ERP005 - Managed IT Services w/ Luis Giraldo

Welcome to Evolved Radio, where we explore the evolution of business and technology. Today I'm joined by Luis Terrado, the CEO of Uke Enterprises. Luis is well recognized in the Mac consulting space as he's a frequent speaker in industry events like MacTech Boot Camp. Luis currently runs a managed service provider in Vancouver with his partner. Today we chat about the managed service space and consulting space, the different forms and flavors that exist in the industry and some of the trends we're seeing in the market. Hope you enjoy it and here we go. Welcome to Evolved Radio, I'm your host Todd Kane. Today we're speaking with Luis Terrado of Uke Enterprises. Welcome, Luis. Thanks so much, Todd. It's a pleasure to be here, always great to get the chance to chat with you and and spill the beans on on the stuff that we're working on. Cool. So if you like maybe just give us a quick background on Uke, who you guys are and what you do. For sure. Yeah, Uke Enterprises is a small business managed services provider and consulting firm. And we're coming up on our 10th year actually in a in a month or so. And so it's been a good run. I originally started the consultancy in 2006. As most people do, doing a little bit of home user consulting and such and that sort of made its way into business consulting. And eventually exclusively into business consulting. Uh, I had an acquisition in 2011, I went to work for a larger firm, which is where you and I met and uh, and after that, I went back out on my own and have been doing my thing ever since. Yeah, so 10 years marks the the spot of having started out on my own as a consultant. Um, and now I have a a business partner involved as well, we do a variety of things from Windows to Mac and converge networks with VoIP and wireless and all the little bits in between. Um, I have a little software as a service product called Monkey Box as well. We do which we built to provide password sharing and documentation for our for our consulting firm and to share with our clients. So, I think most people are probably familiar with managed services. But just if we can get a bit of background on sort of what managed services is and and why businesses would use a service like like that. Sure. I think there's been a at least in the in the Mac focused world, which is kind of where I largely play. Um, there's been a an increased awareness and or desire to be in the managed services platform or service delivery. And so I think as a result, I've seen people sort of try a few different things or methodologies that could all fall under the managed services umbrella. Some people provide sort of a fixed monthly cost to the client to provide a certain scope of services. Others are sort of piecemealing that a little bit and and provide different little plans where people can select what they want, you know, they want computer support but not this, they want server support but not computer support. So there's a varying degree of different kinds of services available. The way we try to deliver the service is is all inclusive in the sense that when we work with clients. We're typically working with small businesses and we're looking after the whole thing for them, we're looking after their network, their servers, their Wi-Fi, their desktop support. And every little bit in between, including sometimes providing support or coverage for stakeholders, computers at home or their personal devices and mobile devices and such. Yeah, so the the managed service space is is kind of an alternative to small businesses that don't don't need to or can't afford to hire an IT team. Uh with sort of the expertise required for all the the needs that they may have. And they can engage a partner that that can provide those IT services for them on a on a fixed cost. Absolutely, and I think a lot of businesses that are starting to grow find themselves right in the middle of a situation where. Yeah, the outsourced cost is a lot more attractive, but not only for the cost, it's also for the ability to get a certain level of skill of people available to them. At that price because, you know, if you hire somebody, you're just hiring the one person. Uh and that even comes at a twice or three times the cost of an outsourced provider that potentially has a larger team of people available to the customer. So, yeah, definitely a lot of a lot of value in having that kind of service available to them. Yeah, right on. You recently posted an article, wrote a bit a bit about. The value of managed services and and sort of the cost structure. And I I see this as kind of twofold is one, understanding the client and sort of where the value is being placed and helping them to understand your cost of business and and why you would charge sort of what you do for your services. But also it it acts as a reflection point for people that are running managed services businesses and making sure that they actually understand their cost of goods so that they can value themselves appropriately and be able to charge appropriate rates in order to cover their costs and still make a profit. Yeah, I think the the big conversation topic around this is that the delivery of managed services relies heavily on the platform that you build underneath it to to leverage your time. To leverage your your services and essentially be able to capitalize on on every effort that you do. So if you need to do something at a client and you can leverage your management tool to quickly deploy that without a lot of man hours of effort to do so. Then you're really, really taking advantage of your time and you're able to service more clients and ultimately that's what drives your profit. But the article was largely focused on on that component. Um, there was interestingly enough on the LinkedIn post of the article, somebody commented that I sort of had missed the boat on discussing. You know, what what the value to the client is. And uh, and I I didn't have that focus in the article. And so I kind of mentioned that, but there is the the flip side of the client needs to understand what the value is to them. And while that could translate into, hey, we are spending 20 hours on this person's salary per month trying to do IT stuff and if we could remove those 20 hours of IT work to give to somebody else. That's worth it for us to have that person actually working on our business instead, then that makes sense. But still the customer needs to understand especially in the transition of moving from a a provider that's delivering an hourly based service. A X dollars equals certain amount of of time provided by the service provider. Uh to getting essentially a sort of value-based service delivery, which is, hey, we're going to charge you this amount of money per month and and here's everything we do for you. Uh and it's no longer predicated on those hours. And that's been my focus of our managed service delivery is to remove ourselves from the hourly calculation of time. Spent on the customer. And so that's it proves to be tricky because it's really hard to make that psychological shift away from $100 or $150 equals one hour of time. Uh and more so for the customer. And so understanding what the value of the platform is lets you sort of put a price on that monthly service agreement without having to necessarily calculate hours just yet. I see it as a interesting contradiction to for the psychology of the business operator, the people that are kind of, you know, redlining and and really reviewing the cost of an outsourced provider on an hourly basis. And they want to be able to justify each hour of work for each dollar paid when if they had an internal IT organization. Certainly their staff, a lot of people and business operators are so fixated on bums and seats means productivity and it really isn't the truth. Yet somehow outsourced providers are held to a higher standard, so I I think it is the you you hit on sort of the the right point on that. Is that it's a psychological barrier that that really doesn't apply to and the internal resources of the organization. When, you know, in a lot of cases they they probably are providing more uh more benefit for the for the work that they're doing because they know that there is that scrutiny and that level of accountability that has to be driven from a value perspective. Yeah, and I think there's a a certain amount of of work as a service provider that we can do with a prospect to try and get them to understand that that value and that service delivery. Um, that's sort of the removed from the hourly price kind of thing. But when they don't yet really make that shift or don't understand that delivery model, um, it's really tough for us to to ultimately win that that deal. Simply because we can never get to the comfortable spot of not always having to justify everything we're doing or everything we're charging. Um, and that's ultimately not what we want. But but there are also the flip side scenarios of customers that immediately see the value of A, they get to not spend any time of their own trying to figure out IT things. And and they are focused on building their own business, they are focused on being proactive and working with experts and having the right people for the job. And so those people all of a sudden see the value of having a fixed cost to deal with all that and more. Because they realize that there are projects and initiatives and strategy and things that will come along that are all part of the service delivery. Um, and so they're really looking beyond the hourly rate or beyond the immediate concerns or immediate problems. And they're being more of a visionary in their own business and those are the types of customers we try to connect with to provide service to. Yeah, definitely the the people that are not progressive around the application of technology in their business and don't have a sense of how that's going to produce value for them. Certainly will probably be more attracted to the break fix model of I'll call you when I have a problem. Rather than having a partner that guides them through the path of technology and making sure that they're they're being uh they're leveraging technology at every avenue where their business can can utilize it. Absolutely, and you know, and I will clarify that I don't think either model is is the right model or the wrong model. Uh I get some flack about this sometimes because I do speak on this subject a little and there are people that are very much supporters of not necessarily break fix in the full sense of the word. But some people offer a a slightly more removed managed services contract where they provide like for $30 or $40 a month, they provide limited email support and things like that. Um, but my point is every customer should be entitled to get some help. However they need it and for some it's just the the break fix. Is we don't need somebody to provide service all the time because we have limited things that go wrong. And in smaller environments, that is usually the case, there are a few things that need to have this sort of large or long-term vision of IT. Um, and or they're not necessarily growing their business and they just need somebody to help with the occasional requirements of stuff that's beyond their knowledge scope or things like that. And so and there are consultants as well who are not interested in the commitment required to provide a platform and a managed service delivery and they just want to be able to do a little bit IT here and there and not have to be able to turn off their phone. Uh and that's a big differentiator in the provider side as well. Yeah, that's a really good point that, you know, the the the smaller businesses or or sort of the the the businesses that don't require as much oversight or whatever the case may be, there's different folks for for different applications within the technology space. It's it's an important point. Uh one of the things that I certainly see in larger organizations, I think the part that that often gets missed in the disconnect between a fixed monthly cost versus an hourly basis is the risk applied to the business if you're doing hourly. Because if in the event that something goes horribly wrong and there's a a security breach or a server falls over and dies and there's a ton of work that then goes into that, that that operator now ends up with a pretty hefty bill at the end of the month for all the work that's gone into that that issue. And I've seen this in the past through the the work that I've done where, you know, we've had a team of three people working, you know, close to 22 hours a day for for two days. And that cost does not get passed on to the the operator in most cases if they're under a managed service agreement. So people don't like to hear or or talk about the insurance model, but there is some application to that that there is a bit of that shared risk. So you can take on the risk of of of having a predictive cost or you can sort of wear that risk and have a lower cost per month if you're getting that service more on an hourly basis. Yeah, I think you've you've touched on a subject that is an interesting also psychological topic and it's the that idea of insurance. You know, it's such a negative connotation with insurance and insurance salesman. And there's this whole history of insurance that people tend to either subscribe to or not at all. And so I find that whenever I've had that conversation in those terms of like, hey, this service is like having insurance for your business, it can go either south right away. Or it can really sound a bell with the with the operator in the sense that, okay, now they understand that they're they're really. It's a risk mitigation factor and it protects their their overhead should something go terribly wrong. Um, and those who understand a little bit about technology understand that things can go terribly wrong. And so, yeah, it's an interesting conversation to have when it comes up in that context and uh, it's a difficult one to have as well. I never like bringing up the whole insurance terminology, um, so it it's it's tricky to find creative ways around that. Yeah, what are what are I guess in that, what are some of the terms that you tend to utilize to affect sort of the same idea or or relay that that message to people? I think it it ends up being just a drawn out conversation where we spend some time with the customer, understanding what their typical day looks like, um, and helping them understand what the actual pitfalls of something in their network going down that is a critical tool or line of business application. You know, take for instance, a a retail customer that has a server with their point of sale application. Uh once they they think, um, sometimes the the misinformation that customers have is is really what's at fault. Because um, it's not just replacing the the server and installing the application again, there's a number of things that potentially can go wrong and it extends the downtime to two or three days. You know, getting parts for the server or or even it happens on a Friday night and you can't buy anything until Monday. And so you'll start to look at all these components and and make it sure the customer understands what the actual downtime of a potential failure is. And they start to understand, okay, well, you know, I'm not comfortable with having more than four hours of downtime with our retail point of sale application. Okay, well, if you are not comfortable with four hours or more of downtime, then we need to deploy the systems this way to achieve that uptime that you want. Are you comfortable with the cost of doing that? And so ultimately, I try to give them the power of making the decision of, hey, we want to protect our downtime by doing this, which has been recommended to us. Um, as opposed to this sort of black box recommendation of doing something the way we say, but not really giving them the opportunity to understand why. Uh, so I think it's not so much replacing the terminology as much as it is just going through the process of helping the customer understand their risk. And giving them the opportunity to be a part of the decision as to how to resolve that risk. But it requires ultimately knowing really well what's going to happen, should there be a failure, should there be a hard drive that goes out or a server that has a logic board failure or what have you. Yeah, that's a a really great approach to talk about the risk to the business and downtime. Uh both from a lost productivity, so, you know, a number of computers are offline because, you know, a network switch has failed and everyone's sitting on their hands. What's the impact to the business and the the risk of outage and and lost income that that can be an interesting conversation once you point to sort of highlight the risk to the to the operations of the business if people see that. The other piece that I I see is really interesting way to view this is is risk around the the business. It can be viewed in a different fashion. And people will often have this conversation where they say, well, give me five nines, I want 99.9999 uptime. And you're like, okay, well, you know, we can build that out. This is what it's going to look like, this is what it's going to cost and they're often see shock and on their face as they realize how much that that that could cost. And they're like, well, you know, maybe two nines is okay. Right? It's it's it's an interesting perspective that that uh, you know, that this is a spectrum, right? And you have to figure out your your comfort of risk within that spectrum. You can go down the rabbit hole on redundancy and uh uh backup plans and however you want to manage the risk around that system. But ultimately, is that worth the cost to the business? Or, you know, can you have some basic measures in place to limit your downtime? But not have to go overboard and spend an unnecessary amount of money relative to the risk to your business. Yeah, I I agreed and I see that happen too. I think the the pitfall for the service provider is to get into a situation where they're being viewed as. You know, giving the customer all but scare tactics if you will. And so, um, I think that plays a big part in the um in the trust factor with the customer. And it can be tricky, I think once that trust is built. One can have a little bit more of an open conversation and not try to come across as just trying to scare them into deploying the solution, but rather just helping them understand where they're comfortable in the in that spectrum that you describe. And then make a decision accordingly. Yeah, definitely I think for operators reviewing providers for managed services. It's one of the things that that I definitely advise people to look for is is if they sense a lot of fear tactics and um a lot of uh oversensitivity to, you know, what the the situation may look like. And be wary of free assessments that, you know, somehow discover that there's a laundry list of problems that are hidden under the covers in your organization. Because, you know, is it really that those are real problems and real risks to your business? Or are the people just sort of gold mining and trying to seed a lot of fear. Uh with uh, you know, some magic pill that they'll they'll sell you in order to make those things go away, so fear as a sales tactic in in that space. Is is often a red flag that, you know, the partnership may not be valid. Agreed, and you know, sometimes customers all they want is for their pain to go away and uh they're willing to pay a price for that pain to go away. But, you know, anybody can promise the pain to go away and that's that's where, you know, it's not so black and white. To just say, yeah, we can remove that pain for you for X dollars per month and, you know, there's a negotiation there of like how much is my pain worth. But, um, it it really doesn't come down to just that in my in my opinion, in the way we approach the the sales process. And that's respect is to really just have an open conversation and help the customer understand their business requirements. It's a really not so much about the technology because we try I try on purpose not to make the conversation steer in the direction of technical jargon. Because that's where we lose them immediately, uh whether or not they understand it, they just don't care to discuss that, unless they're not really focused on their business. Sometimes you get the business owner that is really techy and they're just curious and they want to be involved and hands on with the technology. But we find generally that that type of customer is also not a good fit for us because they'll end up getting themselves in trouble and we have to pull them out of it. Um, usually at an extra cost to them, simply because it's not part of our agreement to fix things that the business owner does. Yeah, the uh the weekend warrior technologist that decides to install some new applications or update some some DNS records without really a full comprehension of how that fits within the the ecosystem that that's been built, right? Precisely. Yeah. Yeah. Yeah. What's your perspective on. The future of IT, especially the managed services space, how do you see it see that changing and evolving over time? I think it's a slow moving vehicle, you know, there's there's certainly a a big trend at the moment. Um, where people are removing sort of the reliance on big systems that are deployed on premises in their network and such. And um, and that is growing. But there are that's also very vertical dependent and I think there are many business types that that can't make a switch like that. Because the way they work is is does not support that model. You know, the cloud model or what have you. And so we still see that on a day-to-day basis, you know, customers that, hey, can we move this to the cloud? I said, yeah, well, sort of, but you'd have to virtualize this, this and that and then the cost to do all that is potentially a big a big capital cost investment. That or even a big OPEX that they're not don't care to do in that moment, given that they have everything currently running and a deployment that works for them. And so it's sort of uh it it's a cycle, I guess. And unless the customer is planning for it long-term, it's really hard to see anybody make an instant switch from not having or from having systems on the network to not having systems on the network. So it's tricky, I don't know, I I find that small business, um, especially in the in the initial part of their growth where they're trying to to focus on their business and grow what they're doing. They really rely on a on a good strategic advisor to give them that kind of direction. Um, and even if it doesn't require, you know, building computers and servers and stuff like that. Sometimes they still need some of that strategy consulting to know what to do or what options to to choose. Um, even if it's all virtual, all in the cloud or what have you. So, um, most of our customers are still very much um on premises types of servers and and computers and workstations. Uh, a couple of them have their laptops and such and they work mostly in the cloud. Uh, but we still have to manage their network and their wireless and everything else so that that process is smooth and tidy. Um, so there's always some component that seems to always fall back on us. Yeah, it's true, the uh the the idea of moving to the cloud seems appealing. And that, you know, we can make all of this go away. We don't need servers or any of this anymore, we can just have all of this stuff delivered from the cloud. Problem is is once everything has to be delivered from the cloud, you better ensure that your network is stable and secure so that that there's no disruption there. So you're right, it is just sort of a shift of focus from servers to network or, you know, the endpoints and security management. Uh it's not that things necessarily disappears that the the effort and and the coordination tends to be shifted to a different uh different spot on the network or on the system as a whole. Yeah, I think that in the in this era of of high leverage of your of your borrowing. Um, as a business owner, I think a lot of people just see the the operating expense as a more attractive option. And so sometimes they'll just choose to spend the $800 a month for a virtualized server somewhere else. Then spend the 20 or 30 grand to deploy a server in house. Uh just because they don't want to give away the 30 grand just then, uh so they'll choose the other option. But, you know, quickly as the company scales, sometimes they revisit those costs and they realize that in order to scale their virtual infrastructure. Their operating expense will go up dramatically as well, uh while the on premises infrastructure could have potentially saved them money in the long term. And so there's it's a fine balance and I think it depends on the size of the business and what they need specifically. And this is where the strategic advice of a consultant really plays a part in all of that because they have no way to necessarily understand how that scalability is going to become an issue for their business as they grow. Right. Interesting. Yeah, it's uh it's an ever evolving space. Uh, you know, this is part of what I I've always really liked about consulting is that you get to face new challenges. You know, on a daily basis and certainly on a monthly basis and with technology having a six-month shelf life. Uh things are ever evolving, keeps it fresh and always having to learn, really interesting space. Yeah, absolutely. Generally speaking though, like going back to the the managed services delivery. Um, a lot of customers sometimes don't realize that part of our service delivery is to is to provide them. All that strategic meetings and conversations around what changes they might want to make going forward. And whether a long-term strategy would be to move to the cloud or not. And so a lot of the challenge in providing the managed service delivery is educating the customer on what we can do for them. And so the more they understand that we can do for them, the the higher the value of our service delivery will become. And so those things all help to get the customer comfortable with what we're doing for them. Um, and ultimately give us the opportunity to be more and more involved, you know, the the deeper the relationship, obviously, the better the opportunities for both. Yeah, certainly, I've heard conversations with people lately, someone suggested that all companies are tech companies. And I think that that really resonated with me because regardless of what you do, you don't have to be, you know, producing code or, you know, making some fancy new device for for your consumers. Every company relies on technology either as a part of their daily basis or really, really heavily integrated within their business. So the having the a partnership with someone that is keeping up on trends and is able to understand your business and be able to give advice on how those trends apply to your business. In in more of a a salient sense of of what is useful, what is distraction and how those things can be leveraged for those individuals and those individual businesses is it becomes more and more critical because the pace of change is is exponential. Absolutely. It's it's just a moving target, like I like to say. And uh, you know, it it's often a comedic when a customer, you know, gets wind of something or there's an article about, you know, storage on Amazon being really cheap. And they're like, hey, why aren't we doing this? And I sometimes just sort of giggle to myself because, you know, there's this whole operation behind how we do their backups and how we do their data protection and everything else. Um, and then the customer's mentality is just very one track in that one article that they read about that the storage in Amazon is cheaper. And so not really understanding the whole of their business or how their technology is implemented. They sort of have already lost sight and it's it's hard to to come to help them to come around because now they're just focused on how can we just get this cheap storage. Um, and so that's a constant distraction for business owners and I find that generally speaking if they're not trying to focus proactively on their own business to grow what it is they do. They often get distracted with these shiny objects and it becomes an issue for us. Um, you know, and as much as I can, I try to be as cordial and explain to the best of my ability why we wouldn't do that necessarily. Um, and what the business requirements are and such. So in this particular case, I said to him, okay, well, here are your potential risk scenarios. Uh if we go to store all your backups just in Amazon, uh, you know, your 80 gigabyte medical software backup would take probably a day or so to download. Are you comfortable with a full day of downtime of your entire clinic if that should happen? Uh and obviously the answer was no. Uh so the the decision was made, okay, we're going to let's leave aside this Amazon thought and we're going to continue doing the local backups and continue purchasing local drives for us to be able to do that. Um, but it is a distraction for business owners because there's there's so many people that have so many thoughts and or opinions about how technology should work or what your business should be doing. Um, that, you know, it's it's it's going to come up a lot. Yeah, it's it it's interesting to to everyone regardless of of sort of your level of technical expertise. But you're you're you kind of nailed it that if it doesn't fit within the ecosystem, it truly is a distraction. So the the whole point of managed services in a lot of a lot of ways is to shift the that focus and that thought and that that guidance to a trusted partner. And, you know, so that you don't have to think about these things and you can focus on your business. So if you're thinking about, you know, your your IT strategy, that's great. But it should be handled in more in a fashion of, you know, I've heard about this, can you tell me more, does this have have an application? And in a lot of cases, you know, you have the the operator that will or or someone underneath the operator that comes in and and says, we should do this, this and this and this. And uh it's really comes from left field and doesn't fit within the the the model of what's been built already. So I think it is in a lot of ways treating it as a partnership rather than, you know, trying to play some gotcha game where they they think they've they've found a better mouse trap than the person that that is supposed to know all these things. Absolutely. Um, it's. It's a trust issue too, I find that whenever there's been a potential break in the trust between ourselves. Or any service provider and their customer, you know, anything that the service provider suggests or does will be questioned to some degree. Um, and that becomes a really challenging thing to sustain in the long term. And so I've always purported to to want to end a relationship if I ever feel that the trust has been broken for whatever reason. And sometimes it's the customer just has doubts for whatever reason about what we're suggesting. And there's nothing we can do to change it and at that point, as long as I realize it in time, I'll try to proactively shift them over to a different provider and just move away from the situation. Because we don't want to ever be in a situation where everything we do or suggest or talk about is being questioned from a distrust perspective. Um, it makes our jobs very difficult and ultimately the customer is just preoccupied thinking about it all the time as a result. Yeah, definitely you don't want to try to try to force someone into a relationship that that isn't working because of a lack of trust. It really isn't good for for either party. Agreed, agreed. Um, it's it's a constant it's a constant watering of the flowers in my opinion. One has to just really treat the relationship as a as any other relationship. And, you know, once what we do the regular reviews and we make sure the customer understands why we're doing what we're doing, um, that they have a a part in the decision-making process of what they're spending on technology. Um, and that's that's always helpful. Uh another thing that plays a big part for us in this process is the fact that we make everything that we keep about them available to them through our documentation platform. And that has been a a big helping hand for us to get the customer comfortable with the fact that, hey, we're not going to disappear and get hit by a bus, the the typical things that you get asked in a sales meeting. Um, you know, what happens if you get hit by a bus and we don't know how to do anything. It's like, well, all your documentation is here, you have access to it and uh you can self-serve at any given point in time. So that has been a big helping factor too. Yeah, definitely transparency is often key component for for trust, right? Yeah, absolutely. All right, well, uh that's uh a great review on on managed services. So thanks for your time today, Luis and uh hope uh business is great and you have a great 2016. Same to you, Todd, always a pleasure and hope to chat with you again soon. Take care.