Dispelling The 10 Biggest MSP Myths

Everything you know about MSPs is (probably) wrong

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As an increasing number of solution providers get into managed services, there are still many myths about MSPs floating through the channel. As it turns out, many of those types of assessments are not even close. VARBusiness asked five MSPs for their opinions on 10 supposed myths surrounding the MSP landscape.

MYTH 1: Buying managed services software costs thousands of dollars. False

"That's not true anymore. It might have been true years ago. But lots of providers offer pay-as-you-go pricing and pricing per users now. You don't have to spend thousands of dollars to get in. You might spend thousands over the course of several years, but it's really pay as you go. It's transparent."

--Damon Richards, president of Port-to-Port Consulting, Indianapolis

MYTH 2: Quarterly business reviews with customers are critical for a successful managed services relationship. True

"Absolutely. We do some of them monthly. If you do managed services properly, they don't notice you as much. Early in life, I worked for the phone company. One day I was talking to the vice president of marketing. ... He said the only time people think about us is when something is wrong. My job is to think of us when something is not wrong. Even though you haven't seen us because nothing is broken, we are doing things in the background and planning for what you're doing next to stay up and running."--Richards

MYTH 3: PSA software is made just for MSPs. False

"PSA [Professional Services Automation] software is, in fact, a true value to organizations looking to impart service and process through the employee base, and provide for great customer service internal to an organization. Delivering service internally to an organization should not be considered so different from an MSP. There should be [service level agreements], expected deliverables and projects with milestones and cost justifications. Treating internal clients as customers, and proving it, shows a true professionalism that few companies take to heart."

--Jerry Adamowicz, CTO of Gekkotek Inc., Vancouver, Wash.

MYTH 4: VARs need to "fire" all their customers who don't want to move to a managed service contract. False

"Every customer has value and can continue to be of value to any organization. Simply 'firing' your customers during your transition is foolhardy. Customers of all shapes and sizes can bring revenue streams, either directly through continued product sales and break/fix services or through referrals and word of mouth. Never doubt the value of a current customer, managed or not, in getting your services out to further reaches. ... Terminating the relationship may have consequences far beyond what you expected, and that would be a black mark that would be hard to get rid of." --Adamowicz

MYTH 5: Remote monitoring and management (RMM) is the same as "managed services." False

"RMM is definitely not synonymous with managed services. RMM can be used as a great introduction to managed services. As an MSP with many legacy clients, we used RMM, even if offered free for a month or two, to show the value of how managed services can benefit an organization. Once proven, we then showed them further managed services that could have more dramatic, positive impact upon their organization. RMM is but one small subset of managed services that an MSP should offer." --Adamowicz

MYTH 6: VARs must fire current sales staff and radically transform their business to deliver managed services. False

"A common misconception I see is in companies that think that offering managed services is the same as offering a new pricing plan. This process may involve replacing some sales staff, although any good sales staff member should be able to adapt to a well-planned transformation in service offerings."

--Simon Binder, managing partner at Greenhouse IT LLC, New York

MYTH 7: Even with the proliferation of turnkey tools and services, VARs and MSPs can avoid commoditization. True

"Absolutely true. When working with small- and medium-size businesses, any service [technical or otherwise] is based on maintaining an excellent relationship with the client. ... It is a seller's market for the foreseeable future."--Binder

MYTH 8: Managed services converts IT costs from a capital expense to an operating expense. True And False

"I first want to say that I am not an accountant. From what I understand though, this is a fact and fiction. When you say 'IT costs,' it may or may not include hardware. If hardware is procured for the client, depending on how it is procured and how it is billed, it can still be a capital expense."

--Neil Medwed, president of Preferred Technology Solutions, Richardson, Texas

MYTH 9: Posting pricing online drives down your value and commoditizes your service. False

"I do not see how this would drive down your value. You either have value for what you provide, or you do not. I know that PTS can provide greater value than our competitors because of our knowledge of advanced technologies and our certifications. We provide superior leadership. We also offer better value because managed services is not only about providing service if an issue occurs. It is also about preventing issues and decreasing downtime." --Medwed

MYTH 10: On average, managed services delivers 2x technology utilization, 3x revenues and 5x profits. False

"Our experience is that managed services revenue is replacement revenue and profit. We do gain tech utilization. We are able to remotely diagnose issues and a high percentage of the time we do not have to travel to the customer site to solve a technology issue. However, we find that we are spending more time watching, tweaking, modifying our thresholds, alerts, alarms and dashboards for our customers' networks."

--Glenn Stenger, president of Ex-Cel Solutions Inc., Omaha, Neb.

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