One of the key values that Do IT Smarter brings to our
partners is that we allow them to focus more on their business. In our model we
provide all of the backend services, NOC, Help Desk, the tools, and more
importantly all of the process around this. Our partners provide the strategic
account management onsite support, project work and project management. This
allows them to focus on their business and the more high value services that
they provide to their customers. This relationship is one of the main reasons
that we shifted to the Master MSP model—as we grew our Help Desk and NOC teams
we found it increasingly difficult to manage the backend while handling the
“frontend” of the house. I believe that this model not only works well for both
Do IT Smarter and our partners as we both focus on our business, but it also
provides our customers with the best of both worlds.
Another area in our business that we changed even before we
shifted to our current model was product procurement. From day one in 1999 we
had been selling product to our customers, not because it was profitable or the
core of what we provided them; rather, because we felt that it added value and
the customers expected it. I think that this is a very common mistake that our
partners make. In fact in a recent poll we conducted during one of our Training
Tuesdays sessions, 71% of the respondents stated they provide procurement
services because “it's a convenience for customers
and a value add.” The answer to this question should be “because it is
profitable.” If not, then I think you should re-consider offering this service.
We were selling enough product to
have an employee dedicated 100% to fulfilling this service. In addition to this,
our engineers spent a considerable amount of time working on the order
specifications and tracking the status of orders. On top of these costs we had
to account for bad debt (industry average is 1.5% of revenue) and the cash flow
issues associated with providing terms to our larger clients. All things considered,
we calculated that we were making less than a 3% margin on our product sales.
Couple this with the fact that the service we were providing our clients was
not as good as it should have been due to the fact that it was not our core
competency led us to an easy decision to outsource this service.
Once the decision was made to
outsource product procurement, we released an RFP and went through a selection
process with the respondents. At the time this was a pretty foreign concept so
none of the companies that responded had actually provided this type of
solution before. We did find a company based out of Chicago that seemed to be a
good fit and moved forward with them. While we did have some success with this
solution; unfortunately, the company was acquired by Dell a couple years later
and the relationship died with this acquisition.
These past couple years we have
been seeing a trend with our partners starting to do the same, but rather than
finding a partner many are just having the customer go to CDW, Dell Direct or
other large operations. This offers many challenges, most notably the real
concern that these companies will steal your customer. I have in fact seen this
happen with a couple partners in the past 6 months. In a recent poll 75% of
respondents stated this as a major concern for them.
Fortunately, we have found another
partner to handle this service in Axis Business Solutions. The difference with
Axis is that their business model is centered on partnering with MSPs to
provide this service to their customers. I started talking with them last fall
and Do IT Smarter has been leveraging them for purchasing our internal systems
since that time. We’ve introduced them to several customers over the last 4
months as a pilot. We are excited to say that not only are we happy with the
service, but our customers are very satisfied and in fact have been able to get
better pricing on items as compared to going to the big name companies. This
allows us to continue to focus on providing managed services and giving our
customers access to product specialists that know what type of systems will
meet their needs.