Mike Cooch and I have finally reconnected. Cooch is well-known in MSP circles for starting a range of businesses — everything from Everon Technology Services to Kutenda. During 2008 and 2009, we typically spoke or traded email a few times per month. But changing businesses and growing families pulled me and Mike in different directions over the past two years or so. We finally reconnected tonight. After our conversation, I re-read a blog Mike wrote back in May 2011. It included four key questions MSPs should ask themselves every day. There’s pretty darn relevant.
The blog entry, from Mike’s SMB IT Pros site, told MSPs to address the following four questions:
- How long do I think it is until almost all of my clients’ services, applications and data are hosted in the cloud?
- When that day comes, what will my business model need to be in order to be a viable business and meet my personal goals?
- What am I doing today/in the next quarter/in the next year to make sure I am ready for this day?
- If the answer is “I don’t have a clear strategy”, should I consider exiting my business to capture the current value, – and what should I do to prepare?
Within the blog, Mike noted that he spends time with a group of entrepreneurs in Denver. Most of those entrepreneurs had shifted the bulk of their servers and server applications into the cloud. That was back in May 2011. Assuming there’s been no serious setbacks, it’s safe to conclude that those entrepreneurs have continued to push more applications into the cloud (am I right Mike?).
Small Business Servers: Dead or Dying
Curious about Mike’s four questions above, I checked the Google search trends for the term “Small Business Server.” The result: Fewer and few folks are searching for small business server information. Ouch.
Answering Mike’s Questions
So let’s get back to Mike’s key questions, and potential answers for MSPs.
Mike’s Question 1: How long do I think it is until almost all of my clients’ services, applications and data are hosted in the cloud?
MSPmentor’s Reply: It depends. I think the vast majority of start-up companies will run nearly all of their business applications in the cloud. But I see where Mike is going with the question. I think most MSPs underestimate how quickly SMBs are shifting IT assets into the cloud. So my overall answer: I think most SMBs will host almost all of their applications and data in the cloud by 2015.
Mike’s Question 2: When that day comes, what will my business model need to be in order to be a viable business and meet my personal goals?
MSPmentor’s Reply: Notice that Mike didn’t say “if” the day comes. He said “when” the day comes. I agree: Cloud is unavoidable, especially for small businesses. So when that day comes, I think MSPs will need to identify how to cash in on:
- the remaining on-premise assets (smartphones, tablets, notebooks, PCs, routers, printers and some specialized applications).
- cloud integration services that allow MSPs to source, provision and manage a range of third-party cloud services.
- business consulting, where MSPs serve as a virtual CIO to help SMBs march forward.
- good old help-desk services, to ensure end-users’ endpoint devices remain online and connected to cloud services.
Mike’s Question 3: What am I doing today/in the next quarter/in the next year to make sure I am ready for this day?
MSPmentor’s Reply: I’d join a peer group and I’d also spend more time hanging out a vertical market conferences to understand which vertical market applications will remain on-premise the longest, generating the most revenue dollars for MSPs over the long haul. I’d also sort out a killer help desk strategy right now. Help desks let you see and hear how customers are feeling every day, and where they’re heading next.
Mike’s Question 4: If the answer is “I don’t have a clear strategy,” should I consider exiting my business to capture the current value – and what should I do to prepare?
MSPmentor’s Reply: If I was preparing an exit strategy I’d:
- Maximize EBITDA (earnings before interest, taxes, depreciation, amortization) over the next six months.
- Build a solid sales and profit forecast that covers the next 30 months. If that forecast doesn’t have clear growth then you better be very flexible on your valuation.
- Hire a broker to identify potential buyers and manage the solicitation process so that I could continue to run the business efficiently and effectively.
- Find a buyer that makes the best strategic sense, without necessarily selling to the highest bidder.
Looking Back, Getting Ahead
Well Mike, you’ve done it again. Each time we connect you cause me to think hard about the SMB and MSP markets. Sorry for the cliche, but the only constant has been change.
Side note: Mike — if/when you’re ever done being a vendor in the IT or MSP space, please consider a career in blogging… but please don’t compete against me. Your insights were always great.
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Mike and Joe: Great speaking points. Something I saw a while back as well. We spoke about the cloud a few years within HTG and of course now with our boot camps each month with MSP University. The cloud is here and pressures are coming from both sides. The top, enterprises are looking at private clouds or even application cloud services and in the SMB space, many organizations (mine included) have adopted a total cloud strategy. Time to become more sophisticated in our MSP consulting and how we adapt for the future.
This is what I share with my MSP Business Consulting clients each day. How can we become more sophisticated and be professionally responsible to our clients and aid in their IT direction versus fighting them with attempts to preserve our margins.
After all, success will come to those that adapt and see the future.
Stuart Crawford
St. Catharines, ON
416.827.5339
Stuart, Keep us posted as you keep adapting. Some of the HTG folks tell me they see a three year window or so to really sort out this cloud thing. I think the window of opportunity to get ahead of this curve is far smaller…
-jp
Joe,
In my travels I’m really seeing a much faster cloud adoption rate from a business owner (client) then from an MSP owner (provider). Technology seems to moving past the IT guy.
To the MSP… It’s time to really buckle down and figure out your value to your clients. If you get excited about helping clients leverage the cloud to not only run their business but to improve their business then you’re in a good place. Keep pushing forward.
Rob
Rob,
That’s quite a reality check you just offered up. Succinct and effective…
-jp
Joe,
I’d never try to compete with you on the blogging front – I could never keep up!
Thanks for dusting off this post. I do still think they are the most important questions an MSP needs to address.
Rob Leon made a great point – that many of the decisions are now being made without the MSP even being involved and they are getting passed by. The friends I mentioned are effectively 100% cloud – they spend very little on outside IT help and have businesses that are growing like crazy. These same companies would have spend several thousand dollars monthly just a few years ago.
I think your advice on establishing a REALLY GOOD helpdesk is right on. Not something you outsource…something that is your product – that you really nail.
The other big opportunity is integrating all of the cloud stuff so businesses can seamlessly share data between apps and services – this is going to be big.
My “two cents”!
All the best,
Mike
Great post! I agree 100%!
It amazes me how many msp’s are still in denial about the cloud. We’ve made most of our money over the years by keeping infrastructure working and upgrading it. Much of that work will be gone or certainly devalued as IT infrastructure moves to the cloud and is managed by someone else.
This will not be an easy transition for most and I think many Msp’s will start to see business dry up.
To be relevant in the could age, we need to be the ones pushing and not resisting. Hard part then becomes, making money doing it.
And I meant to say cloud age, not could age! Damn ipad keyboard!
Mike, I totally agree on the help desk. We keep bringing this up at our MSP University boot camps and it looks like we are speaking to deer in headlights. However, some are starting to see the value. I should have a blog post up on MSP Help Desk on Monday on moving up the chain of sophistication with our clients. I keep saying it over and over…gone are the days of being the IT Guy and welcome to the days of being the business consultant.
Stuart Crawford
Mike@5: Seamlessly sharing data between cloud apps = agreed, I would pay a service provider for that capability.
Rick@7: Don’t worry, the cloud age will eliminate keyboards at some point, too.
Stuart@8: I think IT guys will survive as long as the offer great advice. -jp
I remember reading mike’s original post…along with many others. Mike, you were a major driver in my decision to focus on the micro business segment. I miss your inspiration…
One point Mike made in #5 that has always been true in the MB segment is that owners often make decisions without involving us. We tend to get involved at a break/fix level after the often-inevitable resulting calamity, only after which we’re elevated, sometimes temporarily, to the role of, and I hate using this phrase, trusted advisor. Most of our ‘larger’ clients get what we do and are fine with the relationship for years, but then there’s that Inc Magzine ‘Tech ‘Stuff’ article that throws the proverbial wrench in the gear works…
Joe & Mike: you guys should talk more often:)
Jim Van
Logicomm
Http:www.Logicomm-Inc.com
Jim Van: I promise to fill Mike’s voicemail and email with questions in the weeks and months ahead.
-jp
As a Virtual CIO with no allegance to a certain technology or deployment model I look only at the requirements of my clients’ business. I work with the tech support vendor to determine what they currently have in place and I always talk to them about their views on cloud options. Every vendor has said they wouldn’t go there and I wonder why? I can only come up with the following:
- their current revenues in procuring, managing and supporting Small Business Servers is too good
- they don’t like change
The only option they see for the cloud at their client is if they host a private cloud infrastructure for them – mainly because that’s the “only” secure way to do it. Again, what are they thinking?
This article really struck a chord with me, thanks. Question 4 is perfect – they all need their exit plan if they can’t figure out what to do with the cloud!
Andrew Sims
http://www.oxwichconsulting.com
Well I think the IT guy is heading for extinction. Its happening in a lot business’s – the eradication of the middle man. My own business develops and distributes business software. Back in the 80′s and 90′s we did this thro resellers now we sell directly to the enduser. We have control of the quality of service and everyone of our help desk staff is an expert in our products. We encourage our clients to refer new business with money and employ a web marketing team to drum up more business. And by the way if you want to see real business solution working in the cloud email me at a.mccollmcwha@gmail.com.