'We have a responsibility to share our tips and tricks with MSPs'

ConnectWise's Gregg Lalle says the vendor is stepping up its efforts to help MSPs improve the quality of their businesses and benchmark themselves against the competition

Having spent the last decade ‘crowdsourcing' tips and tricks from his 28,000 global MSP partners, ConnectWise's SVP, international sales Gregg Lalle is in a better position than most to talk about "what good looks like" in the managed services space.

Operationally mature MSPs are hot property right now, but Lalle (pictured) believes many MSP owners are stuck in the "muscle and feel" stage of the entrepreneurial journey.

To move to the second stage of that journey, the owner must relinquish control to trusted individuals and work towards a common vision, measured by KPIs.

A new calculator Lalle himself developed enables MSPs to value their business based on four KPIs covering recurring revenue, customer churn, customer acquisition and customer lifetime value.

It launches in the UK this week.

"We have a responsibility to share all the information - the tips and tricks - we see within our community, and this type of thinking is embedded in our culture," Gregg Lalle, ConnectWise

Once a KPI-driven culture has been cultivated, MSP owners can move onto the final two stages of the entrepreneurial journey. This will see them assume a more strategic role and, ultimately, enable them to exit the business.

Lalle said ConnectWise worked with the owners of UK MSPs Solar Communications and Mirus to help them build value in their firms ahead of their respective trade sales.

He described the calculator in its current form as a "first step" in a journey for ConnectWise, predicting that within a year it will feature at least 50 KPIs covering various business functions including sales and marketing.

"In each line of business you're looking at, [the calculator] will cover the top ten KPIs you should be looking at, and highlight the ones that make it to the top of the boardroom. For instance, employee satisfaction would be top of the HR list. It's about making MSPs and VARs aware of what those KPIs are and how to move the needle on them to become operationally mature," he said.

"The point of the calculator is to encourage dialogue around measuring and metering and starting to understand what good looks like," Lalle added.

"Am I good; what else should I be doing'; what is everyone else doing that I'm not?'"

Lalle said he is committed to developing the tool, not only for ConnectWise's core managed services offering but also in security, where he said many providers lack maturity.

The ultimate goal is to help MSPs gain a few extra margin points somewhere.

"Even the best businesses still have a way to go in certain areas. Maybe you are very operationally mature in your service delivery, but not in sales and marketing. It's about where to spend that time and focus, so that you can continue to grow and scale," Lalle explained.

MSPs can also use the calculator to promote best practice among their customers, opening the door to a business rather than tech-led conversation, Lalle added.

"If they get their arms around customer acquisition cost, for example, the next time they go out to a bank or university they can infuse that conversation with what they've learned and ask them what is the acquisition cost of a new customer or student," Lalle said.

"If we start having business conversations around aligning to the metrics of an SME or mid-sized business, that's the Holy Grail. It's about selling the outcome and being able to sit down as the MSP or VAR and ask how they are going to, for instance, reduce customer churn."

Lalle said his efforts to share best practice within the MSP community build on the work of ConnectWise co-founders Arnie and David Bellini, who set up the ConnectWise University.

"We have a responsibility to share all the information - the tips and tricks - we see within our community, and this type of thinking is embedded in our culture," he said.

"Our partners have been dedicated to us for so long. We have to be dedicated to them to making sure they're getting sharper and smarter, and changing with the times."

Connecting partners

Paul Tomlinson, managing director of Mirus IT, said that working with ConnectWise enabled his team to improve the quality of Mirus' business ahead of its sale to IT Lab this August.

"Since transitioning to the ConnectWise toolset and becoming part of the ConnectWise family we've learnt a lot more about the MSP space," he said.

"This helped us develop the business to provide a better service to our clients but also through sessions at [Connectwise annual summit] IT Nation, e-books and roadshows, we've been able to develop the KPI's and structure in the business to become a more profitable and more mature MSP."

John Whitty, former CEO of Solar Communications, also confirmed that ConnectWise had helped the MSP build value ahead of its sale in August 2018.

The link up with ConnectWise began after Whitty joined the business with a brief to grow the MSP through M&A and from previous experience recognised that an integrated, end-to-end PSA would be invaluable.

"We decided we needed a platform in order to improve our own business, but also to make it easier to perform integrations quickly and effectively," he said.

"We implemented ConnectWise, with the help of their professional services team. As a result we managed to store all of our data in one place and create automatic workflows from sales through to service assurance that meant that, for example, when a contract was coming towards the end of term, we would have an automated workflow indication that we had to go and renew it.

"Running BI reporting from a repository where all data is in one place gave us accurate and timely information to make decisions upon, which created a lot of value for us.

"As we executed acquisitions, we now had a valuable and reliable platform, that allowed us to pick up the data from the acquired businesses and migrate it into that system and quickly benefit from all of the processes and reporting tools that we already had in place.

"On exit of the business we found it much easier to extract information and provide it to the due diligence advisors promptly."