Justin and Eric Discuss the CompTIA State of the Channel Report - EP54

[00:00:00] And today's episode sponsor is MoveBot. Data migrations are complex and irritating, creating days of frustration from setup to cut over. MoveBot was built from the ground up to fix that. MoveBot is the simplest, fastest tool for moving files and emails that there is. Fully hosted with no infrastructure,

[00:00:28] no virtual machines, none of that complexity. Sign up, connect, scan and you'll be moving data in minutes. Move data like a pro at atmsp.link forward slash movebot. So I was down in Boca this week hanging out with my parents trying to be a good son, you know,

[00:00:49] and the worst part about being an IT honestly is trying to take care of my parents technology because like I don't want to treat them like a client because they're like, you know, they're my parents

[00:01:03] but like and my all fairness my dad is over 80 years old and like he's like my iPad doesn't work and I have to go okay thanks for submitting a ticket what's wrong with your iPad and you know

[00:01:18] it's like it keeps telling me this thing is wrong and I'm like what thing you know like it's it's literally like pulling teeth with them sometimes and I never want to take care of their stuff and

[00:01:32] it's funny because years ago back when I had my development company I was on a podcast and there was a commercial for a product called Bushel which no longer exists it's actually now Jamf

[00:01:45] Connect and the advertisement was take care of your parents the right way remotely with Bushel and that has stuck in my brain for like 13 years I put my dad's phone and his iPad in my mobile device

[00:02:00] management thought I got this on lock what did he do one day without telling me he took it to the Apple store because something wasn't working and they just wiped his phone out and took

[00:02:10] it out of management I couldn't control my head so much more yeah but then you know every once in a while they actually come up with a legit problem right like I had one this was probably two weeks

[00:02:23] ago my dad called me up a similar situation right but this time it's because he couldn't print I know one of the most common problems in our industry right like it print but in this case Windows had updated right yeah and evidently they didn't have a new driver

[00:02:47] for his printer and so the printer just disappeared and so I had like hyzer so is a yeah sometimes this is a legit problems I mean when my dad says to me he's like oh it's having a problem and I want to bother you so I called so

[00:03:05] and so I immediately just yelling at him I go do not call whoever it is you think you're calling because I know for a fact you don't know where their phone number is and you googled it and

[00:03:14] you just called the first number that Google comes up with let's backtrack not even my dad but years ago I had a client who I told her one time was like we're gonna put you in

[00:03:22] back plays on our next visit and she decided to like screw me I'm gonna do it myself whatever and so she called back plays and she calls me up she goes I'm not gonna use back plays

[00:03:32] what what kind of pricing is this and I was like we talking about she's like they said it's gonna be $48,000 a month to back up my laptop and I'm like in what world is it 48,000

[00:03:41] and I looked she showed me the phone number that she dialed some 800 number obviously it wasn't back place and I google searched that phone number and that phone number listed as back place tech support apple tech support deltech support gateway tech support

[00:03:54] hb tech support uh slowman security tech support I'm like you got scammed did you give him any information no cool here's the real website it's $9 let's move on with our life and this

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[00:04:46] service delivery ready to transform your it management discover the power of super ops at atmsp.link forward slash super ops what's up everybody welcome to all things msp podcast my

[00:04:57] name is jessen asker and with me always is a very sleepy mr eric anthony eric's tired because he was traveling this week so he's just gonna sit here and look pretty for the rest of the episode

[00:05:07] while i talk some some stuff about that is not true that is the sleepy part is true um and i will give a shout out to all my friends who were at compt sccf who uh who made my birthday

[00:05:19] a very happy event it was a lot of fun uh but i can still get to ask the questions this week that's fine go get to ask the questions do it do it do it do it do it do it do it

[00:05:30] actually we're gonna talk a little bit stuff from the from the compt event right that's what that's what you decided we're talking about boss so one of the things that we did at

[00:05:39] compt sccf was they unveiled the new state of the channel report for 2024 and so you know carolin april seth robinson you know all shared a bunch of information from the report and what

[00:05:52] that report is is talking about so justin i thought we would talk about that a little bit today on the show mostly you thought about and then i you gave me the website i looked at and i said i could

[00:06:04] do this no problem yeah um but you know still i like keeping it real i want the visitors to know what it's really like to be here on stream yard with you at any given time i want you to feel it um

[00:06:20] so we're going over the the state of the channel and you know there's some there's some interesting factoids in here um more than 63 more than half sixty three percent of the channel says that uh

[00:06:34] we're better off today than i guess yesterday or i guess that's against covid right probably the fact that it's it's the post-pandemic now we're in post-pandemic times um we're gonna it's it's now 2024 ppe post-pandemic era um well yeah because it does say their business is in better shape

[00:06:57] than it was two years ago so right you are correct sir and i think that's i think that's a mix of a couple things i think if you are an it company whether you're break fix hybrid msp don't matter

[00:07:09] if you're an it company and you've made it this far and you had started prior to the pandemic because i know a lot of people did not make it through the pandemic and i have a lot of uh

[00:07:19] friends and colleagues and people i know on facebook and things like that that just couldn't convert their business to a pandemic model i guess you would say if you've made it this far yes

[00:07:31] you're in a better place because you a lot of your competition just went by the wayside on its own right so more business for you which is great there's also something to be said about your

[00:07:43] tenacity to be able to like get through the pandemic and we i think we've talked about this before on another episode where i said i remember you know very shortly into the pandemic somebody

[00:07:53] sent a message uh in one of the many many many slacks that i'm in and they were like hey i'm thinking about sending this to my clients and it was like hey this is the time to start thinking

[00:08:03] about vpn and i was like no it's not this is the vpn with something you should have about years ago not in march of 2020 so needless to say most of those people ahead of us so yeah i think i think

[00:08:13] a lot of us are in a better place i my company certainly is because we took advantage of people's companies slowing down and our momentum keeping up to be able to do things like acquiring them

[00:08:29] which was a major part of our growth over the last three years so yeah i think i think for sure i'd be a member of the uh of the 63 percent i'm going to make it 64 with me it's i'm a whole percentage

[00:08:41] point for there you go you're a whole percentage point so what about this one though um because a lot of people know how i feel about the abundance or the abundance mentality in this industry and yet the next statistic on the list that we're referring to is 49

[00:08:58] percent say competition and pricing pressure are top inhibitors to revenue growth and profitability i for a second here i'm going to get on my soapbox okay because competition i still i i adhere to the abundance mentality right i think there's enough small business

[00:09:22] customers out there that there's enough business for all of the msp's that serve that market but here's the other thing there here's the other problem i have with this one is pricing pressure pricing pressure comes about when you have a commodity

[00:09:39] you only have a commodity if you're talking about purely offering the old school either break fix or something like you know providing monitoring or backup or any of the other things that have now become commoditized i think if you're in a service business a true service business as

[00:10:02] a managed managed service provider uh that that's not as much of a case and maybe that's the reason why it's 50 50 right maybe it's yeah i'm on the 50 percent that doesn't believe that and there's

[00:10:15] a 50 percent that does believe that well it's funny me you talk about this because and we all know how i i like a good anecdote i have a relatively newish client who called me up and was questioning

[00:10:28] their bill right and they're on our pro plan so it's 75 a computer just to be in with that 75 you get monitoring maintenance software updates and then everything else is hourly on top of it and his response was because we did a lot of work for them they're moving

[00:10:44] email servers we're doing a bunch of stuff and they got a pretty hefty bill from us and he goes i've never had such a large bill from an i.c company ever and i was like well in all

[00:10:52] fairness your old i.t company did you wrong and sucked and also he's like but max just work why should i be paying this much for max and i was like you're right the max do work because one

[00:11:02] we're taking care of them in the background and two the reason you're paying this bill has nothing to do with your computers it comes down to your users and when i was talking to someone else

[00:11:10] of that company and i was like i'm gonna send you a bill for this and he goes user error and i was like user error and like that connection has to be made so especially on the apple side

[00:11:23] because the max just work mentality like what am i paying for it's to make sure that yourself is still working right and like i understand if you're coming at you know you're not doing a good

[00:11:33] job for the client or like they keep bugging you for things whether that's a miscommunication or you're literally not doing a good job cool but the race of the bottom part of the

[00:11:48] commoditization of you know what this is truly years ago i went to a b and i meeting i'm sure i've told this story before but i went to a b and i meeting and i happened to have been

[00:11:57] i was a guest at someone someone else's in new york city there's like 75 behind groups right so i was a guest at someone's group and i happened to be the day for those who don't know b and i is

[00:12:09] a big networking group where everybody gives referrals and technically you're supposed to supposed to be one of any industry there and i always used to be able to get through because

[00:12:17] there's always an it person there but i was like well i only do max so they let me in anyway and there's always one person who's doing like a presentation of the day and happened

[00:12:26] to be the day that the pc guy was there doing a presentation and in his presentation he's talking about his pricing model and he goes he goes and we're the best and we're the cheapest and we do this

[00:12:37] and justin what do you charge per per end point and i was like 150 and he's like 150 that's ridiculous we only charged 39 dollars a device per month and i was like are you kidding me right now

[00:12:51] and i went over to the person who's in charge and i was like this is what your group is about just bashing one another thanks bye and i walked out you have to blur out the fact that i just

[00:12:59] flipped the bird on camera um like and that was years ago we're talking about 2010 and that person was commoditizing the the product then because you're right if you're selling just monitor if you're selling your product this i'm going to take care of yourself and we're

[00:13:16] going to do monitoring and maintenance or nothing else that's a commodity i'm going to manage your office 365 for you that's a commodity but if you're providing services and value that is price driven and if you are being pressured by price you're not giving good enough service

[00:13:34] you're not giving good enough value and if you think that other people if someone's going if your client is going well you charge 200 and joe schmoe charges 100 be like when joe schmoe doesn't do x y z

[00:13:48] because we're providing you this value this value this thing that thing this thing on site hands on covering your stuff wiping your butt doing whatever it takes and you're providing you're showing that value if that's what you're against if joe schmoe is literally doing all of that for

[00:14:03] $100 questionable your price but if they're not and you should know what they're doing because you should know your competition in town that's the leg you stand on so you're right pressure pricing pressure is is i would say 75% made up in in in people's minds and it shouldn't

[00:14:23] be you know what i mean like i think 25 of us know what it's like to not have to deal with pricing pressure because we're providing enough value to the clients that way this doesn't become

[00:14:36] a problem right and to go back to your microsoft 365 example right microsoft 365 out of the box is not secure right you called it microsoft 365 no i did not you did sorry i had to interrupt you

[00:14:57] because okay well we're gonna replay that right now to see if i actually did go for it and before we find out whether or not i really did say microsoft 365 uh another sponsor this episode is

[00:15:15] sponsored by goes into mobius goes into mobius connects connectwise manage to quickbooks online to generate invoices and update manage with payment status goes into connects your systems together to make sure you enter your data once and it goes into all the systems that it should

[00:15:31] find out more at atmsp.link forward slash goes into microsoft 365 out of the box i'm just picturing clippy i'm just picturing clippy being like hey all right anyway yes microsoft 365 out of the box

[00:15:48] is not secure right so your value as an msp is to add the tools and the experience and the knowledge on top of that to make sure that their microsoft 365 instance is secure now should you

[00:16:03] include that in the margin that you make on 365 hella no you should be adding that as a new line item actually it's funny because i was someone in the um ace's slack which is one of the many

[00:16:17] slacks i mean i was asking about email spam protection because they're not getting enough margin on whatever tool they're using and i had mentioned avanon which i think is a great tool hashtag non-sponsor and avanon complete protect which is something that we resell covers email

[00:16:34] collaborative tools um and chat and gives you access to like it's phishing and dlp and malware and url rewrites and shadow it and a whole bunch of stuff and i really like it and there was

[00:16:49] two other people were having a conversation within this thread about this and questioning do you add it into their email license and i didn't i didn't get a chance right back but someone was like yeah i

[00:17:02] just i have it be their email license plus their spam so they make it one line item office 365 plus email protection and that and i don't think it should be that because the i would i would

[00:17:16] rather do it as a separate line item office 365 licenses are x and email protection is x because sometimes one those two things may not be in line in terms of numbers and two if for whatever reason

[00:17:28] the client wants to leave office 365 and go to google i can keep the email protection line item without changing a whole bunch of stuff there's there's also the perceived value of reading

[00:17:43] it on an invoice as a separate line item because that's something a lot of people don't think about is what the perceived value from the client side of things this is why also when we talk about

[00:17:53] invoicing if you're going to do something for free send an invoice and mark it as a 100 discount because it's perceived value this in their mind your client's mind allows them to recognize

[00:18:07] there is value against this item if you have it as one group thing they're going to see office 365 plus email security they're going to go i thought i i thought office 365 is the email

[00:18:17] security you know and it's not it's a separate it's a separate item even if you're selling just defender if you're doing the office defender for email or whatever they're calling it these days separate line item don't include it in everything should be broken down because you

[00:18:31] don't want a misinterpretation of the value of that item and that's actually how another way you can get through those pricing problems because then you can then ultimately say also if joe schmoe is going to provide email security and his email security is cheaper than your email security

[00:18:50] you get to say to the client well before you jump ship in school if you do just here's the list of everything we're doing in your email security what's theirs doing because if they're charging you two dollars and i'm charging you ten dollars it's not the same product

[00:19:05] and that also helps you get through that pricing pressure problem yeah now see i go the other way on my personal preference for a pricing model see what i did there i saw that in a reiteration

[00:19:19] hey i took english in high school um but anyway um i actually like to obscure my pricing right i want a per user price this includes all of the things that they need and that way if i need to

[00:19:37] swap things out i can't they don't know what i'm using they also can't price shop me against my own vendor who might sell direct as well i've had that problem before with companies that shall go unnamed but i'm gonna giggle because you know who i'm talking about um

[00:19:55] i my pricing is gonna be msrp pricing because a product like avanon i'm not gonna get into the margins in case any of my clients are listening but a product like avanon if you're using a

[00:20:07] wholesale like pax eight there's a reason i'm using avanon and if you don't know go to pax eight go look up avanon and go look at the difference right i will never sell more than

[00:20:16] msrp to avoid that problem and your way totally makes sense i get what you're saying sometimes you want to be able to solve i used to be of that mindset the problem that i'm running into now is

[00:20:27] so many tools are sticking their name in wherever they can that it's almost hard to obscure a lot of that stuff case in point years ago when we started using a product called jump cloud which we've

[00:20:40] pretty much done away with because i do not like that product anymore my clients had no idea what jump cloud was we installed the agent it ran if we put the application in a hidden folder they just

[00:20:51] knew that they used the same username and password for email as they did their computer as they did their sonology and then one day jump cloud decided to update something and all of a sudden there was

[00:21:00] a cloud icon in my client's menu bars and they all went what's this what's jump cloud and i had to explain i had a back roll out of it because i was charging them probably

[00:21:09] double what jump cloud is msrp was and so that became a bit of contention that i said to myself i'm never going to do that again which is why i've gone with the more transparent model and look they both work it depends on what you're selling there's plenty

[00:21:24] of things that we still obscure sure but only in terms of products like that can't be detected so great examples watchman monitoring watchman was a great product it's not one by synchro i don't know what's happening but watchman monitoring one of the key elements of

[00:21:40] watching monitoring was that an end user or a client could never find out that it was watching monitoring because if they all the urls were it wasn't watchman monitoring dot com all

[00:21:51] the urls were like monitoring client dot com and if you went there it said please log into your monitoring client with no labeling and no icons and no coloring and no anything and unless you

[00:22:03] were smart enough to go like do a who is and try to get through the privacy you know whatever the uh uh domain privacy is to figure out who it was which most clients wouldn't like you don't know

[00:22:15] you just think oh monitoring client must be owned by virtual computers or whoever your msp is at the time so that's why i was fine with obscuring that one but in a product like avanon avanon sends

[00:22:29] weekly update emails and yes we have stuck our logo on it yes we have made our colors but somewhere along the line that will break somewhere along the line will say powered by avanon somewhere along the line someone's gonna backtrack the email is gonna say from

[00:22:41] virtual computer security system at avanon dot com whatever so it's pick and choose really i think for how much you could obscure and what you could be transparent about but that comes on to know

[00:22:53] your tools be honest and clear and if you can do if you can't don't but you can still make money on it but at the end of the day back to what we're talking about pricing pressure

[00:23:04] there are plenty of ways to get around that problem i'm on the side of you should be good enough if you're if you've been doing this long enough you should be good enough to not have to worry about

[00:23:16] pricing pressure yes agreed all right so we dug into that one quite a bit yeah um i'd like to switch to more of the future prediction you know what are the msp's that uh have been performing

[00:23:34] better what have they been doing and i know the first one the most the highest percentage one is something that you did because you've talked about it on the show before and that is employing

[00:23:45] a cfo or an equivalent finance financial professional yeah and you know you've told the story before where you actually outsourced a cfo to go over your books and make sure things looked right and and so i know you can speak to this one from from personal experience

[00:24:05] i think uh everyone should do this at least once if you don't have a bookkeeping service or a good account that has bookkeeping services before we get into the details of just the cfo part

[00:24:17] one of the things that this part is leaned on is the idea of a better business acumen which if you scroll up a little bit it's right there in this article and it says 60 of the channel companies

[00:24:33] say their business skills need work in areas like financial forecasting budgeting financials has a cost control cash flow taxes legal and compliance issues and i'm going to extend that because what's missing from there is i wouldn't be surprised if in the same 60 you also need help with

[00:24:50] marketing management hr and all the other things that we don't do because most msp owners are technical minded and and you're not skilled in these other things so let's go to the cfo part

[00:25:05] absolutely i think one of the biggest things about being an it is like we're really good at solving problems right like that's that's i think that's like at the end of the day like the key element

[00:25:15] to what makes us special but that doesn't mean we can solve all problems and you may not be good with numbers so like hiring somebody like a cfo not even a full time it just a fractional cfo or

[00:25:32] some sort of bookkeeping service to make sure your stuff is on the up and up is definitely something you should be looking at because i think every one of us as msp owners should be

[00:25:43] desperately looking at our soft skills and bringing in people who are not doing that and we talked about this a little bit on our outsourcing episode or two-part episode where we talked about outsourcing

[00:25:54] marketing we talked about outsourcing legal and we also cfo here's the thing i don't know a single msp who was like i was a lawyer and now i'm an msp right therefore you as the msp owner who was

[00:26:11] never a lawyer cannot write your contract that you have with your clients so you outsource it because you know that the brains are better somewhere else so it's the same thing with the cfo

[00:26:23] if you're not good with money if you're not good at keeping a check register if you're not good with financial forecasting and planning do a fractional cfo this fractional cfo that we worked

[00:26:37] with actually even gave me an excel document where i was able to like plug in numbers and play with it to be like okay what can my forecasting look like if we stayed stagnant if we did 2% if we did minus

[00:26:51] 2% if we did 10% and it allowed me to figure out where all because she broke down all of our categorizations which is came out of our p&l from quickbooks so our sections you know software and

[00:27:02] payroll and marketing and all me and adjusting those numbers those percentages auto adjusted all the other ones to figure out what how much money so if argumentatively we made 5% more money the system was like okay i it had weighted scores so it said put

[00:27:21] 1.35% of that 5% into your marketing put 0.78% into payroll whatever and i i can't develop that on my own but this person could for the money we paid them definitely helpful so yeah i think a lot of

[00:27:38] people i think this number is a little high and if it's not high i think then that's a problem for a lot of msp's because if 80% are employing a cfo or an equivalent financial professional

[00:27:49] that means up until now and this is uh trades of firms performing better than two years ago if 80% of them from two years ago have now hired a cfo we were in a lot of i think we were

[00:28:05] in a lot more trouble two years ago than we are now yeah for sure right but you know this is it is overwhelmingly because the next highest number is 55% right so this is overwhelmingly

[00:28:18] the one common denominator between msp's that did well and msp's that did not do well yeah you know that's what this number tells me and by the way this is not an msp problem this

[00:28:32] is a small business problem oh absolutely because what happens is most small businesses deal with the financial results of what has already happened they don't do the planning the predictive

[00:28:46] the things that you were talking about you know just a few minutes ago yeah and just because i have that document doesn't mean i use it on i just want people to like i'm gonna i want people to understand

[00:28:55] the truth like i have it doesn't mean i'm using it properly um but i know i have it and it was and it's valuable for me to use it i just haven't yet um but having the cfo look over our stuff

[00:29:08] and we're trying to engage with a new bookkeeping firm who's going to keep our stuff up to date and keep me abreast of that information a little bit better massively helpful so if you haven't worked with a professional cfo before start there because it's not terribly

[00:29:22] expensive and just make sure that like you might think you're in a good place but like have a professional and take a look at you know you feel healthy and then you go see the doctor

[00:29:31] and the doctor is like you need to stop eating bacon and you're like what i love bacon like it's the same thing you know you look good on the outside you feel healthy and you're not it's just

[00:29:42] like something's a little off you're not sure that's what a cfo will do for your finances yep all right well there is a lot to talk about in this report but unfortunately justin we have

[00:29:56] come up to the end of another episode oh yeah i don't know what's more sad for me or the listener let me know if you're sad yeah let me know if you're sad that our episodes are only 30 minutes long

[00:30:09] you can find me and eric at facebook.com slash groups slash all things msp or watch how this whole episode went down on stream yard and whether or not eric blurs out me flipping the bird earlier

[00:30:19] in this episode at youtube.com slash at all things msp like and subscribe and all of the favorite platforms were everywhere leave a review yeah that sounds like a good idea you should

[00:30:30] leave a review i was gonna say or don't but no do do leave a review and that's it even if it's a bad one even if it's a bad one just tell us you love us uh that's it yeah that's eric i'm justin that's the

[00:30:43] end of this one bye thanks for listening and don't forget to subscribe to us on your favorite podcast platform you can also follow us on facebook but better yet go ahead and join the facebook group

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