Vlad Mazek – Vladville Blog

I’m on family leave till 2011 and the only thing I forgot to do in my checkout checklist was to redirect my cell phone back to the office. So yesterday as I was cleaning up I got a phone call from a “friend of a friend of a partner who was told he needed to talk to Vlad about this cloud thing”.

Now, for the record, I love this because someone already preped the guy about the kind of conversation he was going to have.

Friend: So X tells me you’re a really straight forward guy so let me level with you: we’ve got a big MSP and I’m getting hit up from all sides to start doing cloud stuff but I just don’t want to change our business model.

Vlad: Ok. How is it going to change?

Friend: <looooooooong story, story of selling copiers and modems>

Vlad: Do you mind if I curse? (now, if you do, the next paragraph is not for you)

Friend: <Laughs>. Go for it.

Vlad: You’re an MSP, right? So for all intents and purposes, you are the cloud. You’re the CIO in the cloud. You’re an IT guy in the cloud. You’re the advice in the cloud. Your business doesn’t change one bit, for the most part the technology you support doesn’t either – but your marketing does. So same shit, different clipart. Get it?

He assured me that I’ve just earned a client for life.

Truth is, MSPs are no different than the cloud. The same fear bullshit you sell about the cloud as a managed service provider can be sold about you. Here are a few examples:

My clients don’t trust their data to be stored in the cloud! Oh yeah? But they gave you administrative credentials over their entire network, domain and third party vendors for phone, DNS, Internet, etc?

My clients don’t want an unreliable or unaccountable third party involved. If that were true, you’d be unemployed. You mean to tell me this strict accountability and internal control freak didn’t want an employee he could boss around and fire at a whim – he signed a binding (at times multi-year) contract with the party that controls most of the licensing and at times even hardware?

What about unreliable connectivity? It’s similar to the unreliable technician, unreliable MSP, unreliable server and everything else – you build in redundancy and survive.

The bottom line is, MSPs are IT departments in the cloud. Call it a Public CIO if it makes you feel more important. Reality is, most organizations are somewhere between a Private IT Department and Public CTO/CIO, depending on where you draw the distinction. Most small organizations don’t have a need for a full time tech person, so they hire an MSP that gives them a fraction of the time and full power of IT expertise. Some have a private IT department that manages all the in-house stuff but they rely on an Public CTO/CIO to give them direction and introduce new technologies, facilitate big projects, etc.

There.

It’s as simple as that.

Now let me blow your mind: What’s the biggest trend in the cloud? Cost cutting. With billions of alternatives, cost leaders win. Now. If the MSPs are the same as the cloud, what does this do to the overall profitability and growth opportunity for the MSPs?

Disagree (come on, you know you want to!)??? Add a comment!

There are times in business when you make a decision and just hope for the sake of everyone involved that you’re right. If you own a business, perhaps that roll of the dice came when you started your business. Perhaps it happens every day when you try to overallocate funds to your marketing and business development in order to grow aggressively and pursue your opportunities.

Today.. I felt like S. R. Hadden:

From the movie “Contact” based on the Carl Sagan book:

“First rule of government spending: Why build one when you can build two at twice the cost?”

If you’ve never seen the contact, check this out:

What I’ve done today will be public soon enough, and from conversations I’ve had over the past few months, it’s the kind of a gamble that many of you will have to make in order to thrive.

The world of B2B is changing.

Many IT Solution Providers have gone to “This will erode my margins” to “This has eroded my margins” to “That is not a business we are interested in.”

I only got one question: Why the hell not? Money is money, and I haven’t met a dollar I didn’t like. The moment you decide you’re too good to take people’s money is the moment your entrepreneurial life is over.

Last week I spent a lot of my time hanging around the conferences we sponsored in Orlando surrounding the ConnectWise summit. I was not officially a part of any of them which allowed me to have one-on-one meetings with a lot of my partners from literally around the world. On Sunday night I went out to dinner with one of the more successful people in our business. All of these conversations – from startups to the businesses that have been around for decades (no, not a typo, it’s meant to be plural) are at the same point.

Inflection Point.

I like how we’re doing but there is so much more opportunity to do better.

I feel like we aren’t performing at 100%, I am not meeting my own expectations.

If I could have a do-over…

“I wouldn’t change a thing about my life because I wouldn’t have become the person I am today” is the kind of crap you get to say when you’re done kicking a drug addiction or have just gotten out of prison. In all other instances, it’s just plain and simple ignorance.

Evaluating where we are and were we are going always takes into account how we got here and the experience we got along the way. So start here:

http://www.surveymonkey.com/s/W2SWGYY

Before I share my opinion on all the conversations I had last week and share the trends that people have shared with me first hand, I’d like to know how you feel.

If you were to get a clean slate, how would you build an MSP today. Tell me.

It will take less than a minute if you read fast. Two if you like to sound it out.

Which building blocks would you choose, what would you outsource, what would you sell and how would you promote it. Let’s for a moment make a giant assumption that all other things are just the details, I want to know what the majority out there is thinking.

I’ll let it run for a month and share the results then. The survey itself is anonymous, no contact info is collected at all.

Little while ago after finishing a brutal summer of conferences and launch of Shockey Monkey I posed a question and opinion to my audience on whether or not the MSPs have jumped the shark. One of my awesome partners wrote a long email that I posted on Vladville because it was just remarkably well written. I decided to put together a survey on the subject just to get the idea of what everyone else is thinking.

To be clear: I don’t think the MSPs have much to worry about. MSPs on the other hand are very worried and with the consolidation, economy going further in the toilet and even global concerns (EU members defaulting, UK cutting half a million jobs) heading into the holiday season of typical inactivity – the fear out there is pretty thick as folks struggle to figure out a way to keep on growing.

I personally do not believe MSPs have jumped the shark… but I think the IT consultants and IT generalists, if they aren’t already working for a software/hardware vendor, are looking for real jobs. The cycle is similar in nature and exactly opposite in direction than the one we took 10 years ago – when massive layoffs and downsizing forced a lot of people who haven’t kept their skills up to go into the private sector either in small consulting firms or in business on their own. Now, nearly a decade later, with compressed margins and higher expenses, many are finding that 10 years of experience can fetch above $50-60,000 at a much lower level of frustration and effort.

We have to understand and accept the fact that every technological evolution is cyclical. When things are hot, many pursue the opportunity and exercise their options. The same is true in reverse – as technology becomes less complex (less profitable) the safety and perks of full time employment become more attractive.

Frankly, multiple things contributed to this:

1. Small business IT never quite recovered from the SPF (single point of failure) consultant problem we used to have. Too many bad apples made it excessively difficult for MSPs to sign profitable long term contracts because IT consultant experience was so bad.
2. Microsoft killed the channel. Then it started directly competing with it.
3. It’s just too damn easy.

Big problems are expensive to fix.

Small problems can be fixed by anyone.

Most small business IT Solution Providers manage to keep talented staff capable of fixing big problems by making a great margin on managing small problems. With the small stuff becoming free and too many people moving too slowly to adopt the cloud and grow their market share, things get difficult.

Hope:  I know this sounds like doom and gloom but real life is difficult. As a vendor though, I have better and better numbers to show every single month which proves that adaptive businesses are not just growing, but thriving.

Now, for your opinions..

Do you consider yourself to be a Managed Services Provider (MSP?)
91% Yes
3% Sort of; we’re getting there though!

What are your major concerns as an MSP?
55% Vendors going direct
12% Marketplace has too many “managed service providers”

What are your major opportunities as an MSP?
38% More clients to sell MSP services to
33% Selling more cloud services

What is your #1, sure thing, most certain area of marketing and sales in the coming year?
46% More clients to sell MSP services to
18% Selling more cloud services to

Health care as a $20 billion dollar opportunity?
31% Bullshit
28% Total bullshit
26% It’s there but I’m not making much money yet.

The numbers speak for themselves. The health care question was there for my amusement because I find the whole medical industry opportunity as laughable as the “government opportunity”. It’s for people who think they could sell casualty or E&O insurance to the mob. Yes, there is a ton of money but virtually all of it controlled by very few players and the remainder of it pure hype – as evidenced by the results most of which were padding attempts coming from IP address of a well known EMR vendor to the MSPs. Nice try.

One thing is for sure – the marketplace is getting crowded but people are more optimistic about competing.