How ConnectWise Failed to Address 35% of the Best-in-Class MSP’s Revenue
For starters, this was my 9th ITN and it was the best one ever. Nice job ConnectWise, you nailed it this year. We are already very excited to be back for #ITN19.
When I walked into the exhibit hall Wednesday the first thing I saw was this!
Anticipating the IT Nation 2018 As-A-Service Keynote
For 10 years, GreatAmerica has been pounding the As-A-Service drum. As a result, I was enthusiastically anticipating Arnie’s keynote the next morning because I knew he would address As-A-Service to some degree. I showed up Thursday morning and sat in the second row and very early into the keynote I see this.
My heart rate started to rise (I know, it doesn’t take much for me to get excited). Finally the crowd was going to hear how important it was for an MSP to do Everything-As-A-Service.
ConnectWise Talks As-A-Service at IT Nation
Arnie was hitting every point with precision. He talked about how customers want to consume technology. He talked about how ConnectWise is helping partners deliver their products and services in an As-A-Service model. He talked about how other vendors are delivering the As-A-Service model. He then mentioned one of our mutual partners, Paul Hilbert and his company Network Doctor, and how they are doing Everything-As-A-Service.
This was the moment I’d been waiting 10 years for, I was eager to FINALLY hear those magical words “another way Network Doctor helps its customers consume Everything-As-A-Service is they embrace Hadware as a Service (HaaS) and Hardware as a Rental® or HaaR®”. But nooooooooooooooooooo. Nothing. Crickets. No Mention. #ColdShower #WaitAnotherYear #DreamsDashed
How Arnie failed to address 35% of BIC MSP’s revenue
Why no mention of HaaS or HaaR Arnie?
Fact: According to Service Leadership, Best-in-Class (BIC) MSPs consistently have 35% - 40% of their revenue as hardware and project revenue.
Fact: According to Service Leadership, bottom quartile MSPs only have 24% of their revenues as hardware and project revenue. Also, the data shows this percentage consistently dropping quarter over quarter.
The Key As-A-Service Holds to Unlocking the Standardization Mystery
Standardize, Standardize, Standardize
The reason BIC MSPs consistently have hardware and project revenue in the 40% range is they understand how standardization helps an MSP run an efficient business. You can have every tool that ConnectWise sells and still lose money. MSPs must standardize each customer’s environment. The best and easiest way to do this is using an As-A-Service model.
What if you could go to every prospect you are selling to and offer them a single monthly payment for everything (hardware, software, data migration, installation, training, managed services). You never need to ask for a check for the project ever again. In addition, you, the MSP, - would get 100% of the cash upfront for the hardware, software, data migration, installation and training.
Is a Profitable, Scalable As-A-Service Model Too Good to be True?
No. A profitable, scalable As-A-Service model isn’t outside of the realm of possibility.
GreatAmerica partners have varied As-A-Service offerings they sell every day and customers thank them for making it so easy. If you don’t sell this way, you will lose deals to partners who sell the HaaS/HaaR way.
Partners tell us about deals they won because they bundled everything together in a monthly payment and didn’t ask for any money up front while their competitors did.
Do you want to stand out from your competitors?
Many of you reading this know Gary Pica from TruMethods. Gary is, hands down, one of the best guys in the IT space. He grabbed me during the show and told me about a breakout session he was in this week. He asked those attending to raise their hand if they offer a monthly payment option on every deal. What percent of the crowd do you think raised their hand?? Gary estimated it was about 10% - 15% of the crowd. If that math translates to the real world (and it always does, right?!), only 10% - 15% of your competitors are offering monthly payments every time. He went on to encourage the group to offer the payment!! #WayToGoGary
If you want to stand out from your competitors, offer HaaS/HaaR.
Arnie Was Right about As-A-Service
He nailed it. Arnie made the topic of As-A-Service a front and center issue. Thank you Arnie! Your customers are more often demanding a monthly payment solution for everything. ConnectWise and many of the other great vendors in the solution pavilion can help you in many ways. However, I believe they can only help you get 65% of the way. More than ever, I will strongly argue HaaS/HaaR will take you the other 35% of the way. Sure, hardware and projects don’t have the bling-factor or valuation impact that MRR does. But if you want to be BIC you need to figure out the BIC method to deliver hardware and projects.
To put this in football terms, if an MSP’s solution were a football offensive unit, HaaS/HaaR would be the offensive line. The MRR, cloud, and security would be the quarterback, wide receiver and running back respectively. You get my point, those skill positions will never amount to anything if you don’t have a solid offensive line. Your success as an MSP will be hindered if you don’t get good a standardization. To be BIC in standardization you need HaaS/HaaR.
See you next year in Orlando!
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