recently sat down with Craig Flint, founder of Computer ER and a pioneer
user of Ingram Micro's Seismic hosted managed services platform.
What percentage of your customers do you expect to move to managed
We have a huge list of people we think could benefit from it. It should
work for 85% to 90% of our customers. There are a few that it won't work
for based on their network or something unusual that they're doing. For
those customers we will just continue on the break-fix model of billable
hours. For other customers, in some cases we may have to draw a line in
the sand and tell them we can't help them unless they're on managed services.
But basically we still want to help them, if we bill them at an hourly
rate that can still be quite lucrative. We also have a drop-off business
where people bring in computers for repair, and that may continue, though
it might decline as a share of our total business.
Can you briefly describe your business?
We've been in business for nearly nine years. We help SMBs and individuals
to manage their technology needs, everything from basic computer service
to complete network management. We are a Microsoft Small Business Specialist
and offer mostly HP solutions. We also support Macintosh clients and help
Mac users integrate into Windows' networks. Until we started with Level
Platforms, we offered a mostly reactive, break-fix service. Now, after
testing for 18 months, we can offer our clients truly proactive managed
How did you first get involved with managed services?
We first started working with LPI's managed services software in 2005,
and acquired licenses directly from LPI for 17 customers. More recently
we have transitioned to Ingram Micro's Seismic platform as a hosting solution
for our LPI-based services.
Why did you decide to move from running LPI software yourself to a
hosted solution with Seismic?
When we first started working with LPI's software, we found it was difficult
to ramp up our managed services offering while hosting it ourselves. We
started off running the LPI management server (known as Service Center)
on a dual-processor HP server with 3 Gigabytes of memory and a DSL Internet
connection, which is the only type of broadband connection readily available
in our area. But when we started adding customers we found we had a capacity
problem. At one point we added two new customers with 250 IP devices each,
and this just killed our server and our bandwidth. It happened almost
immediately. We had already heard that Ingram Micro was planning to launch
a hosted service with LPI, so we contacted them and moved on to the Seismic
Has your experience with the Seismic platform gone smoothly?
Yes. I'd say moving to Seismic has been the best decision I've made so
far this year. It solved our performance problems immediately. We've had
no down time with Seismic, all our alerts come through without any problems.
How did the migration from your in-house LPI to the hosted version
at Seismic go?
It went very smoothly. Ingram Micro was running a more recent version
of the LPI software, so we had to upgrade the version of the agent software
running at our customer sites. But this was very easy and didn't cause
any interruption in service to our customers. All the LPI device management
templates we were using before work exactly the same. We also found it
was very easy to upload the historical data about each client's site from
our local copy of LPI to the copy hosted by Seismic. So the overall transition
was very easy, and we lost nothing.
Is there any difference in the way your employees work with the hosted
version of LPI at Seismic compared to your previous in-house version?
No. It's exactly the same. We get most alerts from Seismic by e-mail.
If they are critical they go out to the Treo cell phones that our technicians
carry in the field. Then if they're at another customer's site and an
alert comes through, they can just log onto Seismic from a browser, see
what they need to see and take whatever actions are called for.
When you made your initial choice of managed services software, why
did you pick LPI?
We actually started looking at managed services several years ago. We
tested all the major software vendors and found that while they all had
pros and cons they were basically pretty similar. We ended up picking
LPI because they seemed to have the best reputation in the industry, they
had good customer support, and they had a pricing model that was attractive
and very easy to understand. We also liked the people. When Ingram Micro
announced they were going with LPI for Seismic that was a really important
validation of our decision.
How costly is it for you to provide managed services?
The most important cost is in our people. In terms of what we pay to
use the software, the cost of providing managed services is actually very
reasonable. We pay a small monthly fee to Ingram Micro for hosting, and
then we pay a small additional fee to them on top of the monthly LPI license
fee per customer site. This low cost structure makes it possible for us
to move into the managed services business model without a lot of financial
risk. If for some reason I ever decided I didn't want to continue with
managed services, I wouldn't be stuck with some huge cost that would be
a threat to my ability to stay in business.
How are your customers reacting to your shift into managed services?
For the most part they are reacting well, though some are hesitant at
first. Under our old break-fix model we would typically contract with
each customer for a certain number of hours per month. Then once a week
or so we would stop by and do whatever needed to be done on their site.
We are transferring most of these customers over to managed services as
their existing break-fix contracts come up for renewal. For some of them
the new model is a challenge. They're leery because they think it's going
to be something completely different from what they're used to. They think
they're not going to see us any more. We have to educate them.
What does the installed base look like at your typical customer?
Our customers mostly range from 5 to 250 PCs. Mostly they are running
Microsoft Small Business Server on their servers. About 90% of the client
machines are Windows-based, the rest are Macs. We are an Apple reseller
and we do a fair amount of cross-platform integration, so we like to make
sure that everything we install is at least Mac compatible. But we find
we are able to manage Mac networks perfectly well with the LPI software,
we just install an XP machine on the network as the agent and it works
How do you price your managed services offerings?
We have a starter plan at $99 per month that scans just the server, firewall
and backup. From there customers have a choice of paying for additional
services on an hourly rate, or moving up to a higher priced managed services
contract, ultimately extending to cover all of their IP devices. That
is where we think most of our customers should end up, but we do have
to work to educate them about the benefits. Some customers learn the hard
way. We had one customer where our remote monitoring had detected a problem
on their accounting server. We could see it was about to die, but they
didn't want to do anything about it. A few weeks later it did die, and
they learned their lesson about the benefits of managed services.
What do you include in your basic managed services offering?
Once a customer moves beyond the $99 per month starter plan to a higher
level plan, we offer them a complete package that includes remote monitoring,
problem resolution, patching and security scanning. We could charge extra
for the patching and security scanning, but we don't, because providing
these services doesn't take much extra time, and we have reduced the number
of hours of onsite support we provide to them.
Will your business mix between hardware sales and services change
as you move further into managed services?
Yes. The hardware part of our business will probably go down, but it
won't disappear altogether. We were already 60% services 40% hardware
before we started managed services. This was something we did deliberately
over the past few years. It's a pain to sell hardware. If a customer comes
to us and says "this is what I want", then we will sell it to
them. But if they say "can you sell me this for less than the other
guy", we tell them they should buy it from the other guy. Of course,
if we stopped selling hardware and moved all our business to managed services,
then maybe I could sit on the beach in Hawaii and run the business from
there. But probably that won't happen right away.
Do you worry that big national providers like Dell or Best Buy will
compete with you to offer managed services?
No, I don't. They can enter the market if they want to and no doubt some
people will sign up. But I don't think they will be able to deliver service
that really satisfies the customer. I worry about the competitor that
is down the street from me, not about the big guys.
What advice would you offer a VAR who is thinking about moving into
You should expect that it might take longer than you think. When we started
we thought it would only take 6 months, but in the end it's taken us 18
months to really get a handle on it. In the early days some of the vendors
like N-able were even talking about "managed services in a box".
But it doesn't work that way. It takes time to learn the software, how
to get it up and running, what the alerts mean, and so forth. It also
takes time to educate your employees and your customers. A few of them
might not be able to make the transition. But with education and patience
most of them will.
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