The Last Mile

There has been much discussion around the concept that as SMB IT consultants and VAR’s – we own the last mile to our customers in terms of the technology landscape. Arnie Bellini from ConnectWise has been championing that concept to the IT Nation for the past year or more. For the most part that is largely true. Today, the customer relationship with most small and medium businesses runs through a local VAR who provides the needed hardware, software and services to bring IT into their environment. But a little history lesson may be worth considering as it regards the last mile and the future. As the Bible teaches, we can learn much by remembering what has happened in the past and we have a very relavant teacher regarding this relationship.

Local telephone companies always felt they had the last mile. That was a literal thing for them – the last mile of copper wire that went from their local connection point to the homes and businesses on the end of their wire. It served them well for many years as there was no real option – if you wanted phone service – you paid the local telco to get it. Then came change – lots of change. There was the advent of cellular which allowed customers to use wireless technology to bypass the last mile. Then along came cable tv companies offering telephone service using their wire – so now there is competition from a second “last mile” cable from a nontraditional telephony source. Then comes the Internet which is able to provide VOIP telephony services. The Internet can be delivered in lots of ways – via cable, copper, wireless, cellular, satellite – there are many ways that the last mile for VOIP can enter a home or business. Today there is no control at all for the local telco. In fact, they are scrambling to try and remain relevant in many situations by trying to add services to compete in delivering Internet, cable TV, and other digital services across their once precious last mile advantage. In many cases, they no longer even have a presence with the customers they once owned. It has vanished right before their eyes.

So how does that apply to us in the IT business. We have the same potential problem coming our way. First we have the transition that is being driven by managed services. Today many of the services that we once delivered by dispatching engineers to a local site has moved to remote support. We no longer need to roll a truck and put a person on premise to service a majority of the problems that occur. That means service delivery can happen from anywhere at any time. Many of us have built that competency ourselves, but margins will continue to be squeezed. It will become a comodity of sorts. And more importantly, if the equipment no longer resides on premise but in the cloud, our services at the least must change, but may in fact be non essential at all.

The sale of hardware and software has been a staple for many of us for years. That will likely diminish in the near future. With the advent of HAAS (hardware as a service) which allows a customer to purchase hardware and software via a monthly subscription beginning to gain steam, we will see purchases from our own offerings slip away unless we find a way to deliver that service. We are already seeing this being delivered by the national wireless companies as you can get a netbook with a wireless subscription on a monthly contract. And new partners like CharTec are springing up to enable traditional VAR's to compete in the HAAS space without having to figure it all out ourselves. And the next step will be no on premise hardware at all in some accounts – where it resides in a data center and is utilized via the wire. We have to prepare to see the margins we have been accustomed to receiving from the sale of hardware and software begin to move away drastically or maybe completely in some cases.

Cloud computing is a major game changer. It has the potential to rob the margin from the sale of hardware, software, projects and break fix sources. It also could cause us to lose the managed service revenue stream that many have come to rely on unless we adapt our services to be cloud friendly. There will still be a need to manage things in the cloud, and to manage some sort of end user devices, but those will likely take a different shape and be a virtual desktop in nature. If we don’t have services that are designed to serve the cloud environment, we will likely become irrelevant to our customers and lose this revenue stream.

So the real question is “what does your P&L look like if you lose the margin you generate from hardware, software, projects, break fix and managed services today. For many partners – that is their revenue and the bottom line is very negative. In fact, the business is insolvent. There are no other relevant income streams that can come close to supporting most businesses today. So what should we do? Certainly sticking our head in the sand and ignoring the potential threat is not the correct response.

This is not a doom and gloom post – but rather one to drive you to consider the opportunities that will be available to the partners who figure this new world out. Cloud computing will not happen overnight. There are many opinions on the speed of adoption. From my perspective, I believe there are a couple drivers. One will be the speed at which the new workforce begins to take leadership of the IT management in the SMB. Younger people have never known anything different than the cloud. They have put their email, data, pictures and social interactions in the cloud their entire lives. So they will have no hesitation to make the transition if the change makes sense from a cost perspective. Secondly there will be significant pressure on the cost of cloud services as everyone races to get to the new frontier from a delivery perspective. There will be many competitors – both large and small – who will make a “land grab” and attempt to draw people to the new source of monthly recurring revenue. Those two factors will be significant drivers to the transition. My personal opinion is it will happen sooner than later and within 3-5 years we will see a very different landscape when we consider IT infrastructure in the SMB.

So what should we do if we currently serve the SMB space? I believe we need to immediately embrace this transition and learn how to deliver products and services through the cloud. It begins by implementing them internally and using them so we have an understanding of how they work. The magic and ongoing opportunity for most of us will be in consulting around how to select and integrate with and within the cloud. I believe many companies will have a hybrid cloud model for the near term meaning they will likely push some things off premise into the cloud and retain others – such as line of business and financial applications – in their offices and under their direct control. I don’t believe that will be the final result as people get comfortable with the technology and reliability, but for now, it will likely be a combination of thing locally and across the wire. Most are already comfortable having financial access across the wire as they access bank, 401K and other financial information that way currently. Security has become acceptable in the cloud as people do it daily already.

We have to learn to sell differently, and provide services differently as the landscape changes. We have to learn new skills in how to connect the dots in the cloud and to our local customer networks. There is a “new normal” coming, and if we don’t begin now to learn how it will work, and more importantly how we can remain relevant in that new world, we will quickly find ourselves not in control any longer. The last mile is moving and we have to get started now to ready ourselves for the change. One day soon we will wake up and wonder how it happened as we didn’t even notice the change. But we definitely will notice the effect of that change because the income we currently depend on to make payroll and pay our bills will have dried up and moved to a different mailbox. That will be a very sad day as it will be far too late to make the changes and catch up then. Now is the time to stop and take a look at what is coming. The train has left the station. The only question is whether you will accept that fact and get ready to board.

A Great Video on the HTG and ConnectWise Partnership

Thanks to Aaron Booker and VarVid for capturing and posting a video I created with Arnie Bellini from ConnectWise while at the Microsoft WPC in New Orleans a bit ago. We discuss the vision for our partnership and the value that working closely together will have on HTG members. Check it out at:

http://www.youtube.com/user/varvid#play/uploads/0/jwoYgQ9_Cuo

We are off to a wonderful start in our partnership, and it rachets up to a new level in November when we hold our HTG Q4 meetings in Orlando right ahead of the ConnectWise Partner Summit 2009. Same venue, same week, great content for partners every day. We have our fantastic peer group meetings, and they have some great keynotes and breakouts. There is no other place in this industry to get the quality and value that this week will bring. I hope you will be there, bring multiple people, because there is no way any one person will be able to even capture a fraction of the content on their own. HTG registration is open - get registered now. Looking forward to seeing you all in Orlando in November.

Heartland Tech Group Partners with ConnectWise

Here is the official press release about the HTG strategic alliance with ConnectWise. This is great news and the phone and email have been running hot with calls and mail grateful for this move. While no one really likes change, everyone who has called acknowledges that it is needed to move us to the next level. We can't just continue on the path we have been on and achieve the ultimate goal of helping our members succeed. So this is fantastic news for all involved.

MSPMentor has also captured a podcast that you can check out to hear the interaction between Joe, Arnie and myself regarding this strategic alliance. That podcast may answer some of your questions and should certainly give you something to be excited about. Check it out at: http://www.mspmentor.net/2009/06/30/connectwise-htg-peer-groups-ink-strategic-alliance/

One other note while we are announcing things: Christy Sacco has joined HTG as a full time staff member. We are really excited about her addition and know she will continue to make a significant impact on our members and HTG as a whole. Welcome her when you have a minute!

Here is the official press release:

HTG Peer Group members standardize on ConnectWise PSA platform to more accurately compare and measure operational data, performance and efficiency

HARLAN, Ia. – June 30, 2009 – Savvy IT service providers appreciate how critical it is to streamline their business operations and rely more than ever on their peers to develop, share and implement industry best practices. Today, the leading IT peer group network, Heartland Tech Group (HTG), and ConnectWise, the worldwide leader of IT professional services automation software, announced a strategic alliance that will further the insight and analysis available to HTG members through ConnectWise’s capabilities.

Through the partnership, HTG members will use ConnectWise as their business operating system and use ConnectWise-developed education as part of their peer group process. This common experience will enable HTG members to share expertise and quickly implement and measure business process improvements.

“Joining HTG and making the investment in ConnectWise both rank up there with the best business decisions we have made,” commented Dan Shundoff, President and CEO of Kearney, Neb., based Intellicom. “We are excited to see these two mission critical organizations work hand-in-hand to enhance our peer group interaction and our business. This move just confirms those decisions even further.”

ConnectWise, the worldwide industry-leading publisher of professional services automation (PSA) software, is investing over $3 million in the development of educational content for its partners during 2009. The alliance with HTG builds on the company’s commitment to deliver practical and actionable business process education to the solution provider community.

“As HTG has evolved, we realized that our members needed an efficient way to transform ideas into operational improvements,” said HTG CEO and Founder Arlin Sorensen. “We can now not only focus on what should be done to enhance our members’ operations, we can talk very specifically about how to do it. This strategic alliance will allow us to move from theoretical to tactical and increase the impact on member companies exponentially. ConnectWise is uniquely positioned to deliver the industry insight and software capabilities HTG members need to create business success.”

ConnectWise CEO Arnie Bellini said that the HTG partnership is one more way for his company to support the solution provider industry’s success: “HTG has clearly established the industry’s leading peer group community. We’re committed to helping organizations like HTG develop their members’ expertise and improve their business results. With our online university, regional user groups, Learning Center, Mastery sessions and Partner Summit, HTG members have access to the industry’s leading educational content and can select the delivery method that works best for them.”

About Heartland Tech Group
Heartland Tech Group (HTG) is an international peer group organization focused on business improvement, member accountability, and work-life excellence among leading IT solution providers. HTG has over 225 member companies throughout the United States, Canada and the United Kingdom spread over 20 groups of 12 non-competing member companies. Peer groups meets quarterly for a confidential two-day event that focuses on sharing best practices, benchmarking, process improvement and member business review. HTG was founded in 2000 by Arlin Sorensen to provide solution providers a community to foster business and personal growth driven by execution. Visit www.htgpeergroups.com or call 712-744-3619 for more information.

About ConnectWise
ConnectWise is the leading Web-based professional service automation (PSA) software application designed exclusively for technology consultants, integrators and developers. More than 29,000 IT solution providers rely on ConnectWise to more efficiently integrate key business operations across their enterprises, from business development and project management, to client services and billing. ConnectWise technology enables IT companies to drive greater accountability, operational efficiency, profitability, and tighter systems integration. Visit www.connectwise.com for more information or call 813-463-4760.
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Contact for More Information:
Christy Sacco, Heartland Tech Group
813-785-8571 / lcgoodwin@tampabay.rr.com

Lynette Bohanan, CommCentric Solutions
813-727-0196 / lbohanan@commcentricsolutions.com

The Next Frontier

Friday I was blessed to be able to do a live web TV show with Arnie Bellini in the ConnectWise TV studio in Tampa. I really had no idea what to expect, but they have really put together a first class studio to broadcast and record content using the latest in technology. I remember when I thought blogging was a big deal, and since then we have YouTube, Twitter, Facebook, LinkedIn and a host of other ways to connect and share information. But this latest technology - the ability to put video and content together in a live and recorded format, takes it all to the next level. There are so many exciting ways to use the Internet, and web TV is certainly one of the most interesting and powerful.

We discussed HTG in a very interactive format, but also had the ability to share a PowerPoint deck while we had our discussion. So it brings together the power of a live meeting or webinar with live video and then lets you record and even edit it into smaller pieces after you finish depending on the needs you have. We spent an hour together talking all things HTG, and then in the next days it will be available on the ConnectWise website for viewing as well. They use an Adobe software platform, and it is slick stuff, but the power really comes in the marriage of all sorts of technologies into a very polished and powerful presentation format.

I know there will be more trips to Tampa to utilize the power of the ConnectWise TV studio and platform. Arnie and team are once again stepping up to help the channel by making their studio available to HTG to use for recording content to deliver to our members. When I consider what a partner friendly channel looks like, I have to say the investment that ConnectWise continues to make in our future is a very strong example of what all need to do to help us succeed. There is no way HTG could put together the cash to have this kind of technology available, so partnering with ConnectWise really brings a significant benefit to our members and helps us continue to drive toward our goal of creating strong members and being the best peer groups in the industry. Thank you ConnectWise, for your continued investment in HTG and the channel. We appreciate it!