Each and every resource at your company is critical.  I encourage you to maximize each hire by finding those diamonds in the rough, finding unique talent, and then paying them appropriately.     

-Jason Beal

MSPs Bullish and Investing in Demand Generation by Jason Beal / Ingram Micro
July 18, 2008, 10:21 am
Filed under: Ingram Micro, Managed Services, People | Tags: , ,

In the last month I’ve met with three solution providers from different regions of the country (Southern California, Arizona, and Minnesota) who are all very bullish about building their managed services business.  All three are very optimistic about their prospects of significantly growing the number of end-customers on managed services contracts.  Coincidently all three solution providers quoted me the same metric that they were shooting for: to triple the number of end-users on managed services.  Two partners wanted to accomplish this goal in twelve months while the other partner was shooting for eighteen months.  These partners current have between 18 and 42 clients on managed services agreements.


In order to accomplish this goal the three partners had plans to invest in aggressive demand generation programs.  While solution providers have traditionally been reluctant to spend dollars on marketing and lead-generation programs, a new breed of confident, aggressive, and marketing-savvy managed service providers is emerging.  These MSPs are focused on customer acquisition and are investing dollars via traditional marketing techniques as well as via on-line, viral marketing avenues.


Theses partner believe in the MSP model, have properly ‘merchandized’ their managed services offering, have trained a portion of their sales team to effectively position managed service value proposition to customers, and have developed the efficient operations to profitably scale their managed services practice. They are confident that investment in marketing and lead-gen will yield a healthy return and allow them to quickly build their business. 


The managed services land grab and gold rush is on.  MSPs are starting to aggressively market their managed services in their local areas; others are acquiring solution providers in order to flip their customers bases to managed services, while others are opening remote offices to grow their customer bases. Now is the time for solution providers to invest in marketing and demand generation programs to grow the business.

Managed Services: Old-School Fundamentals by Justin Crotty
May 16, 2008, 8:03 am
Filed under: IT Services, Managed Services, Miscellaneous

The hype and hysteria surrounding the rise of managed services in the IT channel has neglected two of the most fundamental elements that should be driving solution provider decision making: brand and unique value proposition.

First, let’s debunk one of the greatest myths of managed services: It ain’t about the tools. It’s about the partners you choose and how you differentiate yourself. Aren’t these the same things that have driven solution providers’ decisions for years? Maybe things haven’t changed that much.

Let’s also face another reality that is difficult for the IT channel to admit: Managed services isn’t about cool technology or flashy applications. It’s about the ability of a solution provider to acquire managed capabilities with a reasonable investment and to quickly turn that investment into revenue and profits for his or her company.

Over the years I’ve had many conversations with solution providers about managed services and where to place their bets. They’ve told me about the agonizing lengths they’ve gone to in evaluating the technical capabilities of different applications and weighing the merits of building their own data centers or NOCs (network operations centers) to support their managed services businesses. Others have talked about the price differentials they will be charged for the various applications or tools.

All of this heartburn and overanalyzing is misguided. They are worrying about the small stuff.

On the other hand, I rarely hear about solution providers who worry about developing a solid value proposition or designing a marketing and brand strategy around their managed services capabilities. Ignoring these critical differentiators is a huge mistake. Solution providers’ ability to clearly articulate their unique value proposition and design effective marketing and sales plans will determine success or failure in this market, just as it always has.

Managed services is not about solution providers’ technical capabilities or fancy infrastructure, but rather their ability to develop solid value propositions and solutions offerings to their clients. For customers, times haven’t changed that much. They want great service at a price they can afford. They want to do business with reputable and accountable organizations they can trust.

The days of leading with vendor certifications and technical capabilities are over. Sure, there is a need for technical competencies—those are table stakes. But being “Gold Certified” or a “Platinum Partner” of any given vendor does nothing to articulate the unique value you bring to customers. These authorizations only reaffirm the same capabilities and certifications that hundreds, maybe even thousands, of other solution providers have earned.

Another truth: Establishing a managed services practice doesn’t have to be expensive. With the right partners you can deliver the commodity stuff—data centers, NOC service, help desk, and so on. Spending your resources on duplicating these commodity investments makes no sense.

Your clients only care that you will solve their business problems effectively, efficiently, and at a good value. Focus your dollars and resources on the things that truly differentiate you: your value proposition and brand promise. These will never be commoditized. In fact, they are the only things you can defend as unique. Business models and technologies can be duplicated. Well-crafted value propositions and your company’s brand promise cannot. That’s old school.




How To Select an MSP: Four Simple Rules by Justin Crotty
March 21, 2008, 1:29 pm
Filed under: IT Services, Managed Services, Miscellaneous, People

Make sure your end customers understand what criteria to use when selecting an MSP – that is when they are evaluating you.  These four rules will serve them, and you, well.