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Staffing MSPs for Growth
Presented by Redmond Channel Partner Magazine
Sponsored by Kaseya
Nov. 6, 2012
Participants
� Scott Bekker, editor in chief, Redmond
Channel Partner
� David Castro, director, marketing, Kaseya
Partners & Service Providers
� Howard M. Cohen, columnist, Redmond
Channel Partner, consultant & former MSP
Agenda
� Rules of Thumb for MSPs – Scott Bekker
� Metrics from 12,000 Partners – David Castro
� Panel Discussion – Howard Cohen, David � Panel Discussion – Howard Cohen, David
Castro and Scott Bekker
� Audience Q&A
Rules of Thumb: Big Picture
� Central Insight for MSP profitability:
Dedicate the fewest possible hours to support
the most possible recurring revenue contracts.
� How do you staff MSP growth? Slowly and
thoughtfully
Founding Employees
� The Professor (technical genius)
� Thurston Howell III (numbers person)
� Movie Star (charismatic salesperson)� Movie Star (charismatic salesperson)
Technical Employees
� Customer service people (entry level)
� Highly sophisticated engineers
� Remote management tools specialists� Remote management tools specialists
� Emerging: SLA management experts
Business to Technical Headcount
� Two sales paths for MSPs
� Sell through solution providers
� Sell to end customers
Sell Through Solution Providers
� Reduces need for headcount on the business
side
� Can be a great way to scale quickly
� Must strenuously avoid appearance of
potential channel conflict to succeed
Sell to End Customers
� Need more marketing and sales employees
right away
� Business to technical employee ratio will be
higher
When to Think about M&A?
1) Need capital for new hires
2) Need capital to expand into new geographical
markets
3) Need capital to expand into new business
practices
4) Owners’ energy level
Endgame: Importance of Growth
� When selling an MSP business one metric
matters most. Is it?
� Technology and equipment
� Employees
� Accounts
� Recurring revenue contracts
• Enterprise-class IT systems management for everybody
• Key Facts– Founded 2000 & privately held, no
debt, no external capital requirements• Consistent, profitable revenue growth
– 33 offices worldwide in 23 countries
About Kaseya
– 33 offices worldwide in 23 countries with 450+ employees• 12,000+ customers
• Millions of assets managed
– 6 patents issued for IT service delivery processes & remote IT management processes• 37 patents pending
– Common Criteria (EAL2+) certified and FIPS 140-2 security compliant
– ITIL v2 and v3 compatible
MSP KPIs: A Few 2012 Observations
More than 20%, 21%Less than 5%, 20%
Service Level KPI: 58% of Kaseya MSPs Improved IT Asset Uptime
by 10 to 20% or More
Between 10% and
20%, 37%
Between 5% and
9%, 22%
Source: Survey of 1,098 Kaseya Customers
IT Asset Management Efficiency Improvement
(per Technician)
More than
300%, 21%
Profitability KPI: 60% of Kaseya MSPs Improved Technician Efficiency by
More than 100% but Only 25% Use Cost Basis in Their Pricing Strategy
How Pricing Strategy Determined
CEO, 33%
Value Based,
15%
300%, 21%
By 200%, 17%
By 100%, 22%
Less than
100%, 40%
Source: Survey of 823 Kaseya Customers
CEO, 33%
Price Match,
27%
Cost Based,
25%
Services Mix KPI: The EARNINGS Generated from Managed Services
And Project Work or Resales Are Quite Different
• MSPs are more profitable than VARs
– MSP typical gross margin is 50-80%
– VAR is 5-10%
• Pure-play MSPs are more profitable than mixed-model MSPs
– Pure play MSP average gross margin is 75%
Source: Survey of 311 Kaseya Customers
– Pure play MSP average gross margin is 75%
– Mixed MSP is 55%• T&M work is 24%
• Project work is 44%
• VAR resale is 8%
Firm Valuation KPI: MSPs are 3x to 10x More Valuable Than
Traditional VARs
Varies $200 to $3,000
$80/PC $275/server
$100/hrAverageDeal Size
KPI / Status Break Fix Reactive Proactive Managed
Source: Survey of 148 Kaseya Customers (who merged or acquired others), SCORE Assn. (2011), and Service-Leadership Inc. (2011)
<50%/tech 70%/tech50%/tech 90%/tech
<10% 70%50% >75%
< 0.2 1.250.3 > 2.0
Gross Profit
Utilization
Firm Valuation
Panelists
� Scott Bekker, editor in chief, Redmond
Channel Partner
� David Castro, director, marketing, Kaseya
Partners & Service Providers
� Howard M. Cohen, columnist, Redmond
Channel Partner, consultant & former MSP
� More Information from Kaseya:
� For a free live product demo
www.kaseya.com/mspdemo
Audience Questions?
� For a free trial
www.kaseya.com/trynow
� To speak with us
www.kaseya.com/contactme
@kaseyacorp/company/kaseya/KaseyaFan community.kaseya.com