MRR is Not the Whole Goal â€“ Capture the Entire Solution
Executive Summary Youâ€™ve heard it over and over. Monthly Recurring Revenue (MRR) is the ultimate goal, the Holy Grail, the
most important issue anyone in the IT channel should focus on.
Is that true?
Is it a good thing?
Before we begin answering these questions, you may be wondering why BitTitan produced this white paper.
BitTitan is the developer of MigrationWiz, the comprehensive migration toolset for The Complete MSP, the
service provider who goes far beyond monitoring and actioning alerts to complete administration and
proactive management of customer networks.
We succeed when you make money.
Thousands of MSPs have dramatically expanded their businesses by offering their customers certainty that
their data, email, document, and all other migrations are complete and accurate when moving from on-
premises to Microsoft Office 365 environments. They then continue beyond the implementation to provide
the training and ongoing support required to keep users productive.
In this white paper, weâ€™ll start by briefly examining how MRR works, why it is perceived as being so
important, and why it doesnâ€™t have to be the whole story. There is, in fact, much more opportunity to be
pursued, captured, and enjoyed.
Weâ€™ll then explore the services customers need in assessing their networkâ€™s current state, data assets, user
communities, and steps for determining what their future state should look like. They will need help
selecting their preferred Office 365 plan and the cloud subscriptions that support it, configuring those
options, planning and designing their new cloud-based environments, and developing an initial project
plan. All of these, by the way, are fee-based revenue-generating activities for you.
Execution of the project plan will require a variety of services provided by you. These include ordering the
subscriptions, provisioning and configuring the services, upgrading client devices, migrating data and
applications, integrating various cloud providerâ€™s services so they work well together, and more.
Finally, we focus on the users, making sure they are well-trained in the effective use of Office 365 and related
applications, and they are comfortable with self-service portals and support options.
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MRR: Hardly the Holy Grail â€“ but maybe somedayâ€¦ Listening to many IT industry experts, youâ€™d think MRR was a revolutionary new
invention that will make your business skyrocket.
It is not.
Telecom agents have lived on MRR for many decades. When they sell a customer
a circuit, they receive a monthly commission, so long as that circuit remains active
and paid for.
And â€œskyrocketâ€ hardly describes the impact of MRR on your business. Itâ€™s more
like a gradual climb. Letâ€™s quickly review how MRR works. In the example below,
use your own numbers for each of these and youâ€™ll figure out something you
probably already know.
Acme Inc. wants to move their operations to Office 365. They have 100 users and
agree they need the services provided in Office 365 Business Premium sold at
$12.50 per user per month with an annual commitment.
This results in a monthly subscription revenue of $1,250 arrived at by multiply the
100 users by the $12.50 fee per user per month. Your commission will vary
dependent upon which Tier I Cloud Solutions Provider you work with and other
elements, so weâ€™ll use a flat estimate of 5%.
This results in a total commission of $62.50 per month or $750 per year plus
applicable bonuses and bounties.
The question you need to ask at this point is how many other Acme Inc.â€™s you are
going to need just to break even?
Letâ€™s say this customerâ€™s monthly breakeven point is $25,000 all in. Very
conservative. Small group. Annualized, that becomes $300,000 before youâ€™re
showing a profit.
Is it realistic to think you can find 400 Acme Incs? If MRR is your sole source of
income, youâ€™ll remain in the red until you do. Letâ€™s start adding to that $62.50.
Fee-Paid Planning Services Long ago when personal computers were brand new, resellers differentiated
themselves from their competition by adding valuable services to the purchase at
no additional charge. This is how they came to be known as Value-Added Resellers
While some still use this term, it hasnâ€™t been possible to add value at no charge for
many, many years. Yet todayâ€™s resellers, cloud sellers, systems integrators, and
others still give away value-added services all the time. These services include initial
system design, upfront consulting, planning, order management and more.
BitTitanâ€™s most successful partners charge for these services. Their first offering to
a new client provides the initial planning and design required before Office 365 or
any other cloud service can be ordered. They easily justify the fee by pointing out
that, for most people, â€œThereâ€™s never time to do it right, but always time to do it
overâ€ or, as Benjamin Franklin put it, â€œFailing to plan is planning to fail.â€
As Benjamin Franklin
put it, â€œFailing to
plan is planning to
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Services you should be offering at a fee prior to the subscription include:
â€¢ Initial Consulting
â€¢ Application Inventory and Evaluation
â€¢ Solution Architecture/Cloud Service Selection
â€¢ Information Architecture/Capacity Planning
â€¢ Security Planning w/Cloud Integration Design
â€¢ Application Transition Planning
â€¢ Environment Transition Planning
Selecting Services to Support the Subscription Up until recently, you could define â€œintegratorâ€ as someone who takes hardware
from various manufacturers and software from various providers and combines
them to create superior solutions for customers.
With cloud computing replacing many of the services integrators used to install
on-premises, todayâ€™s cloud integrator combines hardware, software, and services
from various cloud providers. This means they are also responsible for ensuring
that services from various cloud providers all work well together.
Either way, the end result is the same. Todayâ€™s integrator must still provide
customers with complete, superior solutions. Data must be backed up. The network
and data must be secure and protected. Access must be secure and reliable. User
collaboration must be facilitated. And applications must achieve the desired
functions and results.
Just as you have always kept current on IT hardware and software, your value is
dependent upon your awareness of shifts in the cloud services market its impact
on your customer and your recommendations for their business.
Making Money on Migration and Deployment If youâ€™re like most channel partners, youâ€™ve had customers come to you after trying
to deploy Office 365 themselves and ask for your assistance. They need a qualified
expert - you. Provisioning and deployment may seem like simple activities, but
many users find it challenging to configure IP addresses, DNS servers, and other
internet services. Some also find many cloud services difficult to implement.
Data migration is even more of a challenge. Depending upon what they are
migrating and where they are migrating from, the project could be a simple cutover
with MigrationWiz. Alternatively, it may require tons of conversion, re-mapping,
account manipulations, and more. Hopefully, you are armed with the initial
assessment you charged them for, but it is certainly not something users want to
try to do themselves.
want your customer
to enter their first
day on the new
services fully ready
to be productive.
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Ultimately, you want your customer to enter their first day on the new services fully
ready to be productive. This requires not only confirming the functionality of every
user device, but also the preparedness of every user. Training on the applications,
the platform, best security practices, self-service portals, and more should be
completed before rollout.
Services which should be incorporated into your complete program during the
â€¢ User Transition Training
â€¢ Cloud Service Provisioning
â€¢ Email System Migration
â€¢ Email Archiving
â€¢ Data Migration
â€¢ User Deployment & Rollout
Your imagination and innovation will constantly be creating more services to add
to this list.
The Other MRR - YOU Now itâ€™s time to differentiate between MRR and MRR.
In the exercise we started with, we calculated the fairly small commission you earn
for selling cloud subscriptions as the building block of your MRR success. There is
No network, no platform, no system is static. They are constantly changing with
new needs, new requirements, new expansion, new features, new capabilities from
new software and new services. And then the inevitable will happen. Users will
forget their password. Theyâ€™ll overcome everything youâ€™ve put in place to protect
them. Theyâ€™ll need things fixed. And they will request new automation of various
repetitive or multi-step processes as they become more familiar with the system.
MRR generated from Office 365 licenses, and from the data backup services, the
online security services, and all the other cloud services pay you commissions. The
more complete your solution, the more services youâ€™ve included, the better your
customer is served, and the more commissions you earn. Since each will probably
be smaller than the main commission for Office 365, you may be able to raise your
monthly commission by 25-75%. That will still be around $100 per month.
Some of these services are very familiar to you. Help Desk. Field Support. Most
MSPs already offer network monitoring including alerting and actioning of
anomalies, monthly performance reporting, regular reviews, improvement
recommendations, and much more. Where the circuits to the internet used to be
the only service that carried a committed Quality of Service (QoS) in its SLA, literally
every cloud-delivered service now requires monitoring. You can almost guarantee
In todayâ€™s service
market, you cannot
afford to remain
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that the SLA performance report from the provider will always match their invoice.
Customers need an objective third-party to keep those providers honest.
In the cloud, add capacity management. One of the biggest values of cloud
computing is that you only pay for what you use. Somebody has to keep an eye
on storage, memory, and processor services your users request to determine when
theyâ€™ve finished using them and left them idle instead of releasing them. Customers
save unbelievable amounts of money when you keep them from paying for services
you never use. It also makes you, and keeps you their hero.
When MRR is generated from your own support services, you keep 100% of the
profit. You still need to calculate your fully-loaded burden to compute your total
cost, but the income will far exceed the subscription commissions. This is the MRR
you most want to focus on - the fees customers pay you for your ongoing support
services - because this is where the real revenue comes from.
Some of the ongoing support services after the subscriptions launch include:
â€¢ Day Zero Transition Support
â€¢ User Support Program
â€¢ Network & Cloud Service QoS Monitoring & Management Program
â€¢ Capacity Management
Make It Work Better There is a danger in remaining completely reactive in your execution of a support
agreement. Your system alerts you, you determine a course of action, and you
resolve the problem. Sounds great.
What if there are no problems?
That may sound odd, but the problem that comes from having no service events
is that your customer never sees you in action. Youâ€™re invisible. The problem
doesnâ€™t rear its ugly head until renewal time when your customer asks why they
should bother renewing. â€œWhat did we get for our money last year?â€ is the common
question. Not having a solid answer is the deepest pain.
In todayâ€™s service market, you cannot afford to remain reactive. Not only must you
be proactive, you also must become predictive. You must anticipate problems and
be working on them before they really occur. When you report on your activities
to your customer, you become very visible.
Go further. IT environments are at their best when they grow. New ideas, needs,
requirements, projects, initiatives, users, and applications all require the system to
adapt. Talk with users to understand their experiences with the systems in place
and surface fresh ideas to better serve your customer.
There is danger in
in your execution.
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MRR Lasts Longer When You Remain Visible The more operations we move to the cloud, the more support is rendered online.
While this contributes tremendously to your efficiencies, it also decreases your
visibility with the customer.
Your ability to renew your support agreements and drive continuing MRR is
dependent upon your remaining highly visible. This may take the shape of more
frequent reports from you, more review meetings, or even converting those review
meetings from phone to video.
Sit with your team. Construct your plan for managing each of your accounts more
productively. Maintain a â€œKeep-in-Touchâ€ culture and discipline by requiring every
account team to report regularly on their latest contacts. Stay visible with your
customers, keep improving their environment, and youâ€™ll continue to enjoy more
MRR for many years to come.
If you need assistance with a migration project, contact us or visit www.bittitan.com.