On “One Guy’s Opinion,” Guy Baroan, founder and president of Baroan Technologies , discusses the technology world through the lens of a successful IT managed service provider.
IT providers come in a number of forms. Some are MSPs who provide service for a monthly fee and some are VARs who provide equipment to clients, which they implement, but then only return to service and repair them if a client calls with an issue. This latter model is also sometimes referred to as “break-fix.”
There are a number of IT providers still offering break-fix services as a VAR or in addition to monthly managed services. But according to StorageCraft partner Guy Baroan, that’s never a good move.
We caught up with Guy to talk about why IT solution providers would do well to ditch the break-fix model altogether.
StorageCraft: You started out under more of a break-fix model, didn’t you? Why did you transition to the MSP model?
Guy: From the beginning, we talked to our clients about being proactive. Going in and making sure anti-virus was working, backups were going, and so forth. It was the early 2000s when we started talking to them about being proactive, so from their standpoint it was kind of new—they’d never heard of that method. They usually wanted to call us when they wanted to call us, but we told them we could address the majority of the issues they were calling us for if we just came by and looked at them proactively. If something like backups haven’t been working, why wait until you find out they haven’t been working for six months and then call us? If we are there every month, we can see if it works and restore files to see if it all works. If there’s an issue we catch it ahead of time.
At one point we had about 400 clients calling us, butsome called a lot more than others. These were usually the clients who weren’t paying for managed services so whenever they called, it was an emergency. Suppose you’ve got clients that are on your managed service program and are buying everything you’re selling and are really happy. Then imagine you’ve got someone who’s calling you and keeping you on the phone for four hours troubleshooting a problem because they didn’t clean up their viruses or malware. That’s time you should be either saving or spending on the clients that are really buying into your solutions. You just really can’t have these break-fix clients.
Your managed service clients deserve your attention. Break-fix clients could’ve avoided the problems altogether, they just didn’t do it because they didn’t want to spend the money. And now it costs them (and you) more than it ever would have. You can jeopardize the relationship you have with your best clients if you can’t help them because you’re focused on emergencies for break-fix clients. It just doesn’t make sense.
Plus, since we didn’t see these clients regularly and didn’t have a good feel for their networks, we had to go down there and figure out what the issue was. It just takes a lot longer if it’s a network you’re not maintaining regularly. You eventually get everything back running, but it can take several hours to figure it out. And once they get the invoice they always wonder why it took so long. Break-fix was never a good situation.
Once we started doing more work proactively, we really did see a decrease in calls, especially those related to viruses and performance. We started finding out that we could show them that they were calling us less, which made it clear that a fixed cost was really the way to go.
StorageCraft: What did you do about the break-fix clients you still had?
Guy: Eventually, we decided that any clients who didn’t want to be proactive and have things managed regularly wouldn’t be people we want to work with. We sent out letters and gave them six months’ notice. We told them there was a significant difference in the amount of calls we were getting and the amount of time it took us to do things under the break-fix model. We just couldn’t staff for it and respond at the urgent level they needed. Some of our clients moved away and some didn’t. The ones we couldn’t convince went away to a company we know who was still ok with offering break-fix—we didn’t leave them hanging. After that, we only had clients that were willing to be proactive and it was just so much better. From about 2002 until now, we’ve pretty much only worked under the managed service model.
StorageCraft: How do you explain this model to clients?
Guy: I think the best way to explain is to compare it to a car. You get your oil changed regularly to keep your engine from seizing up. You also go to the dentist for a cleaning every six months or so your teeth don’t rot. You mow your lawn to keep the grass looking nice and healthy. You should actively take care of your systems or you’ll be in a situation where things pile up. The malware will get built up so much that you can’t work and it might not just be a single user, it can be the whole office. So how much are you paying these people and how much will it cost your business if these people can’t work?
StorageCraft: It sounds like the downtime conversation all over again.
Guy: Yeah, and the other part of it is that by having monitoring and management tools, if we don’t catch an issue immediately—which is rare—you can look at the alerts and see exactly what the issue is so you don’t have to spend time figuring that out onsite. You know right away why a particular service stopped. You can see if it’s high CPU usage, if it’s a virus, or whatever. You know immediately.
StorageCraft: I’ve heard that some clients are resistant to the idea of managed services because of the monthly fee. Is that a challenge you’ve run into? Have you ever found that it’s difficult to illustrate the value?
Guy: You have to understand who you’re talking to beforehand. There really aren’t a lot of people who haven’t heard of monitoring and maintenance for a monthly fee. Everyone has monthly fees today. If they think they can get away with not doing proactive support on their network, I’d just back away from those people. In six months, they’re going to be inundated with issues—they’re really not the type of people you want to work with. It’s just a nightmare when something happens. If somebody wants to work under only 100 percent emergency-only, that’s crazy. As a business owner, I don’t want to work like that. I don’t want to have emergencies all the time. I don’t want to be reactive, I want to be proactive. If they’re hiring us, I don’t want to be putting out fires, I want to avoid situations where they’re down.
If owners of a business are only looking at our fees as a monthly cost, they don’t understand technology. They don’t see it as a tool that will help them be more efficient and make more money—I just wouldn’t work with those people.
StorageCraft: That actually brings up an interesting question. Are there certain things that all of your clients have to have for you to work with them? Another partner I spoke with said there are two minimums for people he works with: backups and managed firewalls. Do you have minimum requirements as well?
Guy: Yes. We have monitoring and maintenance for desktops and servers. At a minimum they have to have an agent installed on their systems. That takes care of making sure their backups and antivirus are working, it lets us do disk defrags. We can empty temp files and monitor services. On servers, we can monitor CPU usage and event logs and so forth. If there are disk issues or other issues, we get an alert right away so we can take care of things right away. They pay a month fee for each desktop and server. Beyond that, it’s on an as-needed basis. If you take care of those things, eight out of ten reasons why people would call us are addressed ahead of time.
StorageCraft: What advice would you give to a business that’s still doing things under the break-fix model?
Guy: The question is do they want to be reactive or do they want to help their clients? If they really have a stake in being able to help their clients function, they don’t have a choice but to provide monthly recurring support. There’s no other way to do it. You can’t successfully stay in this business if you don’t do it. Are there people who don’t want to spend money on monthly services? Absolutely. They’re going to realize at a certain point that they don’t have a choice either. If you’re not going to offer managed services, somebody else is. If you want to keep clients and grow your business, you’ve got to do it. If you can’t talk to clients about the latest in the industry and how you can address problems, someone else will. Offering managed services is the bare minimum. There’s no way you can scale your business at all and protect and provide for your clients under a break-fix model.
For more information on Guy’s approach to managed services, check out this great video from their site.
Photo credit: Nesster via Flickr