The Utility Company Wants to Take MSPs Beyond Managed Services

The Utility Company has announced the addition of a new partnership level to its Beyond Managed Services franchise program aimed at attracting existing managed services providers to the company's business model.

The BMS franchise program offers small and midsize businesses a turnkey business plan so they can quickly become MSPs, delivering business services to customers across five areas: IT, including networking, desktops, security and storage; business applications; telecommunications, including hosted VOIP (voice over IP); copier/printer; and Web hosting/Internet.

Currently, the program offers the BMS Affiliate level for VARs that want to enter the MSP space, but want an alternative to other do-it-yourself managed services platforms when migrating their "break/fix" customers to a services contract, said Mark Scott, president and founder of The Utility Company. The BMS Entrepreneur level is for business owners who want to enter the MSP space with a "business in a box" solution.

With the addition of the BMS Select designation, Scott said the company is targeting existing MSPs that are struggling with the business model using other "do-it-yourself" tools.

MSPs using other managed services delivery platforms like Kaseya, Level Platforms or N-able Technologies, which Scott co-founded before launching The Utility Company, may be able to provide a customer technical services, he said, but they often struggle with other aspects of the MSP business.

"Taking the do-it-yourself approach means an MSP has to put all these different business pieces of the puzzle together to be successful: help desk software, field technician training, network management software, CRM [customer relationship management] applications, desktop and security management software—and that's just the technical side," Scott said. MSPs also struggle with developing and implementing marketing programs, sales training and new customer acquisition, he said.

BMS Select, he said, gives existing MSPs the tools both to handle the sales and marketing challenges and to provide the front and back office functionality MSPs need by providing 90 percent of an MSP's services, which they then provide to their customers for a fixed fee.

"This model really frees you up to better service the customers you have and to go out and acquire new customers," Scott said. The Utility Company also provides joint sales and marketing support to franchisees as well as a revenue sharing model.

For an existing MSP, it usually takes between six months and a year to "roll into" the Utility Company's BMS Select program, Scott said. The Utility Company first performs a revenue and services delivery assessment to explore how the MSP is generating its revenue. Then, it reviews several of the MSP's contracts and performs a profitability analysis to compare current profitability with expected profitability as a BMS Select partner, Scott said.

In the franchise model, MSPs must purchase sales territories, he said, with a typical territory costing about $30,000 and encompassing about 2,500 small businesses. Existing MSPs can leverage their current territories and customers to get a "credit" toward the purchase of territories with The Utility Company, Scott said.

If an MSP is generating $480,000 in yearly revenue before joining the Utility Company, that MSP receives a 10 percent credit, or about $48,000, toward the purchase of territories with the Utility Company, Scott said.

Scott said The Utility Company has 48 current franchises, and will add about 100 franchises in 2008, 40 to 50 of which will be existing MSPs that will join as BMS Select partners. Adding a level for existing MSPs to convert to The Utility Company's model "really helps us boost the overall business rather than relying strictly on organic growth," he said.