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- 1. Grow your revenue and profits through managed services for a work from anywhere world Jan 28th, 2021, 11-12 Eastern
- 2. New readiness series! Accelerating growth with M365 Business Premium Accelerate your growth and profitability through deep dive readiness on building profitable managed services with M365BP Practical guidance on developing managed service offers Real world examples from Industry experts like Paul Dippell, Alex Fields, and MSP peers Deep dive technical training with Microsoft Experts Sales and customer conversation tools training Panel of experts helping answer partner questions! Save your spot: https://aka.ms/AccelerateWithM365BP
- 3. Meet the experts Neha Bhaskar Sr. Product Marketing Manager, Microsoft 365 SMB Paul Dippell CEO, Service Leadership Inc Mikko Saarto Country Head, Finland Office Management Tim Sinclair Principal Product Manager, Microsoft 365 SMB Engineering Jon Orton Director of Product Marketing, Microsoft 365 SMB Our presenters Our Q&A experts David Bjurman-Birr Security Architect, Microsoft Download the Workbook for this webinar: https://aka.ms/SLIWebinarWorkbook
- 4. Accelerating growth for SMB IT Partners – Opportunities 76% SMBs are adapting and enabling remote work1 184% expected surge in video collaboration2 90% SMBs would consider hiring a new MSP if they offered the right cybersecurity solution3 85% of MSPs see security as biggest area of growth in the next 12-18 months4 Sources: 1. AMI | Business Survey 2020: the impact of COVID 19 on SMBs in the USA June 2020; 2. Techaisle | US SMB and Midmarket video collaboration adoption March 2020; 3. Microsoft Internal Research 2019; 4. Channel Futures | 2020 MSP 501 Full Report
- 5. Microsoft 365 Business Premium Comprehensive security and productivity solution, designed for businesses with 1-300 employees Collaborate in real time Enable remote access and protect identity Defend against cyberthreats and data loss Easily secure and manage devices ”Having a best-in-class platform like Microsoft 365 addresses multiple challenges in one go, something that was missing earlier. Today, I can say that we have all the tools in place for significantly improving business productivity and collaboration while providing a much higher level of security.” —Praveen Vashishta, Chairman and CEO at Howden India
- 6. Create ongoing value for you and your customer Microsoft 365 Business Standard ($12.50) Office apps and services, Teams Microsoft Defender for Office 365 Intune Microsoft Entra ID P1 (formerly known as Azure AD Premium Plan 1) Azure Information Protection Premium P1 Device Antivirus Autopilot Windows Virtual Desktop license Windows Upgrade rights Microsoft 365 Business Premium $20 per user per month Secure your customers and manage risk Grow your profits through Standardized managed services Reduce operational cost and complexity
- 7. SLI: A Best in Class managed services model
- 8. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary Service Leadership Index® The Service Leadership Index is the foremost Solution Provider benchmark worldwide.
- 9. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary What is Best-in-Class MSP Performance? 9 Over 12 years, Best- in-Class (top quartile) MSPs averaged 2.4X higher EBITDA % than Median MSPs. • This is regardless of where they are, how big or small they are, or what customer segments they pursue. • What matters is Operational Maturity Level™ or OML.
- 10. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary Operational Maturity Levels™ Higher Operational Maturity Level™ means increased ability to: Drive accelerated performance | Maximize profit and value creation | Differentiate in the marketplace Mitigate business risk | Drive accountability OML™ ABILITY TO EXECUTE A BUSINESS PLAN OML 1 OML 2 OML 3 OML 4 OML 5 Basics of profit levers, few controls or forward planning. Don’t know what you don’t know. Largely trial and error. Basic controls. Some forward budget planning, little attainment tracking. Robust controls. Detailed forward budgeting & attainment tracking. Comp tied to attainment. Same as OML 4, now extending to LOBs adjacent to IT at high performance. BEGINNING EMERGING SCALING OPTIMIZING INNOVATING 10
- 11. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary OML™ Progression of MSPs 11
- 12. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary There are 39 Operational Maturity Level Traits that all high performing Solution Providers master, spread across their Strategy, Sales, Service, Finance and Incentive Compensation. Six OML Traits have the greatest influence on profitability and growth 12 OML Traits of MSPs OML Trait What It Means Greater Maturity Means Value Creation Strategy How much profit by when? Greater likelihood of creating optimal stock value. Target Customer Profile Who exactly are we selling & delivering to? Faster time to market Greater differentiation Faster to add customers Higher utilization of employees Lower operational costs Faster progress on your Value Creation Strategy Driving Technology Standards Every customer buys the same technology & my fullest offer. Cross-Selling Execution 100% of customers buy 100% of my offerings (most of them, from the start of the relationship). Selling the Pre-Contract Assessment Getting the customer to become a customer (that is, pay us) sooner. Vendor Management Fewer vendors with each providing the most unified management within their segment of the stack; deeper relationships.
- 13. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 13 Each OML Trait Has a Different ROI ROI Weighting of OML Trait: Driving Technology Standards
- 14. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 14 Score Yourself on the 6 Key OML Traits ? OML Open the workbook: https://aka.ms/SLIWebinarWorkbook Let’s see your OML in the six key OML Traits and your steps to improve it.
- 15. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 15 What’s Your OML Score and Priorities? ? OML Functional Area OML Trait ROI Weight ÷ Your OML Score (1 to 5) = Weighted Score Priority Accomplish By Strategy Value Creation Strategy 3.0 Strategy Target Customer Profile 3.1 Service Driving Tech Standards 3.2 Sales Cross-Selling Execution 3.2 Service Selling the Pre-Contract Assessment 3.2 Strategy Vendor Management 2.5 Your Total Score (Range: OML 1 to OML 5)
- 16. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 16 Functional Area | OML Trait | ROI Weight Strategy | Value Creation Strategy | 3.0 / 4.0 If we grow revenue and profits each year, we’ve got a good value creation strategy. We know the amount of stock value we want to create, we know by when we want to create it, and we know how we’ll extract it. Those owners who have a Value Creation Strategy, are most often the ones who create material value for themselves. That’s because it gives you a longer term trajectory against which you can plan, execute, measure and adjust. It doesn’t matter if your Value Creation Strategy has you exiting in 1 year, 5 years or 30 years: just make one and revisit it each year. Why ? OML
- 17. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 17 Functional Area | OML Trait | ROI Weight Strategy | Value Creation Strategy | 3.0 / 4.0 Those owners who have a Value Creation Strategy, are most often the ones who create material value for themselves. That’s because it gives you a longer term trajectory against which you can plan, execute, measure and adjust. It doesn’t matter if your Value Creation Strategy has you exiting in 1 year, 5 years or 30 years: just make one and revisit it each year. Why ? OML Now, score yourself from 1 (low) to 5 (high). If we grow revenue and profits each year, we’ve got a good value creation strategy. We know the amount of stock value we want to create, we know by when we want to create it, and we know how we’ll extract it.
- 18. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 18 Functional Area | OML Trait | ROI Weight Strategy | Target Customer Profile | 3.1 / 4.0 Good leads are hard to get. Anyone who has budget for what we do, we’ll sell to. Good leads are hard to get. But, we sell only to a narrow range of client sizes. Across all sizes of customers, Managed Services can be sold well and profitably. But a given MS operation doesn’t transport well to customer sizes it was not originally built for. Higher profit, faster growing MSPs start and stay focused on a narrow customer size range. Lower-performing MSPs try to span too large a range of customers sizes, and suffer for it. Why ? OML
- 19. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 19 Functional Area | OML Trait | ROI Weight Strategy | Target Customer Profile | 3.1 / 4.0 Good leads are hard to get. Anyone who has budget for what we do, we’ll sell to. Good leads are hard to get. But, we sell only to a narrow range of client sizes. Across all sizes of customers, Managed Services can be sold well and profitably. But a given MS operation doesn’t transport well to customer sizes it was not originally built for. Higher profit, faster growing MSPs start and stay focused on a narrow customer size range. Lower-performing MSPs try to span too large a range of customers sizes, and suffer for it. Why ? OML Now, score yourself from 1 (low) to 5 (high).
- 20. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary We’ve forgotten why we thought we couldn’t be fully standardized across our client base. We partner with vendors who have the most unified toolset possible. 20 Functional Area | OML Trait | ROI Weight Service | Driving Technology Standards | 3.2 / 4.0 It seems at least counter- intuitive to require our clients to be standardize from the start, possibly suicidal. We use “point solutions” tools that we integrate. The key to high quality, growth and profitability is minimizing technical complexity. This enables: great customer and employee experience, retention and referrals; high sales confidence; fewer and lower cost people. Higher-performing MSPs get standards in place right away; lower performing MSPs decide not to or haven’t figured out how. High- performing MSPs leverage vendors who offer a unified toolset rather than trying to integrate tools from the ground, up, themselves. Why ? OML
- 21. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary We’ve forgotten why we ever thought we couldn’t be fully standardized across our entire customer base. We partner with vendors who have the most unified toolset possible. 21 Functional Area | OML Trait | ROI Weight Service | Driving Technology Standards | 3.2 / 4.0 It seems at least counter- intuitive to require our clients to be standardize from the start, possibly suicidal. We use “point solutions” that we integrate. The key to high quality, growth and profitability is minimizing technical complexity. This enables: great customer and employee experience, retention and referrals; high sales confidence; fewer and lower cost people. Higher-performing MSPs get standards in place right away; lower performing MSPs decide not to or haven’t figured out how. High- performing MSPs leverage vendors who offer a unified toolset rather than trying to integrate tools from the ground, up, themselves. Why ? OML Now, score yourself from 1 (low) to 5 (high).
- 22. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 22 Functional Area | OML Trait | ROI Weight Sales | Cross-Selling Execution | 3.3 / 4.0 Sell whatever we can of our offerings, to who we can. We’ll get there somehow. 100% of clients buy 100% of our offerings; 70% of the time right from the start of the contract. Your goals are in service are: high simplicity and low service cost. Your goal in sales is to maximize revenue per customer. The top performers attain these by getting every customer to look the same, and invest the most in IT by selling to 100% of them, 100% of what they offer. Why ? OML Example of follow-on upselling: O365 to M365BP, then adding Azure.
- 23. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 23 Functional Area | OML Trait | ROI Weight Sales | Cross-Selling Execution | 3.3 / 4.0 Sell whatever we can of our offerings, to who we can. We’ll get there somehow. Your goals are in service are: high simplicity and low service cost. Your goal in sales is to maximize revenue per customer. The top performers attain these by getting every customer to look the same, and invest the most in IT by selling to 100% of them, 100% of what they offer. Why ? OML Now, score yourself from 1 (low) to 5 (high). 100% of clients buy 100% of our offerings; 70% of the time right from the start of the contract.
- 24. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary High Performing MSPs Sell and Install the Full Stack from the Start Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize SLA in Effect Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize Gold Package SLA in Effect Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize Gold Pkg SLA in Effect Gold Package Low Operational Maturity Median Operational Maturity High Operational Maturity Note: “Gold Package” means your fullest MRR package.
- 25. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary High Performing MSPs Sell and Install the Full Stack from the Start Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize SLA in Effect Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize Gold Package SLA in Effect Assess Quote Signed On-Board Deliver Managed Services Refresh Stabilize Gold Pkg SLA in Effect Gold Package Low Operational Maturity Median Operational Maturity High Operational Maturity • Rougher ride for you • Rougher ride for the client • Smoother ride for you • Smoother ride for the client Note: “Gold Package” means your fullest MRR package.
- 26. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary Other Reasons High Performing MSPs Sell and Install the Full Offering from the Start • Advanced security exists because basic security isn’t secure. • When the customer buys “Basic Security” they can’t imagine you’re not keeping them secure. • You’ll have them sign a disclaimer. • When they have a breach, you’ll show them the disclaimer. • They’ll say, “Well, I trusted you, why did you let me make a stupid decision?” • Then, to retain the customer or at least avoid a lawsuit, you’ll spend 600 hours for free, recovering their system. • If you have three Managed Services packages (e.g., Gold, Silver, Bronze), your Sales reps will pitch the Bronze most often. • That’s because Sales rep would rather sell something than nothing, and it’s easier to sell a lower price. • For every time they pitch Gold, they’ll pitch Silver 3 times and Bronze 10 times. • Which means they’ll never get good at selling Gold. • But Gold is the only offering that scales, allows you to grow quick enough, keep the customer happy, and make a fair profit. There’s No Such Thing as “Basic Security” and “Advanced Security” The Solution You Allow the Sales People to Present Most Often, is the Solution They’ll Learn to Sell
- 27. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 27 Results of Driving Technology Standards and Selling the Full Offering from the Start Performance Criteria MSPs < OML 2.9 MSPs OML 2.9-3.8 MSPs > OML 3.8 Revenue Growth -1.9% 5.8% 13.8% Service GM$ Growth -11.8% 5.6% 15.2% Product GM$ Growth -16.% 31.9% 18.7% EBITDA $ Growth -63.9% 9.5% 39.7% Stock Value -16.0% 10.7% 35.2% Source: S-L Index™ Q4-18 through Q3-20 Tech Stack Strategy Lots of vendors, self- integrated tools. <<< In between. >>> One vendor per segment of stack, unified solution. Solution Sales Strategy Get in the door, then upsell. <<< In between. >>> Sell the full Gold Package from the start, including advanced security.
- 28. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 28 Functional Area | OML Trait | ROI Weight Service | Charging for Assessments | 3.2 / 4.0 No need. We do a quick but good technical assessment at no cost, and quote successfully from there. We do a paid technical and business alignment on 95% of our opportunities before quoting Managed Services. Doing a paid, full technical and business alignment assessment before quoting Managed Services enables the highest differentiation, close rate of desirable customers, revenue per account and profitability. Higher- performing MSPs do this on 90%+ of opportunities; lower-performing MSPs either view this as optional, counter-productive or hard to sell. Why ? OML Note: Microsoft has Secure Score and Productivity Score tools that your customers and prospects can access, but your assessments should also include how their execs look at technology and provide a 3-year business technology roadmap.
- 29. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 29 Functional Area | OML Trait | ROI Weight Service | Charging for Assessments | 3.2 / 4.0 No need. We do a quick but good technical assessment at no cost, and quote successfully from there. We do a paid technical and business alignment on 95% of our opportunities before quoting Managed Services. Doing a paid, full technical and business alignment assessment before quoting Managed Services enables the highest differentiation, close rate of desirable customers, revenue per account and profitability. Higher- performing MSPs do this on 90%+ of opportunities; lower-performing MSPs either view this as optional, counter-productive or hard to sell. Why ? OML Now, score yourself from 1 (low) to 5 (high).
- 30. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 30 Functional Area | OML Trait | ROI Weight Service | Vendor Management| 2.5 / 4.0 We have multiple vendors for each segment of the tech stack, and we choose our solutions based primarily on market “buzz” and margin incentives. We have only one vendor per segment of the tech stack, and we have a solutions committee that builds a business case for each choice. High profit, high growth Solution Providers, paradoxically, partner with fewer vendors. They also partner more deeply with those chosen few. They have business plans vetted by the leaders of the company, for each new solution or service they add to their portfolio. These behaviors give them increased scale, efficiencies and flexibility. Why ? OML
- 31. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 31 Functional Area | OML Trait | ROI Weight Service | Vendor Management| 2.5 / 4.0 We have multiple vendors for each segment of the tech stack, and we choose our solutions based primarily on market “buzz” and margin incentives. We have only one vendor per segment of the tech stack, and we have a solutions committee that builds a business case for each choice. High profit, high growth Solution Providers, paradoxically, partner with fewer vendors. They also partner more deeply with those chosen few. They have business plans vetted by the leaders of the company, for each new solution or service they add to their portfolio. These behaviors give them increased scale, efficiencies and flexibility. Why ? OML Now, score yourself from 1 (low) to 5 (high).
- 32. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 32 What’s Your OML Score and Priorities? ? OML Functional Area OML Trait ROI Weight ÷ Your OML Score (1 to 5) = Weighted Score Priority Accomplish By Strategy Value Creation Strategy 3.0 3 1.00 4 Strategy Target Customer Profile 3.1 2 0.65 3 Service Driving Tech Standards 3.2 2 0.63 1 Sales Cross-Selling Execution 3.2 4 1.25 5 Service Selling the Pre-Contract Assessment 3.2 2 0.63 1 Strategy Vendor Management 2.5 4 1.60 6 Your Total Score (Range: OML 1 to OML 5) 2.8
- 33. Total Profit Solutions for IT Companies™ | www.service-leadership.com © All Rights Reserved – Confidential and Proprietary – Licensed Material – Confidential and Proprietary 33 What’s Your OML Score and Priorities? ? OML Functional Area OML Trait ROI Weight ÷ Your OML Score (1 to 5) = Weighted Score Priority Accomplish By Strategy Value Creation Strategy 3.0 3 1.00 4 2021/3/23 Strategy Target Customer Profile 3.1 2 0.65 3 2021/4/28 Service Driving Tech Standards 3.2 2 0.63 1 2021/3/12 Sales Cross-Selling Execution 3.2 4 1.25 5 2021/6/26 Service Selling the Pre-Contract Assessment 3.2 2 0.63 1 2021/2/11 Strategy Vendor Management 2.5 4 1.60 6 2021/2/26 Your Total Score (Range: OML 1 to OML 5) 2.8
- 34. Hear from a peer: Office Management, Finland
- 35. Office Management, Finland Office Management is a Nordic outsourcing partner for SMB Mission: To make every workday better by simplifying 9 offices in Sweden, Finland and Norway 450 employees Mikko Saarto Country Manager of business in Finland, 40 employees In charge of creating profitable growth Providing IT for 550 SMB companies with 7,500 users in Finland
- 36. The “Before State in 2018” Challenges • Multiple vendors • Multiple customer offers • Multiple combination of management and security configurations per customer • Acquiring high % of customers at entry level pricing Resulting in … • Flatline customer growth • Flatline Revenue • Decreasing EBITDA – the key reason to adopt a new managed services strategy
- 37. The turnround: Following the mantra of simplification Increase profits and growth through managed services Target Customer Profile Standardized Technology Stack Cross-Selling Vendor Management
- 38. Our managed services offer model
- 39. M365BP Building your managed security practise For Add-on services Include $2.5X Lead offer with customers- comprehensive protection for data, devices and cyberthreats Custom development Secure score-based assessments All onsite and remote support End user training Comprehensive Security Office and Teams
- 40. For Include Add-on services For Include Building your managed security practise $X Baseline security Customers traditionally deploying productivity but not much security Cost conscious businesses now moving to remote work M365BP Basic Security Office and Teams $1.6X Intermediate security Customers acknowledging the need for enhanced security but not quite the full meal deal Remote support M365BP Advanced Security Office and Teams $2.5X Lead offer with customers- comprehensive protection for data, devices and cyberthreats Secure score based assessments All onsite and remote support End user training Custom development Comprehensive security M365BP Comprehensive Security Office and Teams
- 41. Building your managed security practise M365BP Comprehensive Security Include Secure score based assessments All onsite and remote support End user training Custom development Add-on services Device anti-virus Anti-malware & anti-phishing filtering Secured mail sending with encryption Two factor authentication MFA Device management in Intune and policies Mobile Device Management MDM Conditional access Monthly monitoring and shadow IT discovery Autopilot
- 42. Example of custom add-on service with PowerBI and Dynamics Add-on services • Build tools for the core customer business that gives us a larger role than just being an IT supplier • Build once, use at scale- deploy these Power BI apps to multiple customer environments • Cross-sell – for example, in this case we’re selling both M365 BP and Dynamics
- 43. The ”after” success business benefits of our model Key results • During 2018 – 2019 shift to managed services • Increased Revenue by 10% • Increased EBITDA by 240% • Increased Profit/Employee by 230%
- 44. The ”after” success business benefits of our model Customer growth • 2X customer growth • Clear path to Upsell • Moved from OML 3.2 to OML 3.8 • Next will step up to win larger size customers within our customer target range
- 45. Get Started on your journey to a more profitable practise with M365BP
- 46. M365 BP: A foundation for profitable managed services Standardized technology stack Easy to create standardized customer offers with one solution across productivity and security Cross-selling Cross sell with Azure and Dynamics Easy to add-on SKUs like MDATP and MCAS Selling the pre-contract assessment Develop assessment packages around Secure Score and Productivity Score to uncover needs Vendor management One vendor, bill and license across productivity and security
- 47. Microsoft 365 Partner Playbook: Practical Guidance across the partner journey Understand business opportunity Partner opportunity Build profitable managed services Managed services best practices from experts Train your team Technical Technical Training Sales GTM Customer Conversation aids Manage and deploy solutions IT Checklist Deployment Guide Webinars Decks and docs Videos Tools and templates M365 Business Premium Partner Playbook https://aka.ms/M365BPPlaybook Practical Guidance for partners for building a profitable managed service practise with M365BP – including managed services offers that meet today’s customer needs, technical and sales training and go to market content. Built in partnership with Industry and Microsoft experts. Companion tools and online training. New! Announcing the Microsoft 365 Partner Playbook
- 48. Next webinar Feb 11th – with Alex Fields and David Bjurman-Birr Register now https://aka.ms/AccelerateWithM365BP
- 49. Get started on your Microsoft 365 BP Journey CTA Resources How do I learn more about M365BP? Learn more about the solution Get started with demo environment https://aka.ms/m365bp https://transform.microsoft.com How do I get my staff trained? Join our webinar series Get the playbook Train your staff with TechFundamentals workshops https://aka.ms/AccelerateWithM365BP https://aka.ms/M365BPPlaybook TechFundamentals training run by your distributor New! M365BP and BV IUR Benefits on Partner Center How do I stay connected? Stay updated with latest product news, ask questions, give feedback https://aka.ms/smbtc
- 50. © Copyright Microsoft Corporation. All rights reserved.
Editor's Notes
- Hello everyone, I am Neha Bhaskar from the Microsoft 365 Small and Medium Business Product Marketing team and it’s great to be here with you. Last year was extraordinary and challenging in many ways. But it’s also shown us new ways to work together that has laid the foundation for the work from anywhere world we’re in now. This work from anywhere world presents new opportunities for IT partners to grow by delivering value added managed services across security and collaboration. So today, we’re going to be talking about best practices to develop profitable managed services to grow your revenue and profits.
- Before I start today’s webinar, I want to point out that this presentation kicks off our “Accelerating Growth with M365 Business Premium” readiness series, which will cover all aspects of partner enablement starting with building profitable managed services (today) to technical and sales training for your team. These webinars happen on alternative Thursdays, at 8 am Pacific, through April. The next webinar in the series is on Feb 11th, taking a deeper look at building advanced security services mapped to frameworks like NIST and CIS.
- All right, back to today’s agenda. Today, I am excited to be joined by two very special guests– Paul Dippell, CEO of Service Leadership who’ll drive an interactive session on building a best-in-class managed services practice. For this part of the webinar, we’ll be using a workbook who’s link we’ve put shared so please make sure to download it . Then Mikko Saarto, country head of MSP Office Management will give us a real-world example of how to build a successful managed service practice with Microsoft 365 Business Premium. Plus, we have a panel of Microsoft experts including Tim Sinclair and Jon Orton and David Bjurman-Birr - who will be handling Q/A via the chat window you see on screen. So, keep your questions and feedback coming there. Alright, so let’s get started.
- The new world of work from anywhere presents new opportunities for IT partners- across both security and collaboration. SMBs expect a 184% increase in video collaboration. And with increased security threats, offering security services is no longer optional if you want to be your customers’ trusted IT provider, with 90% of customers stating they’ll consider switching MSPs if they offered the right security solutions. And that is why 85% MSPs see security as the top area of growth in the next 18 months.
- The good news is that at Microsoft we have an offering that provides a comprehensive foundation to deliver work from anywhere with- Microsoft 365 Business Premium. Many of you are already familiar with this solution, but for those who are new, I’ll do a brief summary of what’s in BP and how it connects to the profitability opportunities that Paul and Mikko will talk about. Microsoft 365 Business Premium is a comprehensive productivity and security solution for small and medium businesses. It includes Office apps and services, collaboration tools like Teams as well as tools to enable remote access and protect identity, defend against cyberthreats and data loss and easily secure your devices.
- And there are real benefits to you as partners in having a comprehensive security and productivity solution. Let’s talk a bit about it. Most of you are probably selling Office 365 /M365 Biz Std. With M365 BP, you have the opportunity to offer a more complete work from anywhere solution with advanced security- so all the capabilities you see on the left side of the screen including Defender for Office 365 , Microsoft Entra ID P1 (formerly known as Azure Ad Premium Plan 1), Intune and more. So first, it gives you an easy way to elevate your customers’ security. We know that SMBs are increasingly the target of cyberattacks, in fact as I mentioned earlier, 90% say they would switch MSPs if they offered better security.M365 BP offers you an easy way to elevate the baseline security for your customers manage your risk and reach new higher margin customers. 2nd, you can grow your revenue even further by building value added services on top of M365 BP. What our most successful partners are doing is using m365 bp as a foundation on top of which they’ve built successful standardized high margin managed service practice . Because M365 BP contains everything from Teams to Microsoft Entra ID (formerly known as Azure Active Directory (Azure AD) to Intune, it can provide you foundation to build standardized offers for your customers. Mikko will also share some real-world examples later in the presentation. And finally, it can help you Reduce your cost and complexity. The standardization I talked about helps save your workforce and helpdesk time from having to learn multiple solutions or try to get disparate point solutions to work together, thereby enabling faster time to market. And it’s a cost-effective package, for only $7.50 more than biz std, you get all these capabilities -something that would easily cost you over $40 were you to go to point solutions. Plus, , it’s easy to deploy and you have to deal with only 1 billing and licensing.
- So, I hope that gave you a good overview of the capabilities of M365BP if you’re not familiar. Next. Paul will walk us through the principles of building a best-in-class managed services offer model to maximize profitability and growth. Thanks Neha, pleased to be here. In our operating career we built four Solution Provider companies, the smallest to $50mm and the largest to $2bb…
- We are privileged to have built the largest scale, ongoing benchmark of Solution Provider performance worldwide. Let’s take a look at what best-in-class performance is for Managed Service Providers.
- Here you can see the performance of three groups of MSPs… How do the top performers do it? Let’s drill down.
- We objectively measure the OML of the Solutions Providers How many MSPs are at what level of maturity, worldwide? Let’s take a look.
- This chart shows the proportion of MSPs in each level of operational maturity… There are 39 OML Traits the top performers have mastered, that any MSP can master. Of particular interest to most executives is the speed with which their peers are advancing their Operational Maturity Level, since doing so enhances their growth rate, scalability, quality and profitability. In this chart we see the speed with which firms in the Infra – Managed Svcs community have been advancing their OML. While more than 30% are still at very low operational maturity (OML 1 and 2), fully 46% are at least Scaling (OML 3) and so are making modest profit. In 2012, the community for the first time had more than 20% in OML 4 or 5 (Optimizing or Innovating, respectively), which also means they are likely making BIC profits. The difference in predictability, control, safety and ability to reinvest, between OML 4 and OML 3 is as great as the difference between OML 3 and OML 2 – they are both massive advances in the “grief-to-profit” ratios in the daily, monthly and yearly lives of these SPs. They are also large steps up in stock value and M&A attractiveness, if that is of interest to their shareholders.
- Today’ we’re going to focus on the six most important OML Traits, in terms of return on investment to you. What do we mean by return on investment?
- Here is the ROI map for one of the six key OML Traits we’re going to focus on today. And guess what? We’re also going to enable you to privately determine your OML in each of these six key Traits!
- Grab a pencil and paper. Remember, this is completely private. No one is going to ask you how you scored yourself.
- You’ll probably want to make a little table like this. Or you can download right now…. Ok, ready? Let’s go to the first key OML Trait
- The first key OML Trait is the more important…Value Creative Strategy. Look at the blue text and the green text and place yourself on the scale.
- Ok, now score yourself. Let’s move on to the next key OML Trait
- Let’s talk about the importance of… Look at the blue text and the green text and place yourself on the scale.
- Ok, now score yourself. Let’s move on to the next key OML Trait.
- Let’s talk about the importance of…Driving Technology Standards. Look at the blue text and the green text and place yourself on the scale.
- Ok, now score yourself. Let’s move on to the next key OML Trait.
- Let’s talk about the importance of…Cross-Selling Execution. Look at the blue text and the green text and place yourself on the scale.
- Ok, now score yourself. Let’s dig a little deeper on Driving Technical Standard and Cross-Selling Effectiveness.
- This chart shows how the low performers and high performers deal with technology standards and 100% cross selling during the early contract and on-boarding phase… As you can imagine, these different strategies produce different experiences for the MSP’s customers and the MSP’s staff.
- Who has the smoother ride? And remember, the high OML grow faster and are more profitable. What are some other reasons high performing MSPs always sell the full offering from the start?
- What results does this high OML approach provide an MSP who practices it?
- As you can see the difference in financial results is material… You can also see how the top performers handle their choices of vendors and the approach to solution selling, as compared to the lower performing MSPs. Let’s dig into the remaining two of our six key OML Traits, so you can complete your scoring.
- Another thing high performing MSPs do is…Charge for Assessments. Look at the blue text and the green text and place yourself on the scale.
- Ok, now score yourself. Let’s look at the last of the six key OML Traits
- Another thing high performing MSPs do is…Vendor Management. Look at the blue text and the green text and place yourself on the scale.
- Ok now score yourself. Great job! You’ve now scored your company on the top six most important of the 39 OML Traits that top performing MSPs master. Let’s help you prioritize that list.
- You can see the columns…let’s do the math… All right now, you have your priorities. Let’s take the final, critical step.
- All entrepreneurs wrestle with too much work and not enough time. To hold yourself accountable… All right, now you have your “due by” dates. Great work! Now I’ve shown you the principles of building a best-in-class managed services model, let’s hear from a partner who’s actually doing this in the real world and is on their journey to operational maturity. I’ll hand over to Mikko from Office Management to walk you through their managed services offer model and how it has helped them add value to customers and grow their profits even in these challenging times.
- Now I’ve shown you the principles of building a best-in-class managed services model, let’s hear from a partner who’s actually doing this in the real world and is on their journey to operational maturity. I’ll hand over to Mikko from Office Management to walk you through their managed services offer model and how it has helped them add value to customers and grow their profits even in these challenging times.
- Thank you, Paul and Neha, Hello everyone, happy to be here, I am Mikko Saarto, country head of Office Management, an MSP from Finland. I manage our operations in Finland, where I oversee 40 employees. We have over 550 customers ranging from 10-50 employees, so really small business customers. I want to talk to you about our journey to a managed services model based on Microsoft 365 Business Premium which helped us dramatically increase our profits – based on the mantra of “simplification” and standardization. I want to be transparent that we are very much in the middle of our journey to operational maturity- but I thought hearing a real-world experience could also help others as you start building managed services with M365.
- Back in 2018, that’s less than 3 years ago, we were more of a traditional reseller, transacting licenses and adding support and other onsite consulting services based on the Office 365 cloud platform. We had multiple challenges back then. Multiple vendors and multiple customer offers...which lead to a patchwork of management and security configurations that were difficult to manage and we had no clear focus on target customer segment or offer. As a result, we were acquiring a high percentage of our customers on our entry level price and offer. This was causing poor financial performance as you can see from this chart… We had Flatline customer growth and Revenue. And worse, a decreasing EBITDA. That’s when we decided that we needed to change the way we were doing things. And we developed a strategy to simplify our operational model so we could reduce costs and increase margins in order to increase profitability. And simplification as a strategy is important to our customers as well, because most SMB companies that do not have any interest in investing time to IT related issues . Our focus was on creating a smooth delivery from manufacturer to installation to end customer. We achieved this by using Autopilot, White Glove installation and last mile delivery. Autopilot provides us the remote installation tools, White Glove setup let’s the end-user login to a fresh installation with their own credentials and Last Mile Delivery makes our logistics streamlined, the manufacturing partner delivers the computer to end-user's desktop. This way, the process is always the same and end results stay standardized. Last mile delivery means that we don't have to participate in delivering computers, they go straight from manufacturer to the end user's desktop, we do all the preinstallation in cloud with autopilot. Last mile is integral in simple delivery for us.
- So, here’s an overview of our strategy. We were clear about our Target Customer profile- we were very clear that our target customer were the <100 seat sized customer, initially focusing on 10-50 seat sized customers, vs. larger customers who need many custom services. 80% of these smaller companies can work with tools within M365BP. Standardization: There are two aspects to standardization. We wanted a Standardized Technology Stack: Before 2018, we were using multiple solutions- Office 365 for productivity, an add-on Antivirus software, Separate backup solution, customer specific software (such f Dropbox). With the new managed services model with standardization as a cornerstone, we focused on on just two partners (HP for hardware and Microsoft for software ) and only limited number of their products (M365 for Microsoft), which gave us unbeatable standardizing benefits- We created a solution with fixed price, fixed content and standardized delivery. Standardization of customer offers and processes: Our focus was on creating a smooth delivery from manufacturer to installation to end customer. We achieved this by using Autopilot, White Glove installation and last mile delivery. The process is always the same and end results stay standardized. We create paths for Cross-Selling and upselling: We wanted 100% of our customers to buy 100% of our stack across hardware and software. We’re not quite there yet but have made much progress. And for our legacy customer, we developed clear upsell paths to current solution. We wanted simplified Vendor Management- By just having two main partners, we could create mutually beneficial partnerships and our account teams have just one ecosystem to manage. Our sales personnel are experts on business benefits, not IT, in this model and that’s the perfect setting, as they speak the same language as our customers.
- Next,, let me walk you through the simplified managed services model that we developed. All our offers use M365BP as a foundation as it gives us all the tools needed by 80% of small businesses- from Teams to Office to security to Intune. Our hero offer consists of a comprehensive security package with M365BP, and on top of if we add additional services- example: end user training, onsite and remote support, secure score-based assessments and custom development. Now although we want all our customers on this offer, we’re not quite there where Paul would like us to be 😊.
- We still have some “customers on our basic security package and an intermediate security package. –But our hero offer is always the comprehensive security package which our sales team leads with. However, sometimes our sales team can't get some customers on this package on day one, so we fallback on the others. . Our goal, though, is to move all our customers to the comprehensive security package in time and as I said we’re striving to get where Paul wants us to be.
- Now, let me double click on our hero offer- the comprehensive security package. When Microsoft 365 Business Premium was released, we found a perfect foundation on top of which to build our managed services practice . With this package, our customers get comprehensive security – including: Device anti-virus with Defender AV. Anti-malware & anti-phishing filtering with Defender for Office 365 (formerly known as ATP). Secured mail sending with encryption. Two factor authentication MFA with conditional access that’s available with Microsoft Entra ID P1( formerly known as Azure AD Premium Plan 1). Device management in Intune and Mobile Device Management MDM. Monthly monitoring and shadow IT discovery with Microsoft Entra ID P1 (formerly known as Azure AD Premium Plan 1) that’s included with BP. And Autopilot for drop ship ready devices. This helps us with Last mile delivery- which means that we don't have to participate in delivering computers, they go straight from manufacturer to the end user's desktop, we do all the preinstallation in cloud with autopilot. Last mile is integral in our simplification strategy.
- And on top of this foundation, we add-on additional services. The first is end user training – we want to ensure our customers have a good experience with the solution and we provide onboarding training to their employees- from Teams usage to enrolling devices in Intine MDM to being able to spot when they are being driven in to phishing campaign. The second is onsite and remote support- we include all onsite and remote support as part of this comprehensive package. Our goal is to proactively train users so we minimize support issues. This also gives customers peace of mind that they won’t be nickel and dimed for support issues and it’s actually created a good word of mouth for us and helped us acquire more customers. The third is secure score-based assessments. As you know Microsoft 365 comes with the secure score dashboard that gives businesses a score of their security posture. We conduct quarterly secure score conversations with our customers to drive a security needs conversation and to further upsell additional services. Lastly, we also do custom development for business needs – E.g. Power BI to sales or expense reporting etc. Let me walk you through an example
- Here is an example of a custom Power BI and Dynamics SALES reporting dashboard that we created which shows a view of the sales pipeline for the coming weeks, a snapshot of open deals and gives us a clear view where to focus our efforts on the sales management …. These dashboards are easy to create and offers benefits to both us and our customers We Build thesebtools for the core customers business that gives us a larger role than just being an IT supplier and increases our value in the customer’s eye. We can Build once, and then use at scale- We deploy these Power BI apps to multiple customer environments and give them access to visual data of their own systems. Also, it helps us cross-sell – for example, in this case we’re selling both M365 BP and Dynamics
- Now Let me show you the effect this had on our business fundamentals through a few charts. With this simplified managed services model, we were able to: Increase Revenue by 10%. Increase EBITDA by 240% - the tech stack and vendor standardization and customer offer model simplification really helped manage our cost of development and cost of sale. Increase Profit/Employee by over 40%.
- And this shift to standardized managed services has also helped us acquire new customers at a faster rate. In fact, we saw 2x customer growth from 2018 to 2019 when we made the shift. The clear value proposition and simplified services model really resonated with our customers. Having succeeded with the 10-50 sized customer , we our next step is to expand a bit to a 100-employee customer, which we think we can do with our existing offer model . This will still keep us tightly scoped on target customer profile while allowing us to increase revenue. And all of this was possible because M365BP helped us increase our operational maturity, from OML 3.2 in 2018 to OML 3.8 now. Finally, to close, our goal really to be the customer’s trusted IT provider and M365BP offered us a great foundation to build a complete set of security and productivity services with just one solution. This simplified and standardized model helped us manage our costs, complexity and focus our sellers so we could acquire more customers faster, increase revenue and more than double our cash flow. Now let me hand back to Neha.
- Thanks so much, Mikko! That was very inspiring to see how you’ve been able to use M365BP as a foundation for a more profitable business. What I love about your story is you were able to see immediate benefits of a standardized managed services practice within a year -with growth across your cash flow and customer base.
- I want to connect the dots on what we’ve learned today from Paul and Mikko and show you how M365BP can affect the key principles of building a profitable managed service. Now, Paul mentioned that some of the most important principles for a profitable practice are – standardized technology stack, cross selling, selling pre-contract assessment and Vendor management. So how does M365BP help with these? With M365BP, you have: An easy way to build standardized customer offers for work from anywhere- across productivity, collab and security using just 1 solution as the foundation, that’s easily extensible. BP not only gives you an easy path to upsell your current BS and BB installed base, but also makes it easy to add-on your own services or additional SKUs lime MDATP or MCAS on top of it. And just like Mikko showed, , it’s also easy to cross sell to Dynamics and Azure. Additionally, security score and productivity score , which are included in the M365 admin center, give you additional ways to uncover customer demand for new services. Plus, you can always develop your own assessments package or IP on top of it. Finally, having one vendor stack gives you the benefits of simplification – easier for your team to learn, which means faster time to market, and lower operational tax.
- Partners around the globe are seeing this value and trusting M365BP to power the next era of business transformation for their customers and drive growth. In fact, we have more than 20K partners like you selling Microsoft 365 Business Premium globally. So ready to start your M365 BP journey? I want to share training and enablement kit we’ve introduced to help you build successful practices.. We published a M365BP partner playbook your one stop hub for practical guidance and training across all aspects of partner enablement- from practice development to technical training to customer ready content-emails/decks and 1 pagers and conversation guides as well as deployment guidance. These are free to download, and you can get them now at https://aka.ms/M365BPPlaybook
- And this playbook comes with a companion webinar training series, the first of which was today. While today we covered some principles of a best-in-class managed services practice and showed you a very simple example for smaller customers, in the coming webinars we will go deeper into advanced security managed services and technical and sales training. Next up, is a webinar on Feb 11th , where Alex Fields and David Bjurman Birr will cover how you build advanced security services mapped to security frameworks like NIST and CIS using BP.
- Finally, I want to leave you with three steps you can take today to get started on your BP journey. I do want to point out some exciting new news here- we recently added IUR benefits for BP and BV in for partners with Silver or Gold Small and Midmarket Cloud Solutions competency. You can learn more about this at the Partner Center. Thanks so much- we really appreciate you spending time with us.