Speaker 1: 0:00

I wouldn't do management, I wouldn't touch that with a 10-foot stick, and I found I absolutely loved it, which was surprising and some of the reason why is I felt like leading people and helping people to develop their career was a lot like systems administration.

Speaker 2: 0:17

Welcome to Sell Me this Podcast. I'm Keith, and today we are talking with Todd Cain, the founder of Evolved Consulting, a company helping IT service providers increase profit with less stress. From neighborhood tech support to strategic business consultant, todd's journey spans decades in the IT services industry, starting as a self-described neighborhood nerd who built his first consulting company before graduating high school. Todd developed frameworks that transformed multiple IT organizations, tripling revenue, doubling headcount and significantly increasing margins. We'll explore the challenges that technical founders face when scaling their managed service businesses, discuss the evolution from five guys in a room to structured organizations, and share Todd's insights for finding the right MSP partner. Whether you're an IT service provider or a business owner, this conversation offers valuable perspective on the human side of technical service relationships. Let's dive into the world of managed services with Todd Cain from Evolved Consulting. Todd, welcome to Sell Me this Podcast. I'm so excited to have you today. I'm going to dive right into things. Why don't you tell me a little bit about yourself and a little bit about how you got started with Evolved Consulting?

Speaker 1: 1:35

Sure, so I'll give you a longer story since we have some time here. I have a familiar technical background, I think, to a lot of people. I was basically the neighborhood nerd who got a computer very early on when I was in grade school. I vividly remember sitting on the wet bar next to the box of an IBM PC Junior, waiting desperately for my dad to get home from work so that we could unpack it and set it up. And I was absolutely hooked.

Speaker 1: 1:59

From there Basically got my start in systems administration by building boot disks so that I could run different games and software on the computer. If you anyone old enough to remember boot disks in the eighties of firing up your computer, shout out to those people. And so that was my entry into understanding like how to configure computers and understanding how they worked. And inevitably neighbors started getting computers as well. So they would be like hey, call Todd, Like he's good with computers, Maybe he can come over computers as well. So they would be like hey call Todd, he's good with computers, Maybe he can come over and help us.

Speaker 1: 2:28

So I started helping neighbors and then eventually they also had businesses and they're like hey, Todd, can you help me work with my computers as well. I was like yeah, sure, so lo and behold, before I really knew what I was doing or had figured this out, I had a consulting company before I graduated high school, and this had pros and cons, of course, because the pros were I would get called out of math or social studies to go support the network systems in the school. Cons, I was sometimes going to client sites after school and I was wearing a tie to school. So not the coolest thing in the world.

Speaker 2: 2:58

Yeah, that probably doesn't go over super well yeah.

Speaker 1: 3:00

If you want to be called a nerd at school, wear a tie. Yeah, if you want to be called a nerd at school, wear a tie. Then, familiar, I grew up in Calgary. I now live on the West Coast, but grew up in Calgary and this was a heyday of oil was $200 a barrel and VMware was a brand new thing. So I got pulled up into this really fast-growing consulting company, longview Systems, which a lot of the local people that listen to the podcast will absolutely recognize, and I was employee number number 30 or something. So very early on they're like well over a thousand people or something now, and we went through this explosive growth period where we were literally hiring 20 to 30 people a week for a sustained period and that is bananas growth for any type of organization. So we had to figure out how you scale leadership and the operational side of the team, because we were getting all these technical people to do the technical work but we were constantly hitting the ceiling on leadership. So the organization put together this leadership development program and they're like basically tapped me like, todd, you want to be in? I was like, yeah, okay, I guess I will never intended to be in management, but that was my transition from the technical side of the IT side of business to now into the operation side of the business and I'd never intended that Like I was one of those people who was like, oh, I wouldn't do management, I wouldn't touch that with a 10 foot stick, and found I absolutely loved it, which was surprising and some of the reason why is I felt like leading people and helping people to develop their career was a lot like systems administration, because I hate programming.

Speaker 1: 4:26

Anytime I try programming I end up throwing the book across the room because I just get so frustrated I can't find that missing semicolon. I know it's in there somewhere. Why won't this work? But with systems and with people you can continue to tweak and tinker. There's always something to try, there's a new system, a new framework that you can try and apply and then inevitably, when something locks into place, there's this really rush of gratification that you get and having seen the changes that it can create and set people on a different career path is incredibly gratifying knowing that you've altered the course of their life. Right, it's pretty wild.

Speaker 1: 4:59

So I went from there, did a couple of turnarounds for Bell Canada, fixed up their professional services division and then ended up at another well-recognized brand in Canada, fully Managed. And this was a post-merger hangover of the two companies that created Fully Managed and again went on this wild ride where we tripled revenue, doubled headcount, increased gross margin by double digits. And I learned I had this crash course on sort of the MSP side of the business when previously I'd been on the VAR and professional services and co-managed side previously. So what I recognized through that kind of that story was the things that I was doing, the systems that I was applying in all of these IT businesses were very uniform.

Speaker 1: 5:39

There was no secret sauce. There was nothing particularly distinct about them aside from great cultures, but those cultures were unique to them, not that there was a specific culture that was required. And so I recognize like all the tools and systems that I'd collected were very applicable to a broader base of business. And the more I bumped into other it organizations in the ecosystem, especially back then, things have improved since that time, but back then the maturity level was very low, like shockingly low. So I recognized there was a huge need for people to learn sort of these systems and frameworks to just run a better business. And that's what I've been doing for almost 10 years now is just helping IT companies increase profit with less stress.

Speaker 2: 6:21

Amazing, and so that kind of brought you to where Evolved is right now and without giving you too much of a glowing review like we've had the chance to work together on a professional level as well in the previous world. And it is incredible what you can do when you have those right frameworks, when you have the right lens to look at these scale mechanisms with. There's such a challenge that I see and I think that you and I have talked about this before when you have these managed service companies that are technical-led and that transition you talked about with coming up from the technical side being the guy that wore the tie to high school and then did tech support on the side and transitioning that into a real growing business, what are some of the challenges with these kind of technical-led founders as they start to have their managed service organizations become more real businesses?

Speaker 1: 7:09

Yeah, it is an incredible transition and some recognize it and some just don't. And I think that's the first paradigm shift that people need to understand. And so when you're small, you're just scrappy and putting together an IT consulting company. You're very obviously focused on great technical delivery, producing solutions for your customers, a very high touch, and that's great. But it doesn't scale. So I call this the five guys in a room strategy, where if you're all kind of sitting in the same place and you're everyone's hearing what's going on, you can point and talk to people. That's that works fairly well.

Speaker 1: 7:40

Once you hit 10 people, it completely changes. So I have this, what I call the law of doubling. Anytime your organization doubles in size, it feels like you're fundamentally restarting how you have to operate the business. So you need to be intentional about the way that you're taking that direction. So it works. Five as soon as you hit 10, totally different paradigm. And then you need to figure out how to scale leadership in your organization and then it becomes much more of a people centric business and a process centric business than it is a technical centric business, and that's okay.

Speaker 1: 8:10

Some people may want to remain technical. They need to find someone that can be an operator in their business so they can focus on the things that either they're good at or they want to focus on. But someone needs to be responsible for leading the charge and driving the collective of that people and that team in a particular direction, because otherwise it's just scattershot energy. So the way I like to encapsulate this in a pithy way is tools don't solve people problems, and in the IT industry we tend to look for tools to solve whatever problems we have. The other thing that drives me crazy in smaller growing organizations that haven't quite understood this yet, they often say to me or I hear them say I'd like to hire an HR person and thinking that like an HR person would manage all of the people and take all of that off their plate. And I'm like that's not really what they do and it's certainly not what you should have them do. Like HR has a place but it's not leading your team. That's management.

Speaker 2: 9:03

Sorry to say, yeah, those are very different concepts and I think that would you believe. That's the reason that a lot of these MSPs they get a bad reputation sometimes because as they're growing, as they're scaling through these phases, it can be really clunky for their customers as well and their teams. As the leaders are changing the wheels on the bus as it's driving down the road, it can be a lot of change for someone as they're trying to grow their business, as they're trying to retain their staff and kind of keep what was existing and true and awesome without having the whole thing fall apart. So what are some of the things that you see as common first steps or kind of indicators that these leaders should be looking out for as they are growing their businesses? Is it surely like headcount? Is it 5, 10, 20, 40? I'm not going to go past that because at some point I'll embarrass myself on the math front, but what should people be looking for?

Speaker 1: 9:53

Yeah, I think the first recognition is just when you feel overwhelmed as an owner. Right and again, like I take this from like an IT service delivery frame, but this is universally applicable in my opinion. Right, like the things that we're talking about, it doesn't matter what business you're running, especially in a technical space, like all of what I'm saying I think is applicable. So keep it in that frame of mind. So, at some point, like the heroing your way through the day starts to become really arduous, right, and it doesn't matter. Like I've met some entrepreneurs that have incredible resilience to burnout, but like that's not a good way to live your life, and either you start to fray at the ends or your life starts to fray at the ends. I've also seen an incredible number of entrepreneurs that have completely blown up their lives and their family as a result of just being too focused on trying to hero their way through the day. Trying to hero their way through the day, and that is a unsustainable and B is not necessary, and that's, I think, the part that people really need to understand is like, if you change the way that you appreciate and understand your role in the business as a business leader, or at least, as I said, putting someone in that role. It makes it so much easier. Like you don't have to fight through these things. I know people that are building and scaling Incredible companies and they leave at the end of the day and go home and have dinner with their family. That is a practical reality. Like it.

Speaker 1: 11:10

I think the hustle culture is something that I've always fought against. I don't believe that it is necessary. It is a way to go about things and don't get me wrong, like I work hard. I know people that do work hard. There's days that I voluntarily put 18 hours into a business, into the business, because I'm simply excited about something. It doesn't mean you can't do that and you shouldn't do that. It just means it's not how you should live every day of your life. So I think recognizing your limits and starting to recognize, like how you actually lead and manage the people.

Speaker 1: 11:39

So one of the things I'm really adamant about is running weekly one-on-ones with all of your direct reports, and when I tell people in growing companies that they should do this, they're like I can't do that. That's impractical. I've got like 20 people. How would I do a one-on-one with each of them? That's the problem. Right. As soon as you're past those 10 direct reports, it's a law of diminishing returns as to whether or not you can actually impact, influence and direct them.

Speaker 1: 12:09

So again, we're looking for someone in that team that can step up and start to play a bit more of that managerial or at least team lead role, to take on some of those duties. And what I think this allows is. The second step of this is are you able to spend the time focused on the strategic activities of the business, whatever that is? It's product development, it's account management, it's outbound biz dev, whatever those strategic priorities are for your business at that time? If you feel like you don't have time for that because you're constantly interrupted with the day to day operation of the business, that's a really good indication that you need a captain to be able to field those things. The way I described it is having someone as a firewall to keep a lid on things and at least contain a lot of those questions. So, instead of 12 people coming to you asking questions, one person saves up all of those questions, eliminates eight and then brings four to you at the end of the day to help sort things through Much more sustainable approach.

Speaker 2: 13:00

I feel like you know your audience well with the firewall reference there. Do you find some of these founders have challenges with moving away from the tech? I feel like a lot of the reason people got into some of these MSPs and some of these service organizations is because of their passion and their love for the tech and really, functionally, as the organization grows, the challenge isn't the tech anymore, it's the people, it's the process, it's the leadership. Do you find them having a hard time letting go of those things that they loved before?

Speaker 1: 13:28

Absolutely, and it often comes from different places, right? So you also see this in people. When they've initially tapped their first manager, like it's either the long-term employee or their most skilled employee, they're like you seem to have your stuff together. Can you be a manager and help everyone else figure this out? I'm gonna go do these other things. High five, you're good later, right? That's their training from a person who has done muscle and feel to find their way to the where they are, and then they expect the other person, who is not the owner of the business, to figure things out as they go. So first point is, if you're going to get some help in this or look for someone to do these things for you, they need proper training, right? We talk about a move into management as a promotion. It's not. It's a career change, because all of the things that led you to be successful have very little bearing on whether or not you're actually going to make a great leader and a great manager for that organization. So the same can be said for the owner, right? If this is not an area A that you want to spend time on or B you're just fundamentally not good at, then that's an important recognition Like.

Speaker 1: 14:28

I know several owners of IT organizations that they're functionally a CEO but they act as basically a project person, like this one guy. He's very successful organization. He has zero interest in the administrative and people leadership side of the business. He's a great cheerleader Like. He's full of energy, absolutely loves what he does, but he's happiest in the field doing deployments and working on projects. That's where he spends his time. So he has hired someone else to do the work of the sort of the business administration and the business management for him and several other organizations similar Like they run the organization but they spend more time in the technical area. So I think it's important. Like I said, it's not a limitation. If you want to spend time on technical stuff and that's really the area that brings you juice and keeps you motivated, that's fine. But just recognize that's not going to build the business for you.

Speaker 2: 15:21

So you work almost exclusively with managed service companies. Is that one of the things that really separates the ones that are excellent from the ones that are struggling and scraping by? Is it really that leadership, or are there other things that are separating some of those top performing organizations with the rest of the industry?

Speaker 1: 15:38

I would say another big one is standardization, right? I often say standardization is the strongest lever you can pull in IT. Right, because the more uniform an environment is, the more stable it is and the easier it is to support for everybody. So everybody wins it's easier from a tech support perspective, it's easier for the users, there's less downtime, it's better for both businesses, right, everybody wins. So I think that's an important piece of especially MSPs, because they have disparate client environments and the low performing or low maturity IT organizations don't enforce a uniform environment. So they're like we use Sophos but you guys have WatchGuard, or we use Cisco and you guys have Sophos or whatever the situation is, and they're just take on whatever that organization has, it's fine, we'll support you whatever. And they don't enforce that level of standardization of look, we got to rip out all this gear and put ours in because we know how it works, we know it works well and there's going to be less downtime because there's a level of sophistication in convincing a client that look, you have all this equipment but you need our equipment, like that's sometimes a difficult conversation and leans more into sort of that sophisticated sales of how are you selling them on replacing something that in a lot of cases is functional it's not like it's broken but we don't support it so you can't use it. So I think that is a major component of it is that standardization. And then the other half is just the layers of maturity that you see in these environments, cause you'll often bump into a person that is running a one or two person it firm which has been in business for 20 plus years, and then you'll meet someone who's started an MSP, is into it five years and already scaled to $6 million. What is the difference between these two people? It's not the passion for their business. Both of them care a lot and that's how they pay their bills, that's how they support their family. So one, I think, is just the interest in scale and getting bigger. You have to be a little dangerous about this.

Speaker 1: 17:31

Another adage that I have is ambition is a nuclear reactor. It's incredibly powerful, it gives you all kinds of energy to do the things that you need to get done, but if it loses containment and it's not in stasis of kind of meeting its needs, then it can get really dangerous to everyone around it. So in, especially in the MSP industry, sub $1 million, is that first hurdle right. If you can crack a million dollars in annual recurring revenue, you've done pretty well, like it's a very established business and at this point you've grown up past that five guys in a room strategy. And then the one to 5 million in annual recurring revenue is what we call death Valley, because it's where everyone either stalls out or collapses or sells. Right, because it's really difficult to scale past a million.

Speaker 1: 18:16

If you don't figure these things out around people, leadership and standardization and process management and automation right, like the things that make those other groups successful Then once you crack past 5 million, you've escaped death valley, kind of figured a lot of these things out, and then it becomes different problems, right, you're still faced with the law of doubling. Every time your organization doubles you have to retool the way that the organization works and how the leadership structure functions. But generally you're going to figure this out You're still fighting problems, right? One of the things that I think is really important for people to understand as operators whether that's you as a business owner or working as a sort of the lead manager or the COO of an organization is you are chief problem solver and it really bugs me when people say, oh, there's just so many problems in this company. It's who's going to solve those right. That's up to you, man. So I really want to stress to people that are in operational roles that you got to get a bit of juice from that right.

Speaker 1: 19:10

I think it's fun. They're like these situations are puzzles, and the beauty of working on an organization that is scaling is you have to be general and a generalist and be good at a lot of things, because then you have an opportunity to spend time on whatever kind of interests. You can spend time on service operations. You can spend time on people. You can spend time on automation. You can spend time on some of the technology. You can spend some time on account management, like. All of these things are required in the business, and I love that variety of being able to dip your toes into all parts of the business and keep learning right. I think that's one of the beautiful aspects of this, but that's a function of constantly solving problems in the business.

Speaker 2: 19:48

That's one thing that I believe is a huge misnomer that other people can elevate themselves out of problems, because as businesses grow, the problems just get bigger as it. As your team gets more capable at handling problems, the only problems that actually make their way up to you are the harder problems and the most challenge you just get the get the final boss level of problems versus the easy ones along the way. There's no escaping it that's what businesses either.

Speaker 1: 20:13

You're solving problems for your clients and in the meantime you're also solving problems for yourself, right? If this were easy, everyone would be their own boss. It's not like it takes a certain person to a throw capital out and throw all of the security out the window and just be like I'm going to do my own thing, like that seems insane to most people that sort of really value stability and predictability in their life. So first, like you're a unique person to get into that. And then you have to recognize that your life will be met with constant struggles, right, and it's not struggles as, oh my God, my life is so terrible. There certainly can be those events in your business life. It's not meant to be easy, right?

Speaker 2: 20:52

Yeah, you and I have talked about this before too. There's the people that run towards the fire and away from it. Yeah, and if you're trying to run a business and also run away from the fire at the same time, it's not going to be a very long road in front of you maybe to extend the video game analogy with it, I think is really apt for, like the boss level problems.

Speaker 1: 21:08

Anyone who has ever played a difficult game. It's engaging, it keeps you coming back to it as I gotta solve this. And if you ever like play a game like back in the day, you would have cheat codes that would give you like god level and then you would just go through and rip everything right. It was not challenging at all. It's not fun like a fun game that you set on god mode where there's no risk, no challenges to it.

Speaker 2: 21:29

That's not interesting yeah, I did that on street fighter once. I lost interest very quickly.

Speaker 1: 21:33

It's exactly that's the point right, I know I can win, so why bother?

Speaker 2: 21:37

yeah, all of a sudden you maybe learn a couple things, but it doesn't. Your attention span definitely dwindles. So you've mentioned a really interesting thing about those stages of MSPs. I think you said the one like sub-one million bucket, one to five, five plus From a customer perspective. Are there things that I should? Are there matches that make sense from a customer perspective for MSPs in each of those buckets? Because I imagine that even a one to two-person shop practically could support a large organization. They're just going to do it much differently. But if I'm searching for an MSP, how do I pick the right bucket for where I'm at in my journey?

Speaker 1: 22:13

You're 100% right and I think it's a really good question, because they're not all created equally and even the ones that are similarly sized may not be the right fit. So there is absolutely a matching that needs to go on here. I think at that lower level there are a lot of organizations like just simple SMB businesses that are perfectly fine with what we call time and materials, which is just break, fix, support, right. So, like you, you call someone or you create a ticket because your outlook doesn't work or the printer's jammed or whatever, and someone will probably come to the office or, hopefully, remote into your machine and try and fix that for you and then they send you a bill. So that's time and materials.

Speaker 1: 22:51

That's the old way that the IT services industry functioned and there are still some providers that works for and this is people that are very budget conscious. They don't want to spend. Typical MSP sort of entry point is around $2,500 or $3,500 a month for support from one of these organizations. If you go, oh my God, like I, only want to spend like $200 or $300 a month on IT, then those are the people that you want to work with. Then, once you take your business a bit more seriously or you have more complex needs, then working with a managed team service provider that's what MSP stands for if we haven't clarified that and that is a fixed fee engagement where you pay X amount of dollars and basically you can log as much support as you need, right? The beauty of this model is for businesses is that there's aligned interests Time and materials like they make money when stuff is broken versus a managed service model. They make money when stuff is working, because the less time they have to spend on your environment, the more money that their business makes. So a lot of people would say then I'm getting juiced for this. Is that fair? And it's. It absolutely is. As long as the value is aligned with what you pay and whether or not your systems actually function to support the work of your staff, it gets more into that sophisticated space, that sort of sub 1 million.

Speaker 1: 24:02

There. There are some very good MSPs that work in smaller client environments. If you're working in a larger organization, you have more sophisticated needs. Your technology stack is a lot more sophisticated, especially if you have multiple sites or complex network configuration, then potentially you need someone a bit more engaged and the differences that you'll typically see here is a lot more proactive engagement right. There are the basic MSPs where you pay an X amount per month and generally the stuff works. If things are broken or you have questions, they will support you and help you out with that, but generally you don't hear from them or see them beyond that, and I would say that's the majority of the industry. It's not necessarily a bad thing, it's just, it's a again, it's a match of needs, right. If that sounds good to you, then fantastic.

Speaker 1: 24:46

And then there's that third tier and, as you said, like, this can be a one or two man environment. A lot of the people that I talk to that are smaller and want to scale. I'm often telling them, like, you guys are an outsourced IT company, outsourced your IT needs, so you, like one and two man shops, can outsource their support desk to onshore solutions or global solutions, whatever that looks like, and this is not the age old problem of I've been from all of our jobs and farmed out to India and now the support is terrible. Like, a lot of these options are actually very functional and you would not notice that it's an offshore solution, so that's totally practical. You can grow a business to a very large scale, just as a one or two-man shop just focusing on interfacing with the clients. So that's how it looks.

Speaker 1: 25:28

Different is that hopefully they're engaging with you, maybe twice a year, even quarterly, and talking to you about your business, and this is where that account management function. The term that we use in the industry that I know you hate and lots of other people in the industry hate is virtual CIO or VCIO. It's a meaningful term because it talks about a level of engagement with a customer that is unique, right Like you may have no account management and they just do support for your IT infrastructure Great, backups work, email works, job done, versus. Someone comes and talks to you and says I noticed you guys don't have a CRM. Can you tell me about your workflow and how you guys take orders, how you think what, how does something happen from purchase to invoicing, and walk me through that process and maybe we can find some efficiencies? And that's different right Now. You're talking about VCIO function or just basic account management of they spend time with you to really understand your business needs and try to make sure that your stack is aligned.

Speaker 1: 26:27

You guys have printer problems because the network has these issues and we replace these three things. Here's how much that would cost. It would reduce the downtime by this much, right? So I think a lot of it is based on how you view technology, whether or not it's a necessary evil. A lot of people really view it that way. I need stuff to print and I need email to flow. That's it, versus. I actually want to leverage technology. Tell me about how an ERP could help my business. Tell me about how I can start to leverage AI with my business.

Speaker 2: 26:58

Those are the discussions that lean towards more of a virtual CIO, and framework, and this is I really want to spend some time here, because I think this is a huge opportunity but also a huge point of frustration for a lot of customers, because and I probably fall in this camp the reason that I feel very passionately about vCIO and the framing around it is because a lot of it has come across in the industry as life cycle management as a service or really a new arm of account management. How do I find a way to creatively sell you more stuff?

Speaker 1: 27:30

Exactly, yeah. So I think this is where this stems from right. Vcio was originally a paid engagement in the industry where you have your managed service provider and they would pay X amount of dollars for IT support and then, if you were a sophisticated customer, you'd pay, say, another $3,500 a month for a virtual CIO and over time the vendors started to push. A lot of VCIO functions as a way to scale your business because the software vendors in our industry they make more money if you sell more stuff and have more seats to support. So it's in their interest for you to drive more sales into your customers. So there it drives me crazy as an operations person because so much of the industry is focused on sales as a result of this, because it's a mutually beneficial way to push the industry forward. So I get that part, but I would much rather have a profitable business than a high revenue business, because they are not the same thing. Anyway, end rant on that one.

Speaker 1: 28:24

The VCIO where this went wrong is that you're dealing with again. We're talking about these technical people that aren't business people and don't have a high level of sales sophistication in a lot of cases. That's not universally true. There are some very good sales-led founders in MSPs and they do quite well, but the technical-led founders really struggle with these sales conversations. So they go in talking about doing VCIO and really what they're doing is just account management and, in a lot of cases, technical account management. So these are very different things. Technical account management is what you talked about and a person on my podcast recently described this as filling in the white space. Right, so there's a stack that we need to deploy in your environment and I need to make, I need to fill in all the boxes to make sure that tech stack is deployed, and that's filling in that white space and that's really all they focus on.

Speaker 1: 29:12

You can't call yourself a VCIO If you show up to a meeting and say here's all the, here's all the equipment that's coming off warranty that you need to replace and here's a quote for that right. They're like this is not strategic engagement. This is a sales exercise, lame one at that. But again, this is driven by people thinking that the tool is the solution. Like having a VCIO process is not having a VCIO tool, because those things are limited by what the data they can collect.

Speaker 1: 29:38

You can tell a person when the warranty expires on their equipment or how many Windows 10 machines they still have in their environment that they need to upgrade, because that's very visible. It can be recorded through data, but just presenting that information. Another term that we use in the industry is a virtual captain. Obvious, right, thanks. I knew that. Like, how about we get to the more juicy stuff, the strategic things that can help me in my environment? So my point in this is where things went wrong is we continue to call it VCIO, because that's what it's called in the industry and in probably 80% of the cases it's just account management, that's it.

Speaker 2: 30:13

And so what are some of the red flags here? Because I feel like you've listed a bunch of them, but when I think about a statement you made earlier around even the ERP side of things, I think this is a big friction point where MSPs sometimes get a bad name. Even the ERP side of things, I think this is a big friction point where MSPs sometimes get a bad name because in the effort for the standardization side of things, there's this huge push around service optimization, which is great, but then there's this we'll call it the 20% over here, which are the things that are very unique to their business and kind of have to remain that way.

Speaker 2: 30:39

They're custom applications, they're ERP and in this model where a VCIO sticker gets stuck on something and it's really the glorified technical account management, that 20% is the piece that really goes away and creates a ton of friction between those two parties. And so how do you advise some of your customers that are building that out to address those needs of that 20%, recognizing they need to standardize, they need to scale their business, but also that there's this unique component to those businesses?

Speaker 1: 31:12

that are really important.

Speaker 1: 31:13

I think it's again like to your point of finding an IT provider that matches your needs and the level that you want to engage in, right? So there's no point in having a digital transformation conversation and trying to get someone to leverage AI in their business If they they've. They, they have a network cabling room quote, unquote. I'm using air quotes that has a swamp cooler in it and is constantly alarming because the backup battery has been dead for six months and like we chuckle about this stuff, but you and I know this stuff exists everywhere, right? This is the dirty secret of IT is that for so long, the industry has said we're different because we're proactive. Right, because originally we came from this reactive support, time and materials paradigm, and that's still not true in a lot of cases. No, you're not proactive, you just say that you are. Like, having a monitoring system deployed in your client environment does not necessarily make you proactive. So it's about the level of sophistication and matching the provider with the client's needs.

Speaker 1: 32:12

Because everybody should be focused on standardization, because, as we said, it's the strongest lever you can pull to make the environment work well, which makes clients happy, which makes users happy, which makes the IT support company happy. So that should be the table stakes of what you're engaging in. That should be a conversation you're having with everyone. The point is not to confuse that with a strategic level of business engagement. Right, like a real VCIO looks more like a business analyst, but if you try to have a business analyst conversation with a five person retail shop, they're like what are you talking about? I've got stuff to do. I don't understand half of what you're saying, but if you go to a mining company that's 500 people deployed across six countries, they absolutely will listen to you about how they can better leverage technology and reduce costs, because costs spiral out of control when the comp and given the complexity of that environment.

Speaker 2: 33:07

That makes complete sense, and so to support that. One of the things that I hear from the MSP side sometimes so from the people that are actually delivering these services and maybe trying to have these conversations is they have a hard time getting that seat at the table and they want to be part of these conversations. They want to be part of the board meeting or the strategic planning meeting, but they just can't find themselves invited or through those doors. What advice would you have for customers consuming these services around, including some of those folks in these discussions?

Speaker 1: 33:44

of that of coming from the customer side because I think a lot of the conversation that we have is from the IT vendor side of trying to force your seat at the table Right, and in a lot of ways you need to be invited. So there's some ways that you can. You can produce conversations with a client in order for them to be like huh, that's interesting, maybe you should come to this meeting, right, so you can position yourself that way. But for someone who's who has an IT provider and they're wondering are these guys a good match for me? I've never really thought about this stuff in this way. Test the waters and just ring them up and say I'd like to talk to somebody about my IT strategy, and how they respond to that question, I think will be incredibly indicative. Whether it's like you talk to the owner and they're like fantastic, let's set up a meeting and they're hot to trot, they're ready to go, they'll have that conversation with you. Or if it's like okay, let me find someone for you, and then a day later someone else calls you back and they're like so, someone said you wanted to talk about some strategy stuff. Right, that's a really good indication of the level they're going to be able to engage you on. But I think there is a priority, I think, on the client end, if you want to be able to leverage technology in a way that benefits your business, those are the conversations that you should start inviting, and just inviting someone to a boardroom meeting and just having them present what their options are and then press them on it right, because a lot of vendors will show up or sorry, a lot of providers will show up to these meetings and, like we've said, we'll just spout a bunch of technical nonsense and tell you like here's how many spam emails we stopped for you and this is the number of support tickets that we closed last month, and nobody cares. Right, I pay you for that stuff. That's table stakes. But if you can get them into some of those meetings and press them around, what are the things that I should be considering over the next three months in my business, especially if there's changes to be made in your business, like if you're doing any type of M&A? The classic conversation that we talk about is we're acquiring this business in Ottawa and it's about 80 people, they're spread across two sites and they have a manufacturing facility in Montreal. So we're this is under NDA. We're just exploring this, but I want you to be able to have this something under your hat to think about how we would engage in this right. Like, engaging a person early in that type of conversation will produce massively different outcomes.

Speaker 1: 35:54

Similarly a story I had this guy, adam Walter, on my podcast recently. We were talking about VCIO and why this is a problem. He had this fantastic story where he was more on the client side and he worked in large corporate and education environments and they were doing an RFP and bringing in MSPs to present on them potentially acting as a partner for this large school district, and all of them came in and told them why they're awesome and here's all their plans for their infrastructure. And he's yeah, great, boring, don't care, all right. And then they went through the selection process and he said the crazy part was is no one asked them about what the plans were in the district.

Speaker 1: 36:32

So all of those providers missed a $4 million project opportunity because they were building a brand new school in the district. They had planned to do this in the next two years, so, like simple curiosity on the vendor's part would take them a long way to be able to help that customer. So it's like an interesting analogy because how much should you position with them, how much have they earned that opportunity to sit at that table and play a strategic role? But I think it's fair to challenge them with that and say come to the table, let's see kind of what you're made of, and I'm curious whether or not you're up to par on what I expect from a strategic vendor.

Speaker 2: 37:11

I totally get that. I think that one of my favorite quotes is to be interesting, be interested, yeah, and really just. I think so many people, especially in some of those high pressure scenarios where there is a big contract on the line or there is something that they're these are meaningful opportunities for their business as well, and they get so caught off guard by the moment that they just go in and let me tell you everything about me.

Speaker 2: 37:34

Yeah, yeah, and really to your point, or to Adam's point as well, the secret sauce is how, let me you tell me about you, what are the challenges you're having, what are the things you have on the horizon? And I feel like people don't ask enough questions in any stage, let alone the sales stage.

Speaker 1: 37:48

I think that this is like key in sales, right, like I know a lot I know enough to be dangerous about sales.

Speaker 1: 37:54

I'm not a sales person.

Speaker 1: 37:55

It's something that I've shared with you is like in a warm lead, if we're bringing a client in to talk about, like, closing a deal, like I'm great in that room but like those initial conversations, I'm still really rough with that because it is a skill, it's a practice that you have to spend time on, a craft that you hone, and it's still, honestly, like as much as logically and I know these things of ask more questions, I still fall into that trap of here's what we could do for you.

Speaker 1: 38:20

It just so I don't know why that has become so natural for us of trying to win that person's trust and affection in some way. But you're right, like questions is absolutely key and it's funny because, like I now recognize a really good salesperson. Sometimes it drives me a little crazy when they're too questiony. I've sat with some of these people where, like, you can tell the person's just tell me how much does this cost, I want to sign this contract, and they're like hang on, let's explore this a little more. And I'm like this guy's good, they know what they're doing, they're asking all the right questions, so they can position this back to the person when they actually drop a proposal.

Speaker 2: 38:55

I know we've talked about this in the past as well, but my favorite like first meetings, and my favorite cold meetings are the ones where they walk, they walk out of it and they actually know nothing about me. You leave something to follow up on, there's a conversation, there's a part two. Right, you leave something on the table, because the whole process should never be about you, it's about them, and so I feel like that's a whole other episode. But in terms of the MSP side of things, I feel like one thing that is very true is that the amount of MSPs that exist are continuing to grow. Right, I heard a stat from someone the other day in Calgary Calgary actually has the highest amount of MSPs per capita in the world, which seems crazy to me.

Speaker 2: 39:35

It does seem crazy, yeah, but yeah, it's a basis of the population and the amount of MSPs in Calgary that apparently we have the highest concentration per capita. If I'm a business owner and I'm going out to search for someone to support our business, I think you've given some incredible tips around making sure that fits correct. But what are some of the things that I should be looking out for off the bat to really weed out maybe the 80% that might not be a good fit for me and narrow it down to the 20% I should be talking to and spending time with?

Speaker 1: 40:04

fit for me and narrow it down to the 20% I should be talking to and spending time with. I think again it comes. I would encourage people to look at a prescriptive stack, right, which means that they tell you how they're going to make your business run better and this maybe runs counter to what we just said of being curious and understanding them. I'll come back to that right, but they have a program that they're going to deploy into your business that will make it work. I think that is a really strong position, because they basically have an opinion, they're taking a position on what a good IT infrastructure looks like. So I think that is really critical, that they're not just going to say, oh yeah, we work with anybody. No, there needs to be an alignment around how they actually appreciate your business and how they're actually going to engage with you as a customer.

Speaker 1: 40:49

Then the second piece is more of that cultural alignment, right, because, as I said, differentiation is actually really difficult in this industry because there's a lot of people hate the term best practices, but there are, so we'll use, maybe, frameworks instead.

Speaker 1: 41:01

There are a lot of really decent frameworks that most of these providers utilize, right.

Speaker 1: 41:06

So the differentiation between them do you care how a person solves your outlook ticket Not really right, but that's 80% of what you're going to be consuming from them, so does it matter?

Speaker 1: 41:18

No, so a lot of it depends on why they do what they do, and I think that's a much more important thing. So if you're meeting with a small vendor, a small MSP, are you meeting with the owner, or did you meet with the owner as a part of that and asking them about their business philosophy and how they think that they could work together as partners? I think that's a much more productive conversation. If you're meeting with a large entity, does it feel just off the shelf and does it feel like it has a cultural core? Does it feel like there's some level of alignment around how you view technology and how you view it, can, it could be deployed in your environment? I think that's a much better way to approach these things. So looking for like a base level of sophistication around how they're deploying technology and then looking for that values alignment to make sure that they're aligned with utilizing technology in your environment in the way that you think it actually matches your company.

Speaker 2: 42:09

How important is proximity. Obviously there's a lot of investment in remote tool sets. The technology has come a long way, but how important is proximity in that decision?

Speaker 1: 42:19

It's interesting. It's a good question because I would say it's mixed. I think there is a lot of importance to proximity from an account and relational standpoint, right. So, like, how often do you see that person? Do they show up at your office? Can they make it? Can they get to your office? If something actually does need to be physically done, I think there is some value to that. The other side of this is I know some very successful MSPs that there are 50 people. They don't have two people in the same state, let alone the same city, right? So, like it's not an imperative by any stretch. There are the modern technology.

Speaker 1: 42:55

There are certainly ways that you can build relationship with people virtually. I think a lot of this again comes to your needs. If you have a particular business requirement that has some on-site needs for it, like you have physical equipment that sometimes has issues and needs some support with it, right, maybe you need a field person. But and if you're working with a company that is two provinces away, is that problematic? It could be. It depends on response time, right. If that's low priority and they can deploy someone remotely through utilizing some field services companies like these partner vendors, where you can get a local consultant to show up and white label for you, right, and they just they're intelligent hands, they'll go do some things. As long as you have 24 hours notice, that's not really a problem. But if something goes down and you lose thousands or tens of thousands of dollars per hour that it's not working, you should definitely have someone local.

Speaker 2: 43:50

I want to pivot a little bit to getting more value out of relationships in place. We've talked a lot about the matching game, of making sure that we match the right people. We've talked a little bit about the governance and the strategic side of things. But what about the scenario where things just aren't working right? Is there and there's probably a hundred different examples that either you or I could share around what that feels like or what those causes can be like? But what are? Are there steps that a business leader can take to improve some of those relationships? Or is it, once it goes south that it's tough to recover from on the MSP side of things? What's your perspective there? I certainly don't think it's true. I goes south that it's tough to recover from on the MSP side of things. What's your perspective there?

Speaker 1: 44:26

I certainly don't think it's true. I don't think it's true that it's unrecoverable. So I think everything is solvable. It depends on whether or not the two people again have the relational value and the alignment around what good looks like, right? So if there's a fundamental mismatch around what they're willing to do. So good examples that I've seen is organizations be on site on occasion and be visible and this is an old school management approach of I feel value in the money I'm spending if I see the people that I'm spending money on and there are absolutely organizations that are like that and if you're a remote first organization and don't need to go visit their client site, there's inevitably going to be friction. So that is that alignment piece of. Can you convince that client that me going on site is not necessary? Maybe that's just a psychological or cultural artifact that makes it a misalignment versus you can have that conversation of look, stop saving up all of your tickets for the for Terry to show up on site and then you guys mob him with all of the issues that you've been saving for the past three weeks. Just log these tickets and someone will guaranteed resolve this within an hour. That's a much better circumstance for everybody right. So I think in a lot of cases it all comes down to maybe amping up the level of interaction and collaboration that you work on. So you and I have seen these circumstances where there's an emergency, a relational emergency with a customer, and you basically gather like a tiger team together that focuses on this for a very intense period, where I've been in circumstances where I talk to a client or a president of a client twice a day right through a really hairy situation and just the act of doing that demonstrates that you care, you're going to take the time and attention to focus on them. And then I'd go back to the service team and be like everything that comes in from these guys is now a P2, right, and if it's really an emergency, then automatically P1, right. So P3 is low priority, p2 is medium priority, p1 is emergency situation right. So everything needs to be like a higher priority to really show them the love. And as you build more trust and you find what was broken, where was?

Speaker 1: 46:37

The misalignment of expectations is often where this comes from right, because it's often not a capability or capacity issue. That's going to be evident. And if it is one of those things, then either look, you need to staff up in order to be able to support us. That's a business decision that is either a plus or minus. It's going to happen or it's not. But in a lot of these cases it's often just that I think that this should be happening and I don't see it's happening right. That's really what we're fighting with. So if you can increase the cadence of interaction with that customer to push that alignment around expectations and then, once it's aligned aligned everyone starts to cool off and then you can peel back from each other, this works, yeah, it's good. And then you just you fade into the background. It goes back to the way that it was working before. In a lot of cases, I love that.

Speaker 2: 47:22

So most of the challenges from your perspective aren't even technical people challenges aren't about the organization's. It's just around that communication and that alignment between the organization's yeah, I would say, like most things in business are communications.

Speaker 1: 47:36

Right, You're hired for a job. Either you can do it or not, right? If the quality of the work is terrible, that's a different circumstance. Right, and maybe there's this one person that in your organization, whenever he works on our stuff, like we're really unhappy. That is maybe a people issue. Potentially it's a technical issue. I doubt that there's a lot of circumstances like that, but in so many cases it's just I only want to talk to Mark, right, Like he's the only IT guy that I'll talk to. And if you dig deeper, like there's nothing Mark is doing, that's spectacular, other than he's a better communicator than other people on the team.

Speaker 2: 48:09

I feel like, once again, that could be an episode in itself. I recognize we're starting to run a little bit short on time here. I have one more question for you in terms of the future, of where things are going here. So there's a lot of speculation and conversation around the role of AI, the role of technology in the MSP industry itself. So you have a front row seat In fact, you might even be driving the car in some of these scenarios where you're getting to work hand in hand with these organizations as they incorporate technology into their offerings, into their customer service, into their go-to-market. What are some of the things that customers can look to expect in the next kind of three to five years as this technology specifically around, like AI and some of the other security components, become more commonplace?

Speaker 1: 48:50

So I think one that is most evident to the customers is I think you'll see a lot more interactions with bots, and this will be different than our current interactions with bots, where it's like the bot right now typically it tries to understand what you're looking for and then we'll just feed you back knowledge base articles to see if you can figure it out yourself. It's not great, right? So this is a slightly better equivalent of everyone mashing zero or pound to get to the agent on a phone call. So I think the bots will get a lot smarter. Where there is actually a capability for the bot to understand your intent and to provide either good direction or, in a lot of cases, actually reach out and fix the circumstance for you. I think, even before that, there's going to be circumstances where self healing actually works, and this is I'm an old nerd, right. This is something that has been promised to us since the mid nineties. Like I, I used to have physical floppy disks that were called self heal, right. So this is an old idea that never really worked that well, but it absolutely will in the future, where it's a system uses telemetry to call out to another system and says I've detected an error this and this, and then another system will go in and actually remediate that situation on its behalf, right? No one ever touched this, so we can call this automation. I think it's going to look like something different in the future. So I think that's the first aspect that I think is going to be changing here, and I think a lot of this.

Speaker 1: 50:13

The other aspect of how it impacts customers is understanding sort of data hierarchy and data segmentation. Right, Because once we start integrating AI into all of our platforms and into our workflows, we need to be very intricately detailed, understanding exactly the priority and the hierarchy of the data that it touches. So there's this classic adage that we talk about of I fired up an AI, I loaded it up and gave it all our data. Now the secretary can ask how much the CFO makes because it doesn't care. It does not segment or create or care about the differentiation in that data. So we need to be really careful about how the data actually gets access to that information and how that is shared back or utilized with the rest of the organization.

Speaker 1: 51:01

So that's that first step towards AI consulting, which will definitely be a thing, and then, as we're seeing in the IT industry. That AI showed up as this weird use case where we're just throwing spaghetti at the wall to try and figure out use cases for it. We're actually finding really good use cases for it now and this will start to show up in a lot of client organizations where your workflow has segments where it gets handed off to an AI and it does something with it and potentially either goes direct to a customer or it goes to another person in another department. But I think we'll see a lot more collaboration with agentic AI in the future in a lot more organizations Do you think that customers can expect any sort of financial differences in the models?

Speaker 2: 51:45

and everything Because I think that's one question that I've been getting a lot, which is, as some of these agentic approaches come in as some of the reduction of requirement for maybe even some of the reduction of requirement for maybe even some of the infrastructure management, does that change the financial models or is it going to be determined still?

Speaker 1: 52:00

It'll be an interesting question, right? I won't go into my. I have this whole AI timeline prediction model that I did with a blog.

Speaker 1: 52:06

Someone asked me to repost this. I need to go back and find this and post it. But more on the IT end of this, what I said is that five to 10 year timeframe, which, when I posted this, was about two, almost three years ago. So we're two to three years away from this where it'll start to show up, where AI will actually start eating the jobs in service desks. Right, because what I talked about is those agents are going to become a lot smarter and tied with self-healing. There's simply going to be a lot less support work to do, right, and maybe we're lying to ourselves about cause.

Speaker 1: 52:37

This has always been the promise of the industry, who knows?

Speaker 1: 52:40

But I see this as a very real opportunity where, you know, we're going to be decimating some service desks, like just the help desk role in a lot of organizations, I think is going to start to become slimmer and slimmer on the lower end of things, right?

Speaker 1: 52:53

So how do you get an entry point into a group that only requires more sophisticated skill sets that the AIs are passing up for subject matter expertise or one-off errors, those sorts of things. That will be interesting, but whether or not the cost savings are passed on to the customer. Interesting question Does it mean that agentic AI becomes so expensive from a horsepower and data consumption standpoint that it's functionally equivalent or marginally different in the margins that are created for the business? Good question, but I have to imagine if you're a 50 person MSP and you're able to reduce your staff load by 15 people because you have a really intelligent front endend AI that's doing triage for you, it's probably cheaper, right? So I think it's a very open question about how the business model adapts to that and whether or not the cost just shifts to something else.

Speaker 2: 53:47

Final question here If you could leave our audience with one takeaway around MSPs and their role in business success, what would that be?

Speaker 1: 53:58

Good question. I would say it's that this is a very real need and I think people need to really understand the role that an IT support organization plays in the success of your business. Regardless of what you do, it could be that sort of low maturity guy that just helps you to keep the lights on and fix stuff when it's broken. That's still an important role for your business to function and it scales up from there. But I think the necessity of having an MSP makes a ton of sense because as a five person organization, don't hire an IT guy, right, because they're going to quit or they're. They're going to be terrible and hit their limit on their technical knowledge and you're paying a ton of money for them. So just outsource it. It's going to be less money and you're going to have a whole army of people with technical skillset to be able to apply to your business.

Speaker 1: 54:46

That whole idea scales up right. Like it makes no sense unless you're like an enterprise organization that already has like a 200 person IT department and I've worked in those environments. Right, outsourcing that to a third party, that would be tricky, it's not impossible. I've seen it done with like largeourcing some of that subject matter expertise and at least the consulting aspect, to stay current and make sure that your business is moving into the future and properly leveraging technology, whether or not they support it or not.

Speaker 2: 55:27

I feel like you hit the nail on the head there and I love that piece of advice. Todd, as always, it's been incredible. Thank you so much for sharing your expertise, your knowledge, your wisdom, your stories today. This has been a blast For people that want to learn more from you find you on the internet, connect with you. What is the best way to do that?

Speaker 1: 55:45

Probably best place would be LinkedIn, so just search for me. Todd K-A-N-E, you can find me on LinkedIn. If you want to hit up my website, it's itisbusinesscom, because we're not running a charity, it's a business people.

Speaker 2: 55:58

I love it. Thank you so much. I appreciate you coming on and I hope you have a splendid rest of your day. Thank you, sir.

Speaker 1: 56:03

It's great.