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MSPs: Manage More than Tech. Manage Budget

Today's IT requires more telecom services, more cloud services, more subscriptions than ever. Each one has its own pricing complexity to confound and confuse.

The MSP who is as adept at configuring the most cost-effective licensing and subscription strategy earns far more appreciation by protecting their customers' budgets. Here's some guidance on how to master the services catalog.

According to many "experts," monthly recurring revenue (MRR) is the holy grail of managed services. It's everything you want to achieve greatness, success, riches beyond your wildest dreams.

Any of you who have ever seen me in presentation live or online have probably heard me rail against this short-sighted nonsense foisted upon you mostly by people who have never worked a day in the channel.

Put in its proper context, MRR is an important source of revenue for you, among many others. If you stop to think about it, that makes it one of your customers' larger concerns. They're the ones who pay those "costs" that become part of your "revenue." Know what? They appreciate when you show concern about that, about those costs.

Coming at it from another angle, part of what you'd always like to do to improve client relations is to make your clients into heroes to their companies. What makes your client a hero more than saving money while getting much better service for their company?

And for those of you with the wisdom and ability to conduct your client relationships at the C-level, particularly the CIO and CFO, you know that these executives are as concerned about the operation of the business overall as they are about the technology as an enabler. When you speak to them in the language of budget, you gain even more respect from them.

Expand Your Portfolio
Business 101 teaches us that there are only two ways to increase revenue: create new customers or sell more to existing customers. And if we're listening to those earlier-mentioned pundits, we know its five times easier to sell to an existing customer than to create new ones.

All you need is something else to sell. Following this thinking, MSPs are best served by constantly seeking to add new services to their portfolio of offerings.

Here's one to consider: Call it "subscription management" or "license management," or call it "budget control" or "cost control" or just plain "holding on to more bucks." Doesn't matter what you call it -- the idea is to be the one who manages your customer's cloud subscriptions, software licenses, capacity management, cloud resource controls and other financial considerations that surround their technology. Help them manage the one thing that's most important to all of them: their budget.

More Here than Meets the Eye
When you pull this idea apart, there's much more to it than may have occurred to you at first.

The capacity management piece is simple, but it's very important because it involves the ever-hazardous PEBKAC (a.k.a. problem existing between keyboard and chair). One of the fabled "great things" about cloud is that users can request resources when they need them, release them when they're done and only pay for them while they were in use. That's great, until the PEBKAC neglects, forgets or otherwise fails to release them. Then you keep paying until someone notices those resources just sitting there.

Be the one who notices. The one who is constantly looking to make sure no funds are drained needlessly. Talk about heroism!

The plan lawyer part of this requires more homework, but it can really pay off during presales. The engineer who goes beyond technical design and identifies the best purchasing program to bring licensing or subscription costs down to a minimum is often referred to as "that genius who saved me money." Yeah, hero time again.

Those Were Appetizers; Here's the Main Course
The main cash cow is so big that an entire business grew up around it. Starting a few decades ago, a few insightful people realized that many companies were burning money due to mistakes or other incorrect billing for telecom services. They offered to analyze your telecom bills, and they did so on a contingency basis, taking around 10 percent of what they saved you as their fee. You paid them with found money. Nice.

As telecom became more complex, so did managing telecom expenses. These auditors found more and more to analyze for potential savings.

Today, telecom expense management (TEM) providers save their clients tens, hundreds of thousands, and even millions each year simply by correcting incorrect invoices from telecom carriers. Their wins come from many places beyond simple mistakes. Often, telecom circuits are not shut down when a company leaves a location. They continue being billed even though they're no longer in use. Kind of like those cloud resources. TEM providers hunt these down, then get them removed from the client's bill. Heroism.

The best TEM providers take the process from order to payment. They maintain a complete and current inventory of every wireline circuit, every mobile contract, every phone and other piece of hardware or licensing in a company's telecom "estate." They receive all telecom invoices, assess them, validate them against their contract and real-time utilization, and they'll even pay the invoice -- removing the entire telecom management burden from the client. Truly a total lifecycle service.

But wait, there's more! You know better than most that data and voice have long lived in two separate silos. Network managers run the data; telecom managers run the voice. They don't even want to know each other. But that's now changing right beneath their feet. Data, voice, video and more are all converging on a single network. How much sense does it make to closely manage telecom invoices and not cloud service invoices, datacom, backup services, disaster recovery, Internet of Things and more? It doesn't.

As a result, most TEM providers are advancing from telecom expense management to technology expense management across the board. In other words, not only are they enjoying the all-important MRR, they're also getting paid to manage it. Sweet, no?

Channel 101 Reminder
Being providers of technologies from providers with wide product selection, and also cloud services, if we've learned anything it's that we can always try before we buy. That is, before we invest in building capability, we can sell services obtained from partners and enjoy compensation from that. When we prove to ourselves that we have sufficient market, we can then build our own capacity and transition our customers back over to us when we're ready.

That said, my recommendation is that you Google "telecom expense management" and "TEM" (those so predisposed may "Bing it") and talk to a few players. This is such a big market that Gartner has a Magic Quadrant for it.

Add TEM to your portfolio and find your relationships with your clients deepening. It can't hurt!

Posted by Howard M. Cohen on October 30, 2020