The CEO of Air-IT told attendees of this week's CRN MSP North conference that he does not like employing salespeople because they "create the wrong ethos".
Todd McQuilkin, who founded the Nottingham-based MSP in 2005, was sharing his best-practice tips on how to achieve differentiation in an increasingly crowded managed services market.
Photos of the event can be viewed on our Facebook page.
Having built Air-IT into a £5m-revenue, 50-staff business with 60 per cent recurring revenues, McQuilkin now focuses on helping other MSPs around the country improve the quality of their business.
Alongside having a mature service desk, an emphasis on people is key to building a successful MSP, McQuilkin (pictured) said.
"I started my business in 2005 based on my dad's model [McQuilkin's father sold his medical device manufacturing business in 2004]: looking after people, and being strong, honest and committed," he said.
"I didn't want salespeople in my business as they create the wrong ethos for my company. I wanted people who were going to be with me for the whole journey. If I wanted to do that, I had to give away equity, which I did. I gave away 30 per cent equity so I could get the right people in the right seats. These people came on a journey with me."
To underline this, since McQuilkin stepped away from the day-to-day running of Air-IT 19 months ago, the firm has been run by its MD, who joined Air-IT as a 19-year-old.
McQuilkin set out the metrics of what he regards as a successful MSP, telling attendees they should be aiming for 60 per cent recurring revenues and having efficiencies at 80 per cent on fixed-fee agreements.
Despite commoditisation driving prices down to as low as £10 per seat, MSPs should aim to hold their prices at £50 to £75 per seat on fixed-fee agreements, not including additional services, McQuilkin advised.
"We refuse to drop our prices," he said. "We put our prices up, not down. Even when our competitors are at £10 a user there's no way we're dropping our prices and taking on 40 hours from a company that doesn't see the value of technology. All that will lead to is low morale, a leakage of staff and knowledge, and unhappy customers," he said.
McQuilkin added that "all tech companies think they're MSPs, offering the same products and services, billing themselves as virtual CIOs, attending the same vendor events and listing the same SLAs and KPIs on their websites".
To stand out from the crowd, MSPs must digitally transform their business by rolling out improved processes and continual service improvement, he asserted.
"If you are serious about being an MSP then you need to have a mature service desk that is working to industry best practice, and not a helpdesk," McQuilkin said.
MSPs also need to build ‘total professional services automation', and become innovators in areas such as knowledge management and client portals.
"This is what the youngsters coming into our industry want to see as end users. At the moment, they are going onto Google and getting help. You don't want that. You want them coming to you. You need to be agile and lean and need to be able to adapt to change," McQuilkin said.
"I've seen so many MSPs teaching people how to transform, but have not transformed themselves, and that's why they have fallen behind in this crowded market."
Digital transformation is "a journey" that takes time, however, McQuilkin said.
"You cannot do it in a day. It's taken us four years and we're not quite there yet," he said.
"If you adhere to [what I've shown you today], there's a chance you won't get dragged into commoditisation of managed services," he said.
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