My New Company - Dara 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.
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@Breffni-Potter said:
I will manage the AD portion for you.
AD/DC/DNS/DHCP are all treated as the same app on the server.Those are all separate services. AD DC, DNS and DHCP are three unique things that can be run together, separately or any part of them not at all.
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@Breffni-Potter said:
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.
So the flat rate is just the bait, it's not really flat per server? I realize that it is just an estimate. But as a customer, I expect a published estimate to apply to me. I don't get a price from Rackspace and then expect to negotiate after I've reached out to them. When they publish a price, even if it says estimate somewhere, I expect that to be the price.
And it's less about where you start up front, it is more about where you go. Customer starts with AD on there. Then adds on QB. Then adds on CRM. Maybe months apart. They are making decisions based on your agreed flat rate. Do you tell them up front that once you set the rate that they can't use the server like normal without talking to you about price changes?
Why is a server used how they traditionally were, lots of things on one system, not covered by the pricing that seems to be specifically for that?
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@Breffni-Potter said:
I.e an Exchange Server VM and a DC/DNS/DHCP/AD VM would be billed as 2 separate servers.
So the expected price just doubled. That's big. If you say "flat rate by server" to a company, the literally think that the rate is one price per server. Not one price, maybe, per "operating system instance." The people making these agreements won't even know what that means. A desktop is a desktop, why is a server not a server? Make sense?
And a VM takes far less management than a physical machine. Why would each VM cost the same as something so much bigger?
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@Breffni-Potter said:
Goes back to work-load, but bearing in mind the website is not the contract or scope of work.
Not to you it isn't. But to a customer, it will easily feel like a bait and switch. Lure in with what looks very much like a flat, predictable rate. Then find out you are going into a negotiation where you could easily pay four times what you thought that the flat rate was going to be. And then finding out that it isn't flat still, but if you use the servers as normal, the rate might change on you in ways you can't predict.
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Business alignment is something that I have put tons and tons of thought into having seen it tear companies apart while everyone was attempting to do the right thing. It's something that SMBs miss. Both the IT people and the business people - it is one of those things that keeps SMBs in the small category, they miss when they are getting into relationships that are not set up for success. Mostly because they fail to empathize for the other party and think about how the relationship will look once set up and running and how that will cause people to want, or even need, to behave.
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@scottalanmiller said:
Those are all separate services. AD DC, DNS and DHCP are three unique things that can be run together, separately or any part of them not at all.
Yes they are but they are treated as combined. All are needed for a functional network, whether you only run AD or run all 3.
@scottalanmiller said:
I'm confused. Not sure what you are saying here. Are you saying you will just turn down the customer?
I'm saying that it is impossible for a customer to immediately book and agree a service like this. This is not Amazon, there is no pick an item, add to basket, pay by credit card then you get it. So the scenario you are describing will never happen.
@scottalanmiller said:
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.
Defining it by the workload of the device, the maintenance work required,
@scottalanmiller said:
Not to you it isn't. But to a customer, it will easily feel like a bait and switch. Lure in with what looks very much like a flat, predictable rate.
Yes but for your example said customer is expecting to pay £75 per month to manage 200 servers. When the £75 clearly states "per server" how per server is defined, you should talk to us about.
@scottalanmiller said:
And a VM takes far less management than a physical machine. Why would each VM cost the same as something so much bigger?
Because Exchange needs the same level of management and care whether it's physical or virtual. Which you know
Virtual Exchange helps but not massively. -
@Breffni-Potter said:
@scottalanmiller said:
Those are all separate services. AD DC, DNS and DHCP are three unique things that can be run together, separately or any part of them not at all.
Yes they are but they are treated as combined. All are needed for a functional network, whether you only run AD or run all 3.
That would apply to many Nginx services, a load balancer and a database farm too, though. Like MangoLassi... it is all one thing but has many different services that combine to make it, even though each is also used independently.
AD, DNS and DHCP are not all needed. AD and DNS have zero reliance on DHCP. DNS has no reliance on AD. Only AD needs DNS of all of those. And none of the three are needed for a fully functional network.
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@Breffni-Potter said:
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.
Defining it by the workload of the device, the maintenance work required,
Then as a customer I'd think that a cluster would be a single workload, not many. It's one thing to me, typically.
