Marching Orders 2025: Getting Proactively Back to Basics

Is 17 years long enough to refer to something as a tradition?

"Marching Orders" was first launched here in Redmond Channel Partner magazine on December 1, 2006 with Marching Orders for 2007, featuring advice from then-Microsoft-Channel-Chief Allison Watson, Robert DeShaies, then VP of the US Partner Group, and popular industry luminaries Mac McIntosh, Ken Thoreson, IAMCP President Bill Breslin and the legendary Harry Brelsford who is still a major force in the channel.

Shortly after I left "active duty" in the channel, my first appearance in "Marching Orders" came in 2012, along with Tiffani Bova, Dave Sobel, Jenni Flinders, Jon Roskill, and Per Werngren, all very good company to enter with!

Reviewing the "Marching Orders" of the past 17 years, it struck me that they were always, for the most part, highly reactive to what was going on in the Microsoft Partner ecosystem at the time. Microsoft always set the agenda and we analysts did our best to advise how best to execute on that agenda for maximum benefit.

Then The Channel Changed

In 2017, we changed the name of my column from The Changing Channel to The Evolving MSP, because the editors and I agreed that cloud computing, mobility, and the emergence of managed services had completely changed the channel. Now it was time for channel partners to choose their path and begin to evolve.

So here we are seven years later, and evolution is proceeding remarkably. Many have left their "reseller" or "VAR" mantle behind long ago and refocused their profit-producing strategies on the services they provide themselves or through partners. Some have become MSPs. Others are now CSPs. Still others are MSSPs. We anticipate seeing more data science providers, artificial intelligence service providers, IoT service providers and more. Many of us have taken to encapsulating all of this in the category of ITSP.

The marching orders for each will vary widely, but some fundamentals still remain the same and that's why, this year, I've chosen to focus on the basics of being any kind of ITSP and proactively working to grow our businesses based on our own priorities, not Microsoft's or any other vendor-partner's.

This is not to say these partners are no longer important. Without their products and platforms there would really be nothing for us to integrate! But it is to say that channel partners must take up the helm and become masters of their own ships. This sounds good to me!

Here are my "fundamentals" marching orders for 2025:

Know Your Costs
This may seem an odd place to start, but it's really an existential priority. One of the early great executives in our service industry, Bob Berry, VP of Services for BusinessLand, once asked me if I knew the difference between a great service company and a not-so-great one. Expecting a long, drawn-out lecture I sheepishly asked what the difference was. Bob simply said, "The great service company knows its costs."

While this may sound obvious, it's disarmingly easy to find you think you know your costs, but you're wrong about them. Talk with your accountant about "fully-burdened costs," which is the total of the basic cost of something plus all the attendant costs that come with it. For a technician's hour, the cost only begins with their hourly wage. Then you must add their benefits, training, tooling, transport, and other direct costs along with a portion of your overhead expenses such as rent, heat, light, telephone, internet, and other physical plant costs.

Only when you are armed with the fully-burdened costs of a technician's hour can you begin to price that hour by adding your desired profit.

But even then, you're not finished...

You then have to calculate how many of each technician's hours you're selling, because their hourly cost is only captured when you bill for that hour. If you're only selling half their hours, you must double their hourly cost. This is why utilization is so critical to measure. And don't let anyone tell you that you cannot sell more than 100 percent of a technician's hours. Many of your colleagues have been doing that successfully for years.

Define What You Do
Another very wise industry axiom is "Don't try to be all things to all people." It's very expensive to train everyone on everything and get them the tools they'll need. It's even harder to achieve any consistent level of quality to build a reputation on. Choose the thing you most want to be known for and strive to be the best in the world at that one thing.

For the best example of this strategy in action, examine medicine. At one time, every doctor was a generalist. Today, you have your primary care physician (PCP) who often refers you to many specialists depending upon your needs. Specialization is where every doctor wants to be. ITSPs will follow the same path. They already are.

Partner for What You Don't Do
Welcome to the ideal situation, but also welcome to the minefield.

Effective partnering is so challenging that former-Microsoft-executive Vince Menzione has formed an entire consulting practice around it, The Ultimate Guide to Partnering.

If you begin to locate a partner for a particular skill as part of a larger project when you're already selling the project, you're too late. Someone else will likely beat you to it. Effective partnering begins long before that with vetting of various choices. Perhaps the easiest way to identify ideal partners is to join some of the many associations and other organizations that serve the channel. There you'll meet all kinds of partners who specialize in all kinds of services. Meet with them. Ask tough questions. Talk to their customers if you can. Then establish an understanding of how you'd both best like to partner and strike an agreement in advance of having any business at hand.

At worse, you'll have wasted some time meeting interesting people. At best you may find yourself in a proactive relationship to pursue business together.

Don't Invest in Things You Aren't Measured On
If you're not specializing in migration services, find a partner who does and subcontract your migrations to them. If you're not a storage specialist, or a security specialist, or a messaging specialist, or any other kind of specialist in fundamental services, don't invest time and effort into delivering those services yourself. Find and vet a partner with that expertise and let them help you maintain your reputation for high quality services. The only thing these services can earn you is a black eye if you do it poorly. If you do it well, your customer isn't measuring you on it so it will go unnoticed.

Define Your Target Customer
If your answer to the question "Who is your customer?" is still "Anyone with money" you're setting yourself up for failure.

The more customers you have who have things in common, the more the learning you gain from one can help you do a better job for the others. This is not to say you must become a vertical market specialist, it just means you need to start by profiling the ideal target customer in terms of number of employees, annual revenue, years in business, reliance upon technology, and opportunities to provide recommendations.

On the subject of vertical markets, you may not have to go looking for them. Take a look at your own existing account base and count how many customers you already have in various industries. Once when I was still managing a practice, I did such an analysis and found we served dozens of retail giants. That vertical had found us!

Who knows what verticals may have already found you?

Who's Doing the Selling?
The inability to find and hire good salespeople continues to be a constant complaint in our community. Many of the channel executives I speak with bemoan the series of monthly goose-eggs their new hires turn in. Account managers are easier to find than true hunters, but this is still a huge challenge.

It may be time for a new sales model. If you're calling yourself any kind of ITSP you're running a professional practice, not a sales company. In many professional practices, the senior partners are the ones who do the real selling and close the big deals. They surround themselves with appointment-makers, account administrators, and other support staff. But they recognize that their customer only wants to speak with someone who really knows what they're talking about.

You are in the knowledge business. You sell your knowledge, your experience, and your expertise. Who can sell that better than you or a member of your professional staff? Let someone else open the door and then send in your top team members.

Get Serious About Marketing Your Professional Practice
There are a tremendous number of coaches and consultants offering to show you how to market your business better.

In many cases, their strategies are great for a company like yours in 1997.

Again, ask yourself how a professional practice markets itself. Hint: it doesn't involve postcards, email "blasts", fax "blasts" or any other kind of blasts.

Instead, it involves networking with your existing customers and other associates to ask for referrals. If you land a great project, finding every other customer who resembles them and sending them a description of the project and how it would benefit them is leveraging success to grow more success.

It Really Is Five Times Easier
One more axiom: It's five times easier to sell more to an existing customer than it is to create a new one.

Embrace this. Selling more to an existing customer cuts right past the first half of your selling cycle. If you've done your job, the existing customer is very receptive to any recommendations you may have.

To sell more to an existing customer you must have more to sell to them. At some point, each customer may become saturated with all the services you have that they need. Bravo. That's a great success!

To sell more to that saturated customer, you'll need new services to sell. This is not as easy as it was back when you were a reseller of products. Then all you needed to do was to look at the distributors' product catalogs and pick out some things.

Now, to have something new to sell you either have to create a new service, or find a service you can feel great about selling. The creation process involves innovation, design, development, research, training, methodology development, and more. You may choose to partner for some services you will eventually develop in-house. It's worth sacrificing some margin to get to market sooner.

That's Not All, Folks
The sole purpose of this article is to get you thinking about how well you're executing on the basics of the business. It is by no means an exhaustive "everything you need to know about IT services but were afraid to ask."

As we move into 2025, we'll continue to talk about ways in which you can evolve your business into a more profitable enterprise.

In between, I hope you'll subscribe to my free newsletter techChannel:Results. In it I share observations on what I see going on in our channel that may help you improve your strategy, increase your income, or better understand where we're headed. While there, if you're interested in learning more about how to better market your professional practice, I hope you'll consider subscribing also to techChannel.marketing which is featured on the menu.

Here's to having an awesome 2025 together.

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