Laser Focus for Success in Managed Services and Cloud Services


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Go vertical or stay horizontal? There has been a lot of talk in the managed services community about that decision. One option is to take a more blended approach — diversifying your customer focus, but specializing around one particular technology solution, such as security or managed services. That focused competency approach has led to extreme success for Tampa, FL, MSP IT Authorities. Co-CEO Jason Caras has watched his 7-year-old managed services business post at least double-digit growth from the start. Like those numbers? Read on to find out how Caras and his cofounder and Co-CEO Jason Pollner profited by building their IT company as a pure managed services practice.

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Laser Focus for Success in Managed Services and Cloud Services

  1. 1. NOT FOR REPRINT ©JAMESON PUBLISHING managed services ❚❚❚❚ cloud Can You Grow If You Go Pure Managed Services? After opening its doors as a pure managed services provider (MSP), IT Authorities’ focused approach has led to 377% growth over the last three years. By Gennifer Biggs G o vertical or stay horizontal? There has been a lot of talk in the man- aged services community about that decision. One option is to take a more blended approach — diversifying your customer focus, but specializing around one particular technology solution, such as security or managed services. That focused competency approach has led to extreme success for Tampa, FL, MSP IT Authorities. Co-CEO Jason Caras has watched his 7-year-old managed ser- vices business post at least double-digit growth from the start. Like those numbers? Read on to find out how Caras and his cofounder and Co-CEO Jason Pollner profited by building their IT company as a pure managed services practice. Does Specialization Limit Your IT Business’ Early Growth? Caras believes strongly that, as a business leader, you must decide who you are, explaining that IT Author- ities has a technology specialization — managed services — and doesn’t take projects outside that core com- petency. “Don’t get me wrong — IT people are clever, so they can probably figure out anything a customer needs and provide it to them directly or indirectly, but the problem with that is you end up taking on things outside your focus and core competency, such as Web programming or VoIP [voice over Internet Protocol] and other one-offs like that.” At IT Authorities, the focus is cloud and managed services. That’s it. “Every sin- gle person here has their brain wrapped around that, and being laser-focused is why we are so successful. You cannot have a superior product or service unless you have strict focus on your core competency.” Caras and Pollner should know. They launched IT Authorities in 2003 after their former IT business — a “jack of all trades” company that did everything from bill auditing to running cables to building IT networks — failed to show profit. He says that business failed because it tried to be all things to all people. “That is a good way to go out of business,” laments Caras. “In most cases, a specialist will clean your clock.” Based on his own experience, Caras offers a warning. “What we learned is you are too distracted to grow if you approach business that way. Plus, you aren’t doing anything well.” Today, IT Authorities offers the products28 January 2011
  2. 2. NOT FOR REPRINT ©JAMESON PUBLISHING Jason Caras, co-CEO, IT Authorities and services outside its focus to customers — through partners. The MSP doesn’t bill for those services under its own brand, but rather subcontracts a partner for the project, has the partner invoice the customer, and then IT Authorities bills the subcontractor for its cut of the project. I know any conversation about partnering leads to questions about losing customers to subcontractors and the challenge of scaling slowly if you are outsourcing projects that are not part of your core competency. Caras has advice on both fronts. First, he recommends finding peace of mind by tapping into partner com- munities available through vendors such as Autotask. Partners in vendor or distributor partner communities are vetted and asked to respect each other’s client base. However, if you are in the position you must use a subcontractor, Caras advises you hire an attorney to draw up a partner contract. That agreement should have a mutual noncompete clause, as well as penalties if either side violates that clause. “If my subcon- tractor leaves with one of my customers, he’ll pay a price. It will really sting,” says Caras. To achieve that, IT Authorities has a policy to pursue full damages if a subcontractor steals a customer. For example, Caras says he would sue for interference with the contract IT Authorities has with that customer. IT Authorities Because he started IT Authorities on a shoestring, Caras understands that IT business owners believe they must take whatever work they 2010 sales revenue: $7.3 million can when their business is young. He argues it is worth it to pass on many of these opportunities and grow slowly, mainly because it gives 2010 sales growth rate: 50% your IT business a chance to mature and handle accelerated growth down the line. “In the first two years, our company brought in $1.1 Employees: 30 million, then $1.3 million — fairly slow growth. But then we hit $3.5 million and $4.8 million, and because we focused our time in the slower years to developing highly documented workflow, we were Vendors: Autotask, Cisco, Kaseya,Photo By Alex McKnight ready with systems and processes to support that accelerated growth,” Microsoft, NetApp, Nimsoft, Qualys, he explains. Quest, Untangle Distributors: Ingram Micro, SYNNEX, Documentation The Foundation For MSP Growth In fact, building a standard process for every situation and then doc- Tech Data January 2011 29
  3. 3. NOT FOR REPRINT ©JAMESON PUBLISHING managed services ❚❚❚❚ cloudumenting that process was key to IT Authorities finding the value of the specialization it offered (managed ser-success around a specialized service, especially since vices) and find a way to show customers how it deliv-managed services was a relatively new product in 2003. ered on its promises. That meant documenting how ITTo sell managed services, IT Authorities had to articulate Authorities handles every situation that might arise with a customer. “We have a 600-page guide to our services, Increase Managed Services Profits and that book answers every question a customer might have,” says Caras. “For example, when we say we will With Business Automation Tools take care of your servers, this is exactly what that means. We can show you our process step-by-step.” With that Jason Caras, co-CEO of IT Authorities, a managed services provider (MSP), says that documentation under its belt, IT Authorities found it easyvisibility into customer environments is only the tip of the iceberg when it comes to run- to push those “everything to everyone” businesses rightning a successful managed services company that excels at customer service. To be an out of contention. “We were extremely successful inefficient and profitable MSP, you must have insight and measurable metrics about your competitive situations since we were up against busi-own operations. To achieve that, IT Authorities uses a combination of tools — Microsoft nesses that ‘also offered’ managed services,” says Caras,Dynamics CRM (customer relationship management) and Autotask, a business automa- explaining the MSP’s success rate for contracts was in thetion software tool that handles trouble tickets, workflow assignments, and time track- 90th percentile against competitors that didn’t specializeing, among other tasks. in managed services. “Autotask is the connection between our clients and our company,” explains Caras,calling Autotask the central nervous system for IT Authorities. The tool coordinates the Focus On Managed Services Drives Business Expansionneeds of hundreds of customers with a staff of 30 employees. “Autotask is integrated IT Authorities now has a stellar reputation in its region,into everything we do, the monitoring and management tool, accounting, our CRM, and its strong, steady growth has allowed for reinvest-everything.” The reason, says Caras, is not only to drive efficiency — Autotask auto- ment into its offerings, such as building a private cloudmates tasks such as billing and time tracking — but also supplies metrics that prove on high-end components from Cisco, MoreInfo Learnvalue and success to customers. “Autotask provides the accountability to support our VMware, and NetApp. “We have three more about Caras’ philoso-promise that we deliver four pillars of service to every customer,” he says. things other providers don’t: people phy about performance as Those four pillars include dedicated to upholding our unique cul- a competitive driver at insight into the state of a cus- ture and our focus on cloud and man- tomer’s network (optimized, aged services, processes that allow us to show our cus- compromised, unsecured, tomers exactly how we deliver on our promises and etc.), accountability for what IT force internal effectiveness and accuracy, and technical By providing metrics for Authorities does to keep that prowess around cloud and managed services.” That com- managed services providers such network running smoothly bination allows IT Authorities to grow upstream as well as IT Authorities, Autotask helps businesses right price their ser- (remediation and mainte- as defeat other MSPs in the market. While most MSPs tar- vices and prove their value. nance), reports on the perfor- get customers with 1 to 100 users, this MSP can scale to mance of IT Authorities (time handle customers with as many as 1,000 seats or close trouble tickets, how many tickets handled, response time to calls, etc.), and That means average monthly revenues from managedfuture spending forecasts (what the customer needs to plan for in the network, such as clients total more than $1,500/month per customer at theadding storage capacity). “Autotask is core to delivering the value proposition of those low end and up to $65,000/month per customer withfour pillars by pulling the information we need for the reports from disparate systems larger customers. In fact, with those processes in place,and then creating reports with that information,” says Caras. In addition to helping IT Authorities has watched its growth per contractCaras showcase value, Autotask supports pricing by the MSP by providing visibility into increase by 1,600% since the MSP began addressing thethe cost of supporting each client and meeting that client’s service level agreement midmarket.(SLA). Autotask also feeds IT Authorities’ automated billing by supplying invoicing infor-mation to their accounting systems. Lastly, the software supports ongoing customer ser- Is It Too Late To Specialize In Your IT Business?vice improvement. Each service ticket closed in Autotask triggers an email with a cus- It is never too late to evolve and hone your businesstomer satisfaction survey link. All those surveys are translated into reports that reveal focus toward a more specialized approach. Caras cau-any troubling trends with customer service. tions that a business owner can’t make that change alone, While that information on hand is useful, having Autotask automatically issue reports but rather it is a cultural shift that demands buy-in fromto each manager at IT Authorities for weekly staff meetings takes that usefulness to staff. At IT Authorities, two self-improvement philoso-another level. “Each manager sees the SLA performance for the past week, such as tick- phies drive the company’s dedication to constantlyet counts by type, customer survey comments, profitability statements, problem man- improving its service: CANI (Constant and Never-endingagement reports, etc., all fed by Autotask, and that is how we start each meeting,” says Improvement) and the 212-Degree Concept that says giv-Caras. “Without Autotask, or a tool like it, you simply cannot be an MSP. End of story.” ing your very best and always adding that extra degree of effort each day makes a huge difference in the end.30 January 2011
  4. 4. NOT FOR REPRINT ©JAMESON PUBLISHING managed services ❚❚❚❚ cloud By starting with each staff member and demanding and For example, Caras points out that most employeesenabling constant innovation and improvement, and want to do a good job, but need guidelines, a way totherefore improving the company’s performance and measure outcomes, and a plan to improve. In the case ofcustomer service as an outgrowth of that focus, IT IT Authorities, workflow is tracked through the compa-Authorities has become a juggernaut. “Process is direct- ny’s customer relationship management (CRM) tool,ly lined up with profitability,” says Caras. “It’s not just Microsoft Dynamics CRM, which is integrated into thehow you manage and serve customers, but how you do MSP’s business automation tool, Autotask (see sidebarmore every day with what you already have.” pg. 30). “That combination gives us great visibility into our operations,” explains Caras. In fact, every Friday is Task Friday. An automated report hits every employ- ee’s email in-box at 8:01 a.m. on Fri- day and contains a list of outstand- ing tasks and their owners. Each task Ready must be completed by end of day. “We had workflow processes in place, but needed to hold people for NCR’s c-tailing revolution? TM accountable,” says Caras. Because every employee sees the report, there is a sense of accountability not gained otherwise. “This is about everyone having skin in the game.” Do it my way: 83% He adds that he believes IT Authori- of global consumers ties’ culture is just as important to its growth as those finely tuned and are more likely to documented workflows he presents do business with to customers. retailers that allow For IT Authorities, having such them to personalize focus — from its technology offer- and control where, ing to its corporate culture — has when and how they allowed a small company to scale. interact through their Its national customer base helped it preferred channels. land on the Inc. Magazine list of 5,000 Fastest Growing Companies See the c-tailing revolution in action at NCR’s (#801) in 2010. It has been named booth, #1903, at the 2011 NRF Convention & EXPO. by the Tampa Bay Business Journal as Tampa Bay’s Best Place to Work, and is on that publication’s list of 50 Financial Today’s consumers are time starved, digitally enabled and more in control than fastest-growing companies in Tampa Retail ever before. They demand anytime, anywhere convenience and they want to Bay. In 2010, the MSP was voted the Travel serve themselves across multiple industries and channels – when, where and Healthcare how they choose. #1 Best Company to work for in Food Service Florida. The company also managed Gaming Tomorrow will require a new way of doing business. Converged retailing— to bring in $7.3 million in revenue in Entertainment c-tailing—solutions from NCR enable a personalized experience based on 2010. So perhaps success isn’t a mat- Public Sector consumer preference and presence. ter of vertical or horizontal, but and more rather a matter of discovering your Become part of the NCR Partner Program and join an industry thought core competency and then challeng- leader. Email NCR at, or contact one of NCR’s ing your staff to be better at that distribution partners for more information on our programs. solution than anyone else. ● Gennifer Biggs is net- work security, storage, and managed services © 2010 NCR Corporation editor for Business Solutions. Contact her at January 2011