My New Company - Dara IT
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@Breffni-Potter said:
There may come a time when the bench side is dropped completely, I've done some number crunching and although the numbers are not massive, they are enough to justify offering it to those who need it, especially when you already have a pool of clients.
We don't allow bench services because of the insurance problems. Keeping someone's computer on site is a liability nightmare. Won't touch it. No money is worth that.
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@Breffni-Potter said:
Where as with this model, it is in my interest to prevent issues/problems, If a client is stable and happy across a year, that's a years worth of revenue as my incentive plus by preventing issues, I get an easier life. You cannot prevent 100% of problems but there is a lot of work you can do.
What you have is an adversarial agreement. This is the primary reason we won't consider these kinds of pricing structures. It is in your interest to deliver as few services as possible - maybe even to the point of incurring risk for the client. It is more cost effective to be risky and lose some clients to disaster than to do the right thing for most of them. It's like SAN sales, you make more money selling customers something risky, even if you lose lots of clients, because the margins are great. So this makes you the financial enemy of the client.
Likewise, it is in the client's interest to push for scope creep and get as many services provided within the agreement as possible. They have no interest in your cost problems.
This type of agreement requires you both to overcome the inherent "enemy" structure of the agreement. It rarely works.
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@Breffni-Potter said:
You cannot prevent 100% of problems but there is a lot of work you can do.
No, you can't. And when you take on all responsibility for preventing issues, any issue that comes along, even ones that you have no way to prevent, it looks like it is your fault because the responsibility for spending money to protect them was yours, not theirs. Every decision is yours, not theirs. Every failure, every blip, every outage makes them say "could he have spent more money and have prevented this? I'm sure he could have, I bet he's being cheap."
This type of arrangement leaves you looking bad, often even when you've done a great job.
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@Breffni-Potter said:
@JaredBusch said:
We very specifically do not reference ourselves as a MSP.
Unless I'm badly mistaken, I've been careful not to say that anywhere.
No one does, really. MSP means nothing to customers. It is the set pricing that moves you into the MSP space (if you go beyond bench services.)
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I feel like seeing that you do more than desktop / bench support requires looking a bit more than you would tend to do. I see servers there now.
As a potential customer, when I look it seems that you handle ongoing support of servers that I have set up myself. But how much support do you really do?
Some questions would be...
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Do you charge the same per month for managing an AD server that does nothing as managing a massive, enterprise, thousands of users MS SQL Server? If so, why would I use you only for the expensive ones and someone who charges by the hour for the low utilization ones?
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What do you consider a server? A VM? Or a physical device? Or a cluster? For example:
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What is the charge for the single, stand alone Windows AD DC?
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What is the charge for a Windows AD DC cluster?
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Do you only service the server and not the application running on it? Who will manage the AD DC portion of the server?
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If you do manage the apps, how much do you charge for that and how do you define the server and the applications?
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If you manage the apps, do you charge by the app? If so, would that be AD DC, DNS, DHCP as separate items on a single server?
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Do I get charged differently if I put lots of apps on one OS instance compared to having a separate VM for each application?
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Is a physical server one thing? You charge the same for an HP Microserver running one workload as a DL580 G9 running 200 VMs?
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Is a Dell VRTX one server, four or thousands?
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Do you pay for things like ILO, IPMI and DRAC to make remote management possible? Do you expect me to? Do you charge the same regardless of the remote support software and hardware that I have been willing to invest in? (If so, why would I pay for any of that stuff?)
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@scottalanmiller said:
- Word of mouth pretty much does not exist in business. It just doesn't, especially around IT services. There are tons of reasons that we assume around this, but the reality is if a customer loves us or hates us, they tell no one.
I'm afraid I disagree, I've seen a UK based company grow from a garage based office, to a premium installation and service company in 25 years, all without advertising, all through customer referrals, networking and building a brilliant reputation.
I've sat in meetings where people swap contacts about different sectors who have helped them, from the brilliant Project Manager who delivers on the building project, to the contact who runs a print firm who swoops in to save the day at the last minute.
@scottalanmiller said:
We've had customers for over a decade that could not live without us and love us to bits but..... have never discussed us a single time.
In 10 years, you've had no positive referrals or recommendations at all? How do you know that a customer did not recommend you?
@scottalanmiller said:
- Establishing trust doesn't really work. You aren't doing the work that establishes trust, you are just burning the opportunity to get the ball rolling.
@scottalanmiller said:
(MSP style agreement, ect edited for brevity)
This type of agreement requires you both to overcome the inherent "enemy" structure of the agreement. It rarely works.Yes but what's to prevent an hourly agreement becoming the same enemy of the client? I've hired on "hourly" techs at providers, I got billed 8 hours to fix an issue with a single wireless access point, they got dropped quickly after that. Where as if the issue is:
"Fix my wireless AP please" - I make no extra money by dragging out the fix, I would do if I was hourly.
Scope-creep "Just one more thing" happens in hourly fixes as well, even if you draw up a gun and say no, they still argue either way.
@scottalanmiller said:
It is more cost effective to be risky and lose some clients to disaster than to do the right thing for most of them.
Contracts or type of agreements aside, If doing the right thing is not at the core of what you do, you'll find ways around those agreements. This is impossible to prevent, this is more about the values of the provider.
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IT services are extremely complex. That you only support Windows helps, that eliminates so many things that could come up (Linux, BSD, RISC architectures, etc.) but still leaves so much complexity. I feel like you are relying on your customers fitting into a very specific mold and not leveraging your flat rate contract to their advantage to make this even remotely work.
If servers only every do light web sites, AD, file serving, etc. Sure, a flat rate isn't too bad. But still just so many things will come up.
You will run into the customer with lots of VMs, all Windows, and all running something weird that requires all kinds of special support pretty quickly and find that you are bleeding weeks of labour on a single server contract and have no time to support anyone else, even though the other people pay you 100x the rate.
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@Breffni-Potter said:
@scottalanmiller said:
We've had customers for over a decade that could not live without us and love us to bits but..... have never discussed us a single time.
In 10 years, you've had no positive referrals or recommendations at all? How do you know that a customer did not recommend you?
We've had one or two known recommendations in sixteen years. Nearly every one ended up being a customer we had to fire (the ones who we were recommended to, not the ones recommending us.)
True, maybe we have some cheerleaders and there and they just don't have friends who listen to them. But it has to be rare considering that no one ever reaches out to us because someone recommended us. It just doesn't happen. But we have customers that love us. Heck, lots of us have been in customers' weddings or vacationed with them or whatever.
At scale, we just don't see this happening. Not for IT services. Other things, sure, but not IT.
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@Breffni-Potter said:
Yes but what's to prevent an hourly agreement becoming the same enemy of the client? I've hired on "hourly" techs at providers, I got billed 8 hours to fix an issue with a single wireless access point, they got dropped quickly after that. Where as if the issue is:
That's different. Hourly agreements are "aligned" in the same way that standard employees are. It's not perfect, but the "effort" is aligned. If the customer needs more work than you expected, they pay more for the work that you do. You charge for what you actually do, they pay for what they actually get. It's a direct relationship rather than an inverted one.
What you are mentioning, being charged too much, is different completely. That's not related to the relationship type, that is just someone who either could not do the job or lied about the time (or it really takes that long, always an option - compare to internal IT, often little things really do take all day.) Once you are an IT service provider, you will start to realize how much time work actually takes and how little people intend to pay for that work!!
But the core issue that you are listing is simply overcharging. That is unrelated to being aligned. That's no different than a customer thinking that you are going to bill for one server and you surprising them with labeling every VM as a server or every service on those VMs as a server. There are ways to "pad" service no matter what the agreement is. But one agreement at least ties your effort to the cost, one makes it inverse.
Don't start from an intentionally adversarial position, start with good intentions.
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@Breffni-Potter said:
"Fix my wireless AP please" - I make no extra money by dragging out the fix, I would do if I was hourly.
No, you make more money by claiming it is outside of scope. Or you make more money by rushing through the fix and not doing a complete job. Flat rates take away all of the value that an IT department would provide - the slow, thoughtful, taking ownership of things and investigating options, doing the right thing just because you should, etc. It makes it so that extra firmware update? Nah, it can wait, or doesn't matter. How much time do you plan to put into checking logs when you only change 30 minutes of labour a month for everything? Not much, I assume.
Dragging things out doesn't provide the value that it seems to, because that takes time away from other billing. It requires you to work for the money and it requires you to compromise. If you drag out with one customer, you don't have time to service the next. So unless you are out of work to do, dragging out doesn't do what you think that it does. And you have to pay the tech for that time, so the profits are small.
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@Breffni-Potter said:
Scope-creep "Just one more thing" happens in hourly fixes as well, even if you draw up a gun and say no, they still argue either way.
No, it doesn't, because the scope of hourly work is "the amount of work that is done in an hour" and nothing more. Hourly work inherently solves scope creep by eliminating it conceptually. Scope creep is exclusive to contracts that require a scope definition, hourly does not.
NTG works very hard to have aligned contracts and scope creep never comes up because what the customer wants is our scope and the time it takes to do that is the time. No need to argue over scope, no need to try to legally bind each other to make it all work. Work takes time, they decide how much work they want done, we do the work. Easy peasy. Everyone is on the same team. When they want us to work, we make money. When they want us to stop, we get to go have a beer and stop working.
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@Breffni-Potter said:
Contracts or type of agreements aside, If doing the right thing is not at the core of what you do, you'll find ways around those agreements. This is impossible to prevent, this is more about the values of the provider.
Yes, but there are two concepts here. One is what you are describing which is simply being unethical. The other is having a contract where the profits are make or lost in enforcing technicalities. In an aligned situation, it is in the interest of both parties to do the right thing because both succeed together. They work, legally, as a team. It requires one of them lying or cheating for a problem to arise.
In a misaligned contract, the legal departments are at odds, each trying to figure out how to make the most many or get the most work out of the wording of the contract. The contract is complex and even when you want to work as a team, your contract makes this very hard. This is not a theory, this is a real life lesson I have learned. If you are made into legal adversaries, it is basically impossible for you to have a long term, healthy business relationship.
In the second case you have big problems on top of one of the parties attempting to lie or cheat. Don't introduce major issues when there are enough issues that cannot be avoided.
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One of the important things to remember here is that this is business, not people. A misaligned agreement with your neighbour might work because it is you and him and it is personal. A business is many people. Don't think of this as an agreement between you and an owner and it is a friendly handshake. Once you have employees who get "more time off" by "doing less" things will start to change. And once he has employees who "get more through scope creep", things change. You might start out great, but a legal agreement that makes the companies see each other as a means to make money or get free service, your personal agreements or feelings won't matter.
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Here is a very simple example:
Relationship starts off great. But after a while, it is time for the customer to purchase new desktops, the old ones are getting too expensive to maintain. In an aligned relationship, if the customer decides to invest in awesome desktops, modern OS and good tools, the vendor does less work and the customer saves through a reduction in billing and the vendor has more time for other (or more) customers.
If the customer decides to skimp on hardware and tools and makes the vendor shoulder an additional labour burden, that's fine. Because the customer spends less on the hardware and the vendor does more work and gets paid for it. The vendor is happy with either decision from the customer, because the vendor gets paid based on the effort that the customer decides they have to do.
But in the misaligned model, when the customer's financial department runs the cost of ongoing support they will see your in the cost model as a fixed price. They will say "oh wait, why would we invest in more reliable hardware, better support tools or new operating systems if the key values of all of those things are lost?" It's completely innocent. It's nothing personal. The financial model simply says to shift as much cost over to the vendor as possible because by investing less in doing things "right", the cost of support leaves the customer and goes to the vendor. It's very simple business decision making. If you look at the numbers, it makes you do adversarial things. If you ignore the numbers, you are being foolish.
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Another way to look at it.... when you are concerned that someone will overbill, that's concerned that a human will try to cheat you. But if you had a robot do the work and it was told to always be honest, that problem would go away.
But if you have a misaligned contract and you have robots doing all the work and decisions and all are told to be honest and never cheat - you would still have problems. The robots who are told to determine what is or is not in scope would always try to reduce scope definition as far as the contract would allow. While the other robots would attempt to shift as much cost and effort over to the vendor robots. Inevitably, one party or the other will be screwed. It's the battle of contract definitions.
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I do have prior MSP experience, both on helpdesk and in project management
In the case of this hourly tech, I caught him working on other client sites throughout the day remotely, using our site as a base, not happy.@scottalanmiller said:
You will run into the customer with lots of VMs, all Windows, and all running something weird that requires all kinds of special support pretty quickly and find that you are bleeding weeks of labour on a single server contract and have no time to support anyone else, even though the other people pay you 100x the rate.
Yes but all someone has to do, is fill in a form, pay me the money via pay-pal and boom, hit me with their crazy requests which is not the case.
@scottalanmiller said:
- As a potential customer, when I look it seems that you handle ongoing support of servers that I have set up myself. But how much support do you really do? Some questions would be...
Your stand-alone AD DC would be treated as a single server £75 per month. Your cluster, how many servers in that cluster?
I will manage the AD portion for you.
AD/DC/DNS/DHCP are all treated as the same app on the server.
Lots of the same apps on different VMs, you'd talk to me for a quote, most likely the cost would not increase, but it depends on what other apps (Sage, Quickbooks, ect) you are loading onto each VM.I.e an Exchange Server VM and a DC/DNS/DHCP/AD VM would be billed as 2 separate servers.
Goes back to work-load, but bearing in mind the website is not the contract or scope of work.
We'd need to talk about that, it depends on your requirements. Why have you got those tools?
Give me a second to type a few thoughts.
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It's the problem of "free". Once a product is free or unlimited, people do weird things. Make McDonald's hamburgers 100% free and you don't just have people eating them for every meal (and getting nothing else) you also have them getting them for their pets, for people they meet, to use a ballast in a ship, etc. It's free, use it anywhere you can. It is cheaper than water.
In Japan they do this with doctors. All doctor visits are free. They have found that they have people who go to the doctor just to talk. Nothing is wrong with them. When a professional is at your beck and call, always, for free (or prepaid with unlimited support) people stop using them as doctors and start using them for anything that they can - including being their only friend in many cases.
This like in your lowest cost service: Whatever technical issue you are struggling with, we will log in remotely and get it resolved for you. That's scary. Now it is in the interest of the customer to have useless employees who don't know how to do anything - because the cost of holding their hands is yours, not the customer's. Why pay for better employees or employees who already know products when they can have each employee keep you on the phone, looking at their screen, helping them with anything and everything? Why screen issues or even track them? Why try to fix common issues? None of that makes financial sense when you have a vendor who has taken on those responsibilities.
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@Breffni-Potter said:
I do have prior MSP experience, both on helpdesk and in project management
In the case of this hourly tech, I caught him working on other client sites throughout the day remotely, using our site as a base, not happy.Again, not relevant. You are mixing concepts of having chosen an unethical partner with having created an adversarial relationship. You are missing my point completely. The issue of ethics cannot be avoided. The issue of being adversarial can.
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@Breffni-Potter said:
You will run into the customer with lots of VMs, all Windows, and all running something weird that requires all kinds of special support pretty quickly and find that you are bleeding weeks of labour on a single server contract and have no time to support anyone else, even though the other people pay you 100x the rate.
Yes but all someone has to do, is fill in a form, pay me the money via pay-pal and boom, hit me with their crazy requests which is not the case.
I'm confused. Not sure what you are saying here. Are you saying you will just turn down the customer?
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@Breffni-Potter said:
Your stand-alone AD DC would be treated as a single server £75 per month. Your cluster, how many servers in that cluster?
So even though they act as a single server, you will bill for each one as if it was unique? Doesn't seem like good customer value. How are you defining a "server"? Some people see that as a cluster, some as a physical machine, some as a VM, some as a service, some as a container.
