Episode 47: Human Beings Suck at Probability

Read the Transcript

Erick and Rich discuss how MSPs can profit from pursuing the same ecosystem strategy that ConnectWise and N-able use to compete in the market for managed services suites, and how a disciplined approach to change management can help MSPs make big strategic initiatives like building an ecosystem manageable. Then they’re joined by Mike Psenka, president and CEO of project management vendor Moovila, for a deep-dive conversation on challenges and opportunities in MSP project management. And finally, one last thing: A new AI-powered healthcare solution with a value proposition too icky to discuss here.

Discussed in this episode:

Throne’s toilet camera takes pictures of your poop

 

Transcript:

Rich: [00:00:00] And three, two, one, blast off! Ladies and gentlemen, welcome to another episode of the MSP Chat Podcast, your weekly visit with two talking heads talking with you about the services, strategies, and success tips you need to make it big in managed services. My name is Rich Freeman. I am the Chief Content Officer and Channel Analyst at Channel Mastered.

The host of this program. I am also a co host specifically of this podcast. I am joined this week as I am every week by your other co hosts of the show. Erick Simpson, our chief strategist at Channel Mastered. Erick, how you doing? I’m doing well, Rich. I’m getting ready to meet up with you. In miami in just a few days, but where in the world are you right now?

I am in miami actually right now. I’ve been here a few days. I am currently attending the canalis forum the north American edition of the canalis forum because they do three of these around the globe Every year canalis, for those Few of you who are not familiar, one of the foremost analyst organizations out there.

And if you are into the kind of wisdom that analysts share and all the facts and figures and predictions and statistics this is as good as it gets. I’m actually, I just finished interviewing Jay McBain who was one of the analysts at Canalys just minutes ago Erick.

I’m back in my hotel room here at the event site. Through the window in front of me here, I can see the beach. Didn’t spend the day at the beach, spent the day at this event. And it was for me, for Mr. Channel Holic to, to quote the name of my blog. This was as good as it gets.

Erick: Yeah, sounds like something that’s right up your alley. And, Jay McBain, friend of the show, always love having him on the podcast and just what a wealth of information and the way that he boils it down for lay people like myself to appreciate, understand it, and then report it back to our audience along with you, Rich.

Rich: With that as a bridge, let’s go right into our story of the week here, and it’s Funny how things come together sometimes Erick. So a couple of weeks ago, I wrote a post in my blog channel Hawick about connect wise. And I had a chance to interview the new CEO there, Manny Ravello. We were talking about his strategy and this.

piece of his strategy isn’t actually new for ConnectWise. But they are going to market with an ecosystem. They’re going to take their software and services, combine it with best of breed software and services from third party vendors and then manage services from their MSP partners. How does ConnectWise compete and win in the market for managed services software and suites?

Through an ecosystem. This week, the beginning of this week, I had a chance for the first time in about six months or so to interview John Paliuca. He’s the CEO of enable. What is an able strategy for competing and winning in the same market? Connect wise as it is an ecosystem play. They call it the eco verse in their case, but it’s basically the same idea.

You combine their software their services with software and services from other vendors with services from their MSP partners, and they all go to market together, and that’s how they win together. So I just, like I said, spoke to Jay. Let me just rattle off some numbers that he just rattled off for me because he has these numbers at his fingertips.

Fingertips at all times. So 2.6%, that is roughly the global GDP right now, 6.4%. That is roughly the current growth rate for it spending as a whole 14 point. 8%. That is roughly the growth rate for managed security services. And 49. 7%. That is roughly the growth rate for MDR specifically. Now, if you are an MSP and you want to get into managed security, And you want to tap into that 14.

8 percent growth rate right there. You want to radically outgrow the it market radically outgrow the global economy. You want to tap into that even bigger growth. That’s coming with MDR right now. How do you do it? And this is Jay now whose advice I’m sharing with it through your very own.

strategy, what you need to do. And Jay’s been on the show with us before Erick. And he’s talked about how typically there are seven partners involved in any deal. You need to build your very own ecosystem. You are the closest point of contact to the customer, but you’re going to need to pick a distributor or a marketplace like PAX eight, you’re going to need to pick a software vendors.

You’re going to need to pick service providers like say an MDR vendor. [00:05:00] You’re going to need to go to market together with these companies, with a unified offering that you bring to your customers, your very own ecosystem. And that’s, what’s going to enable you to get real margins in this industry and real growth, because, and this was another thing that Jay emphasized if you are building your future around resale.

You’re making an enormous mistake. There is peanuts to be made around resale. As we’ve said many times in, conversations with many of the guests we’ve had on the show, it is all about outcome oriented, consultative services, not the increasingly commoditized stuff, not the resale stuff, which is super low margin.

And it’s only going to get more over time. So it was just very interesting. The way it all comes together. You need to think the way Enable thinks, you need to think the way ConnectWise thinks, you need to put ecosystem first, you need to build one of your own by establishing and growing relationships with all of the different pieces and parts that you need to meet a an outcome oriented business need for end users and make the big money that consultative partners make as opposed to resellers.

Erick: As you said, Rich, we talk a lot about this on the program, and it’s simply. It’s simply the evolution of the businesses that MSP support and the need for MSPs to evolve to meet those specific needs. Again, we’re not selling technology outcomes anymore and adding massive valuation to our organization because when we’re selling technology outcomes rich as an MSP.

We’re probably selling a lot of hardware resale. We’re probably selling some break fix services some projects which are all very low multiples in terms of Evaluation during an exit these revenue streams have a low multiple compared to Managed services so we’ve talked about that and the guidance that I give the clients that I coach with rich is to start shifting more into Of your focus to cybersecurity, to manage services, get that recurring revenue going.

I even count renewals as recurring revenue, rich, as long as it’s consistent because it, and that is probably the highest profit margin or anything we do. We check a box and renew something for a client and we make our profit margin. Granted, it’s not the large profit margin that managed services provides us, but still it’s MRR and ARR at the end of the day.

So I love the guidance that Jay shared with you about. This ecosystem, I had not thought about it from that perspective about and, the last time we had jam a podcast, he did talk about these seven strategic business partners that every business owner surrounds themselves with. Now he’s taking it down a level and say MSPs need that too.

And we need to create that no matter who it is that we plug in. And this rich goes beyond the conversation of whether we should go all in on one vendor, or if we want to. Create this kind of best of breed boutique, group of services and solutions. You’re still creating an ecosystem. You’re surrounding yourself with these strategic business partners that then you take to market under your brand.

And deliver these services to your clients. I think it’s. It makes it much, much more effective to market that message. I think it creates this ability for you to command higher rates at a greater profit. And as you standardize as an MSP rich around this ecosystem of providers and products and services, you’re you stop taking on.

Prospects or clients that don’t fit within that. So you’re maximizing your efficiency. You’re churning your clients over time. So you can bring on more of these a clients that fit this mold. And that just supercharges. Growth, profitability, and ultimately rich. The thing that we speak more and more about every, every show valuation of that company for the stakeholders at exit.

Rich: I’ll just before we move on to your tip of the week here, I’ll just share one other thing that Jay shared with me when we were talking before folks in the audience are probably familiar with a company called insight. They are essentially a. Solution providers slash MSP. And they’re dealing, at the the enterprise level, much, much bigger company than most of the folks who are listening to or watching the podcast right now, but essentially they’re in the same business as you publicly listed company and their stock outgrew Microsoft’s stock over the course of the last year.

And keep in mind, Microsoft stock was up 57 percent last year, thanks to all the AI stuff going out there. Insight to outgrowing Microsoft. And insight is making two, 3 for every dollar Microsoft makes on cloud solutions. And it’s not [00:10:00] about resale at all. It’s all about taking that Microsoft software, taking pieces from other partners in their ecosystem and building solutions.

That deliver outcomes to business needs for customers and that company is growing like gangbusters. You can do that too on your own scale folks in this audience if you’re thinking consultative you’re thinking strategic and you’re weeding with ecosystem all I am I am as you can tell having a great time here at the canalis forum, Erick, but I am looking forward to to hearing your tip of the week What do you got for us?

Erick: Rich, I think it dovetails nicely into, this discussion point. It’s all about managing business improvement changes successfully. So we just had a great discussion about the need for MSPs to adapt and adjust their thinking and the way they’re structuring their businesses and the partnerships and the things that they’re adding to their solution stack and things like that.

But Rich, change is hard. Change is hard. I know it for first hand because, being a recovering MSP as I am, I went through all the pain of banging my head against the wall when there weren’t as many resources back in the olden days. As there are now to help MSPs really grow and accelerate.

Not withstanding the resources and the great advice and the communities that are out here today and the events that, that really feed all these strategies. To MSPs, we still have to take that home and we have to work on the business while we’re working in the business. We have to fly the plane while we’re still building the plane.

It reminds me of that movie Madagascar, rich when they’re flying the plane and they’re, they’re, things are falling apart and they’re trying to fix it. And it goes down rich when you can’t manage that effectively. So here’s three tips. On how to look at this from a perspective that doesn’t seem like we’re just, I like to say we, we eat the elephant one bite at a time, rich, and we don’t do it like a bunch of piranhas and attack everything.

Because you never get anything done. We want to, I like to say we started the tail. And methodically work our way to the trunk and that’s how we eat the elephant. And so here’s three things. First of all. We have to have a change management plan for business transformation in our businesses, just like we implement a change management plan when we’re delivering projects for clients.

Rich, if we want to improve profitability, let’s say that we want to improve efficiencies on the service desk, right? Probably one of the top answers, if we were playing family feud, if we have some MSPs in. And they say, what’s the number one thing that you want to improve efficiency? And they say, Oh, service desk or processes or procedures, whatever that is.

Whatever that goal is, we know that no project that we ever deliver. And, I’m speaking from experience and working with partners as well, is always the same. There’s always something that causes us to adjust. Now, if we do have the projects that are like two, three projects that just went exactly the same, we didn’t have to change anything.

That’s off to you. You’ve matured your project management process. You’re delivering something that, eliminated, un unexpected, gotchas where you have to adjust. Our audience knows rich that change is expected when we deliver projects. And so we implement a change management strategy and a risk management strategy when we’re delivering projects.

Same thing with internal business transformation, implement change management. You’re managing progress toward change. And for those in the audience that have not read the book traction, I highly recommend it, right? We’re EOS shop rich at channel mastered, as and it allows us to set very specific goals and measure progress and make sure that we hold each other accountable.

So managing change when things go wrong and then discussing it, adjusting the strategy. And then keeping after it. Number two, involving the employees, involve your staff in the change process. Because you need to get their buy in and their participation. And so we need to introduce it to the team that it’s going to impact the most, especially Rich, when we’re asking them to do a few things above and beyond their normal day to day work.

We’ve got to give them the why, And we’ve got to give them the benefit to themselves and the organization and why we’re moving in that direction. Number three, implement a clear communication and status reporting process. If we’re trying to implement change and maybe two or three business units in tandem, and we’re, especially if we’re leveraging the same teams, just like we do when we deliver projects to clients, rich, we’re tagging in the same team that does tickets and other things.

[00:15:00] There has to be a clear communication process so that we are checking in regularly and reporting back and making sure that we’re identifying those things that need tweaking and that everybody understands what those changes are and how it’s going to impact. Forward momentum and etc. And this is how we manage expectations correctly as well, right?

It’s a moving target. We’re going to have communication. We’re going to report in. We’re going to have meetings and we’re going to make sure that everybody is rolling in the right direction so we can get to port together. Yeah, there’s a lot there. And like you said, change is hard. It changes hard for any business in in any industry.

Rich: And, but in this industry in particular, it’s absolutely critical. And because change is hard and because the changes that MSPs have to make sometimes are rather sizable. It can be paralyzing. And two, two things that you’re talking about that really three, but you’re talking about bringing some structure to that process so that it’s a little bit less frightening and a little bit more easier to manage.

Making sure that everybody is on the same page about it, which is about, ties into the idea about consulting with the team and having a communication process to make sure everyone is aware of where things stand. And then the other thing, you mentioned the book Traction, and like you said, we’re big believers in EOS at Channel Master.

That’s how we run our company. We have an EOS service for our clients. We’re such big believers in that. But the other book that kind of came to mind. Is getting things done, right? You’re talking about eating the elephant one bite at a time and change can be paralyzing because it’s so big.

And so you break that big change down into a bunch of little changes and you sequence those and you take them on 1 at a time. And if you do that in a structured way, and you do that in a way in which everybody is coming along together on that process, it becomes manageable. And next thing you know, you have adjusted to the next era of cybersecurity, to the AI business process optimization era of it, whatever it is that you need to do to keep your business on the cutting edge of what’s going on in this industry you can do that if you have that kind of disciplined rigorous way of going about it.

Erick: Yeah, rich. And I’ll add one more thought, right? When I’m working with teams, we want, I want to find some low hanging fruit opportunities. That we can accomplish quickly and get a quick win or two, right? There’s nothing that motivates a team faster rich than giving them the sense that oh wow We can do this and it doesn’t really negatively impact what i’m doing day to day too much, right?

So we want those quick wins. So if you’re putting together this change management plan in your msp Think about the low hanging fruit opportunities that can give you a good ROI, but that you can accomplish relatively quickly, like 30 days or so is what I would recommend. Pick one or two things and maybe a business unit or two, and then time it.

So that’s three weeks to 30 days so that we can get it done relatively quickly. And keep the team motivated and celebrate those wins, right? Reward the team, celebrate, we’re doing this together, and that gives them the sense that, holy cow, let’s get the next task done and we will go at it together.

So just some thoughts there.

Rich: It is interesting, actually, that the conversation wound up being about structure and and discipline and pulling a team together towards a shared goal. Yeah. Honestly, folks we didn’t engineer it quite this way, but the reality is a few days ago, Erick and I had an opportunity to interview Mike Senka.

He is the president and CEO of Moveola. Moveola, if you’re not familiar with them, this is a vendor that does project management software specifically for MSPs. And Mike just given what he does and what Moveola does knows a whole lot. about project management for MSPs where MSPs tend to struggle, best practices for overcoming those struggles.

So we’re going to take a quick break. When we come back, we’ll be joined by Mike and have an interesting conversation with him about project management and how MSPs can get better at that and the rewards of going about that and making the effort to get better at project management.

Stick around folks. We’re going to be right back.

Alright, and welcome back to part two of this episode of the MSP Chat Podcast, our spotlight interview segment, where we are very pleased to be joined by the president and CEO of Muvula. They are a project management company for MSPs. His name is Mike Sanka. Mike, welcome to the show. Thanks very much, Rich and Erick.

Thanks for having me on the show. Really appreciate it.

Erick: Great to have you, Mike.

Rich: For folks in the audience who have not met you before and may even still be new to Muvula you folks are relatively new to the MSP channel, tell folks a little bit about yourself, [00:20:00] your background, and then a little bit about Muvula.

Mike: Yeah,

Rich: I’m

Mike: the CEO and founder of Movealot. We’re on automated project and work management platform. So the best way to think about it is like an AI driven automated Microsoft project or Asana or Monday. My background, I’ve been in tech and building tech companies for God, 32 years now.

Previously had a business intelligence and analytics company. But I sold back in 2011 and then my CTO and I started this company around 2016, started incubating it a little before then, but realized Surprisingly, there were just still problems with project management, right? And that was an interesting puzzle for us to go.

This is a really old space. Why are people still surprised about project deadlines? That doesn’t make sense. Not a problem in accounting software, not a problem in spreadsheets, not a problem in word processors. These are all old platforms. You’re never going, Oh my God, I spellcheck didn’t work or, the columns didn’t foot, but people are surprised, continue to be surprised of.

Hey, what happened? Why? Why? I feel like we should know that we were going to be this late. So that was a fascinating thing for us. And that’s what started us down this path many years ago to figure out how to solve that problem of reliability and predictability in delivering projects.

Rich: Project management is a notoriously difficult discipline just in general, regardless of what industry you’re in. If you’re a business and you’re managing projects, and they all are to some extent or another, it’s hard to do. Is there anything specific about project management for MSPs?

That is, different, harder, complicates the picture in some way.

Mike: I don’t, there are certainly some components or dynamics that exist for MSPs that are distinctive to that industry. And At the end of the day, MSPs typically have a large portfolio of work, a diverse portfolio of work. One of the unique challenges that MSPs have is that the people deliver, in many cases, the people who are delivering on that project work are also responsible for delivering on service tickets, right?

So you’ve got these shared resources. Not only are they shared across a portfolio of work, But they’ve also got ticket work and trying to juggle the scheduling in this margin sensitive sort of resource utilization intensive industry is probably one of the bigger challenges for people that dealing with projects, MSP struggling with that problem, right?

Erick: Yeah, Mike, I I cut my teeth in the enterprise doing very large projects before I ventured into. The MSP world in my MSP practice, and I was lucky to have had the experience of working with like the top here, project managers, coordinators. Like I learned, how to phase projects, how to scope projects, how to do phase reviews, how to have kickoff meetings with clients, how to do, how to do progress updates and all that stuff from your perspective, taking what you just said about the MSPs.

Almost, I’m not going to say it’s reactive from a strategic perspective, but maybe because, the number one thing that they’re doing is supporting end users on the services, let’s say, and then they’re time slicing, like you said, using these same technicians and engineers to do project prep and deployment.

And it’s always, a fight between what’s the priority, what they’re doing all day long. Do you feel that MSPs are taking project management seriously enough? Because, from my perspective, There’s a lot of things that could be doing differently when they’re looking at it from that.

So are they taking it seriously enough and to encourage them to make change and improve that outcome for themselves and their clients?

Mike: Yeah, Erick, I think that’s a really good question. And I would say up until two months ago, I don’t know that we knew the answer across the industry. We worked with another organization to serve in the industry to get an answer to that question.

Like we’ve seen incredible growth in this segment. But we wanted to know just how prevalent do they see we know the problem exists, but do they see the problem exists? And we were surprised to find that nearly 50 percent of MSPs that were surveyed on this felt that bad project management was negatively impacting their margins.

So they at least know that, Hey, this is a problem for us, but then you got another 50 percent that either, certainly a percentage of those might be dialed in, but then there’s another, large chunk that maybe doesn’t have project workers and a little bit of denial around it, the, what you’re talking about is they, MSPs have a lot of what we’ll talk about is, kind of community project managers or accidental project managers.

They’re not PMP certified. And so they’re going into an environment. They’re not managing best practice. We’ve got customers outside the MSP industry that manage monolithic projects with 10, 000 tasks and a hundred interdependent projects. [00:25:00] And, we’re automatically computing the critical path and analyzing and finding those defects.

And At that scale, it’s just not possible for a human being to remotely manage that, but it’s also not possible for human beings, even in a small to midsize MSP, manage the calendars, the schedules, the tasks, the projects in these dynamic portfolios. It’s just not doable. So to try to manually do that, as one of our customers said, It’s a little bit like you’re not having our men like imagine, you’ve got our men and you’re utilizing that.

And then that tool gets taken away. All of a sudden you’re susceptible to the whims and fancies of whatever’s happening. And that’s, think of each task in a project like it’s an end point, right? It’s subject to fail. It’s got its own failure rate. It’s got its own problem. If you’re not monitoring it, it’s gonna blow up on you and your big projects. Erick, you had people that were observing, manually observing those things and having meetings and having status and spending absurd amounts of time because those projects were half a million, 5 million projects, right? So you could say we can spend.

I have 120, 000, 220, 000 resources do nothing but all day. Look at this one project. MSPs can’t do that. They can’t do that. And what ends up happening is it’s The project goes sideways and the really big problem. And I think one of the biggest reasons or one of the biggest drivers for us is the owners are tired of the unpleasant phone call from the customer going, Hey, we were supposed to be done like 30 days ago and I’ve not heard anything from you guys.

So if you’re not managing this project what else are you missing? And it’s a credibility issue. That might be doing an amazing job securing and managing the site, but now the customer goes. The engineer didn’t show up or you guys didn’t tell me there was a supply chain problem. How do you not know that?

And that’s really embarrassing for the senior leadership of these MSPs to try to say, we’re the leading cyber security expert. We’re the this, we’re the that, but we can’t seem to manage calendars and dates on these projects. Um, yeah. Long answer to your short question is I’d say half of them know that it’s something they need to improve on for their margins and it’s hurting their business if they don’t pay attention.

Erick: And I would add to say that another quarter are just, lying to themselves.

Rich: But, we’re following up further to the point about taking this seriously. You’ve touched on certain aspects of this already, Mike. Bleeding margin, missing deadlines unhappy customers.

In terms of why MSPs really need to be serious and rigorous about project management. Talk a little bit more about the repercussions of not being serious and rigorous about project management.

Mike: Yeah I obviously just highlighted one of them, which is managing credibility with your customers, right?

So People and we’ve had we’ve got a lot of customers now who said, you know I’m tired of losing customers because of a poorly managed project right? We’re bulletproof on our managed services and security We dropped the ball on these projects. It was very upsetting. The other, there are two other things and one is related to that first point.

Another really important component beyond just efficiency, like automating and efficiency and reducing the cost of managing it is having real time. status updates and financials around it. And this is really critically important because unfortunately, especially in fixed fee environments, MSPs aren’t always bulletproof accurate on those estimates.

So they’re going to come in and go, yeah, we think this project’s going to take 200 hours. And in many cases, they don’t find out that project didn’t take 200 hours. It took 600 hours. They find out 30, 60, 90 days later, and it’s too late. They build the customer’s paid. Imagine if.

You had some work done in your house and the contractor comes back to you two months after he’s done putting an addition on and going, Hey, I need another 150 grand for you. You’re going to go. Are you kidding me? I already paid you. I’m living in this space. As opposed to coming to you during the project and saying.

Hey, we ran into an issue. There’s some trees by the foundation. The roots gonna take a lot longer to dig the found. You go. Okay, that’s fair. I get you didn’t see that. So this cost recovery of in flight projects is another really big margin saver for these. The other thing that we saw that was less expected, but makes sense that it goes back to that first point is customer success.

And customer satisfaction relationships. We’ve had customers where they gone, it’s gone from like the mid sixties to the high nineties. We asked him, we said, Hey, is it because you’re delivering on time all the time now? And they said we’re certainly delivering on time more, but what’s happening is we’re identifying the problems early and we’re calling the customer to say, Hey, that project that we’re supposed to be, that’s supposed to be done in 60 days.

We’re going to be delayed 30 days, unfortunately, for these reasons, as opposed to What happened in the past was the customer calling and going, where are you guys supposed to be done last week? Oh yeah, it’s going to be another month. And that [00:30:00] once again, damages the credibility and the customer satisfaction.

So this kind of effective management around this. It’s really about relationship management. And that’s the interesting thing. We’ve got an A. I. Automation and expert systems, all this stuff. This industry is still going to move all the A. I. And all the automation. This industry is still going to be about relationships.

It’s gonna still be about the relationship with the M. S. P. And their customers and the fidelity and the credibility they have with those customers and the trust and anything that erodes that trust or credibility. Is damaging the relationship increases churn hurts their margin. So, that’s like I said, that was a surprise in the process because we went through this going Hey, you’re gonna have efficiency gains and utilization gains and all these things But at the end of the day a lot of them came back and said we’re having all these relationship gains This is one of the bigger things for us because it’s helping us get new business.

It’s reducing churn So that was a kind of a delightful discovery As you said, we’re new to the space, year and a half, two years in now, that’s been one of the more delightful things to find. Just because as you both know, this is a relationship business at the end of the day.

Erick: I love that. That, that real world of observation, it is a relationship business. And I think, from my experience and my MSP and then working with other MSPs as well as MSPs sometimes don’t realize how much of an impact Project efficiency can have on their client relationships. They may be like you mentioned earlier, Mike, it may be doing a great job, in other areas, but boy, it’ll erode credibility very quickly when you’ve got project creep and see if that goes in there.

And the client now feels wow, I thought, you guys were superheroes, but I see, there’s some kryptonite in here impacting you. And doing this, so we’ve talked quite a bit about the negative repercussions about not, tuning your project management process and perspective.

Let’s flip it a little bit and tag into some of the, and you were getting into it a little bit there in your last answer about the benefits. Of improving project efficiency to the MSP and then to their customers. Mike, why don’t you double click on that for a sec for us?

Mike: Yeah. Yeah. Yeah. Sure thing. There’s a, there’s certainly a host of benefits to it.

As I’ve alluded to a lot of these first and foremost in this process, it is really about margins and profit, but what are the direct things that drive to that? The first is just the cost of managing these projects. You can’t not manage the projects. And so For a lot of these MSPs, they have a portfolio of work, the efficiency in which in the span of control in which they can do this and can lower their cost structure significantly.

So using some of these automations, using automated project management, that process really gets rid of a lot of the grunt work. That either the engineers, project coordinators or project managers have to do, freeing them up to manage a larger portfolio of work, having oversight to that. So there’s an immediate cost savings around that.

I alluded to the preventing of cost bleeding on projects and cost overruns and identifying that process. Obviously, higher CSAT scores increase referenceability and additional opportunities. But also automating schedules and that process and improving the accuracy of schedules and reducing scheduling churn increases engineer utilization, which also falls back to the bottom line.

So most MSPs are paying these engineers, for eight hours a day, regardless of whether or not they’re doing work. And when you miss schedule dates or projects, or double schedule them or overschedule them. That’s lost time on that process. Not only may you have a frustrated customer, but if the engineer shows up and the project isn’t ready for them to work on, that float time while they’re either on the beach, if it’s a half a day or they’ve traveled, they’ve lost that time.

That’s irrecoverable costs. So it is, we talk about the, I think the thing that I always say is The world doesn’t realize, and this is part of what drove us into the space, doesn’t realize the probability problem that exists. If you’re managing a portfolio of work, people think in general, if they’ve got reliable people, projects are going to get completed on time.

And the statistics in the math are really terrible in this regard. And if you’ve ever heard, have you ever heard of the birthday paradox? I haven’t. So the Birthday Paradox, it’s a great party trick, by the way, if you’re ever in a room full of people. So the Birthday Paradox says if you have 23 people in a room, there’s a 50 percent chance that two people share the same birthday.

And that kind of doesn’t make sense because there’s 365 days in the year. If you have 60 people in a room, there’s a 99 percent chance that two people share the same birthday. And what that underscores is Human beings suck at probability. We’re good at basic arithmetic. But when we look at a situation and we try [00:35:00] to size up the probability of whether or not it makes sense, instinctually, we’re really bad at this.

We didn’t evolve. Our bodies didn’t evolve to understand and manage probability. What does that have to do with a project? If you have a larger project and not a huge project like the ones you’re talking about, Erick, but you have MSP is a larger project and there are 100 tasks in the critical path.

If their team and their customers, if everybody operated at a 95 percent reliability, that means 95 out of 100 times they deliver on time, right? Only five times they wouldn’t. And by the way, no organization operates at a 95 percent level. But even if they were that high, there’s only a 0. 6 percent chance.

That project is going to be completed without a delay. It’s terrible. The odds are that’s just one project. And so when you look at a portfolio of work organizations, and we’ve talked to Accenture, we’ve talked to the largest organizations in the world to go, look, you have to understand in a big project, you’re statistically doomed.

Now you’ve got to figure out what are you going to do to meet this dragon? Are you going to sit back and deal with the scramble and the stress? Or are you going to be proactive? Identify those problems early and obviously it’s a lot less stressful. So the last thing I’ll say, one of the biggest benefits that we hear about is just the stress level and the quality of life getting better.

The stress level going down because of the fire drills are going down the unpleasant, no surprise rule phone calls not occurring because they’re on top of it. They know about the problems early. And that last one shouldn’t be underestimated. Because obviously labor can be tight in this market and it’s a margin sensitive industry and business.

So when people get stressed out and get their heads torn off because customers are yelling at him about projects, they Sometimes I think maybe they want to go find another place where they don’t have to deal with that.

Rich: You just touched on two possible answers to this question. You were talking about cost projection and cost management and scheduling, schedule management.

What, in your experience, are the top dimensions, the top aspects of project management that MSPs tend to struggle with? So there are two things

Mike: that a lot of MSPs don’t do today, and if they can, if they’re not doing, if they’re doing them great, because then they’re going to be able to unlock a lot of automation for project management.

If they’re not doing them, they need to just add two, we call them the double D’s, which is dependency and duration. So Rich when you have a project and you have all your tasks and you say, Oh, we’re going to do this. Right now, the MSPs are saying, Oh, we think this is going to take four hours.

And it’s going to be this resource type. Here’s the work. This is what needs to be done. But what a lot of them aren’t doing that if they’re willing to do This change this process change one is the duration which is okay How long are we going to give you rich if you’re the engineer and we got to reconfigure a firewall and you go?

It’s going to take me four hours How long am I going to give you to do that? Because after that Erick’s got to go in and do something else, right? So you have to be done first and then Erick’s going to do his task So I’m going to say I’m going to give you a week. We’re going to give this task seven days for you to get your four hours of work done.

So that’s the first part. That’s the duration. The second thing is the dependency. Erick’s task, I’ve got to say is dependent on your task. The minute you add those two things, if you have a technology or software capable of that, you can now autonomously monitor the entire portfolio, the work The engineer’s calendars, their process, their structure.

And so the things they’re struggling with, Rich, which is an accurate date. If you want to boil it down, their dates are garbage and it blows up scheduling, it contaminates their business intelligence pipeline. And, this is the story we do is they look your project task work, those tasks might only represent 20 percent of the work you’re doing.

But that bad data is contaminating your scheduling, your customer communication, your forecasting, your business intelligence. And they know it is. And it’s just a scary thing for the owners because, and the schedulers are going, I just don’t know that I can trust those dates. So they go to schedule.

So their biggest challenge is the accuracy of scheduling. And because it’s not accurate, it blows up everything, including margins in relationships. And I’ll say this, even if they were doing dependencies and Anyone who’s got 10 to 20 engineers or above or 10 to 20 employees or above, honestly, it’s just not possible for a human being to do all the calendar math, to pull in everybody’s schedules, their personal calendars, their tickets, their work, their projects, and then deal with the change.

Cause no project goes as planned. Customers come in and say, I can’t make this. We can’t do this. There are supply chain issues. And so your project plan may look great day one. If you had an amazing PMP build it, But by day four, day five across your portfolio of 50 projects, [00:40:00] it’s game over, right? Um, that’s one of the changes we talk about.

Solve the scheduling problem, solve your date problem. You got to have automation.

Erick: Mike, it’s really fascinating to hear your perspective on this because of all the data you’ve gathered and how you’re looking at it from a very objective perspective, which is sobering. For a lot of our listeners, I know I’ve lived through, bad project management in the past.

And, like I said I learned how to do it right in the enterprise before I started doing it for clients as an MSP and, when you talk about the challenges that MSPs have, talking about the scheduling and the dependency thing. Yes, but what happens? When the MSPs see that happening.

So what advice would you give to our MSP audience in terms of when you’re seeing this potential for scope creep or budget creep to occur? How would you guide them in terms of identifying it and then taking action? Is it just simply. Better risk management and change management or does it go beyond that?

Mike: Guess first and foremost, I would say you’ve got to observe the data right timely real time observation of data So to your point scope creep occurs Real time in a project. And so I would say, first, you have to have a process to introduce change so many times in organizations. It’s easier for the engineer on site to just do the change because it’s a hassle to go in and do a change order.

We see this in other industries as well. Construction, is a really common place where The business eats the change order because you’ve got the onsite engineer, a person who just doesn’t want to go through the hassle, right? So making that change order process easy to report that and elevate that is a really critical kind of process that any organization can do, right?

How can we identify the change order, make that a simple process for the person on the intake so we can get that incorporated in our project, identify that, get customer approval and get a change order, right? Because there’s additional revenue on that. The other part of the change order to that, I would say, is understanding the impact on the timeline, right?

Because in many cases, the change order will occur, but the customer is gonna go, Yeah, but I assume that we’re gonna be on time still, right? In many cases, the answer is no to that, right? So there is a bit of process that has to occur around this idea of, as you said, change management to capture that process.

But observing it real time is really important, too. Finding out as we talked about earlier, 30 to 60 days, you’re gonna end up eating those change orders in that cost in that process or have problems that you’re unaware of. So having some way to observe the project automatically because I just, we haven’t seen even we, some of our customers are the largest MSPs.

We just haven’t seen any organization that has the bandwidth to do manual, to manually observe all that stuff. There’s just too many variables. Like I said, it’s like. Manually observing. Endpoints, right? It’s just not efficient.

Rich: Project management, obviously and it becomes more obvious the more we talk about it here. It’s a very complex multifaceted kind of discipline. You’ve already provided a lot of great examples of how to get better at it, but what, give me one thing that every MSP in our audience today.

Should do immediately as soon as they finished listening to this episode. Here’s the one thing you can do today to get better at project management.

Mike: Gosh, one thing. Um, I guess we have to assume what’s the capability level today that they have. If they don’t, if they’re not, if they’re tracking their projects in something like Excel or a simple list, I would say that’s.

If they’re really small, that’s okay. As I said, if they’re larger, that’s a problem. But if they are tracking projects, if they’re using one of the PSAs to do that or any third party system, having and tracking the durations and the dependencies, making that part of your practice.

Because as you do that, as and it’s a maturity model thing, people go, wow, we don’t do that today. But it will unlock automation for whatever technology and platforms you’re using. And when they do that, All the things that we talked about, like you cannot have that automation if you don’t have those two things, you just can’t have it right.

And you’re not gonna use a black box solution. You’re not gonna use black box AI around that or generative air around that because it cannot handle those nested processor dependencies in that. It’s just shown not to be good for that. So I would say, in addition to your work estimates, create durations and dependencies on those tasks.

And make that part of your process. And that way, if your technology that you’re using today doesn’t do it, it will eventually, they all will in the future. They’ll have to, because this kind of automation is going to be critical. And it’s going to be a little bit, as one of our customers said, this is like RMM for projects, right?

[00:45:00] We have to, we just don’t have the bandwidth to touch these end points manually anymore. And we, and they’re saying, we don’t have the time to observe these projects anymore. I would say those two things.

Rich: Fantastic. Mike, thank you so much for joining us here on the show. Great conversation about what is too often a neglected topic for MSPs.

For folks in the audience who might like to follow up with you, learn more about you, learn more about Moovla, where should they go look?

Mike: Yeah movila. com, M as in Mary, OO, V as in Victor, ILA. com.

Rich: Fantastic. Mike Sanka from Movila, thank you again for joining us on the show. Folks, Erick and I are going to take a quick break now.

We’re going to be right back, and when we are, we’re going to share a few Final thoughts about the conversation we just completed here. Have a little fun, wrap up the show, stick around. All of that is coming up in just a moment.

All right. And welcome to part three of this episode of the MSP chat podcast. Great conversation. With Mike Sanka really I think we said during the the show there. A neglected topic in the managed services world. Every MSP is managing projects, but how will they go about doing that, where they tend to get tripped up, the repercussions of that best practices for overcoming that is something that really we ought to be talking about a lot more because it goes straight to margins.

And And the bottom line, and, for me, there was a lot there to dig into with with Mike, but I suspect the the title of this episode, Erick, is going to be something like Humans Suck at Probability which was something that Mike said during the conversation there which just goes to show that when we’re doing it seat of the pats when we’re making estimates, when we’re running a project based on those seat of the pants estimates, we are going to screw things up and that, it gets you to that role of structure and discipline and in project management, your guesswork will be wrong because you are a human being, but there are ways to compensate that that will assure or ensure that the the project gets completed and gets completed profitably and to the client’s satisfaction.

Erick: Mike really. Forced me to look at things a different way from this, these statistics that he brought just from, analyzing all of the data of all the partners that are in the platform and just seeing what’s happening and having this kind of, this recall of percentages is almost like he was a human AI giving us kind of the output of where, what our chances are when we don’t think when we don’t do things.

Correctly, and boy, it’s a thin line between success and failure in some of these cases, Rich. And I was like, wow, this is something that would resonate with MSPs in general and with the partners that I work with, because we work on, project management improvement.

And I, it’s one of the three areas where I always say, you can be tremendously successful or lose your shirt. And, a lot of that project management challenge that MSPs have is not having standardized documented procedures with things, not using a platform, not assessing and analyzing and adjusting project plans with new information, candidly having poor risk management processes, having poor change management processes, not having effective, kickoff meetings and phase reviews, like all this basic one on one stuff that, PMP training gives, gives us.

Some MSPs just either, haven’t held themselves accountable to it, or maybe haven’t thought, Rich, to send some of their team to PMP training. I know I work with a lot of partners that have, but I’ve worked with a lot of partners that haven’t as well. So it is this kind of fly by the seat of our pants thinking, and when you’re not measuring anything or have a process.

To measure with, then it’s going to be tough to deliver consistent outcomes and maintain a high level of client satisfaction.

Rich: So take that project management, serious MSPs it will pay off for you. And folks that leaves us with time for just one last thing on this episode of the show. And, one of the other things Jay McBain said when I was speaking with him a little bit earlier today is Canalys is projecting 59 percent compound annual growth rate growth in AI services, I believe through 2027, if I’m remembering right.

Transcribed by https: otter. ai by golly, Erick, I recently read about a technology that, you as a service provider might be able to tap into and build turn into an AI service opportunity. And this one comes from an Austin, Texas based health startup called Throne.

Throne sells a camera. That camera clips onto the side of a toilet bowl and it takes pictures, not kidding, Erick, of your poop. Throne And then it feeds those pictures to artificial intelligence, which studies the pictures and can provide all sorts of healthcare advice, basically, [00:50:00] about I guess the state of your Got your digestive tract just looking at those pictures and it could be a health breakthrough for all I know, Erick, but one word reaction, ick.

Erick: Yeah, no kidding, Rich. Yeah. And I love the way you set it up. Yeah, it could be an AI opportunity, but For the select few I would say. For the select few.

Rich: As I said, folks, that is all the time we’ve got for you this week. Thank you so much for joining us. We are going to be back again in a week’s time with another episode for you.

In fact, that show Erick and I will be doing in person together at the Kaseya DattoCon event. And we’re going to have all sorts of interesting stuff for you. From DattoCon. Until then, I will just remind you this is both a video and an audio podcast, which means that if you are listening to the audio edition of the show, but you’d like to check us out on video, you can just go to YouTube, look up MSP Chat.

You’re going to find us there if you’re watching the video version, but you’re into audio podcasts. Go to Spotify or Apple or Google, wherever it is that you get your podcasts. Look for us there too, because you’re going to find us. And wherever it is you find us, please subscribe. Great review. It’s going to help other people find and enjoy the show.

This show is produced by the great rest Johns. It is edited by the great Riley Simpson. They are part of the team with us here at chat channel mastered. They would be delighted to help you produce a podcast of your very own. And podcasts are just one tiny sliver of what we do for our clients at channel master to learn more about that, the big picture.

You want to go to www.channel mastered.com. Channel Master has a sister business called MSP Master. That is Erick working closely with MSPs to grow and optimize their business. And you can learn more about that at www.mspmaster.com. So once again, we thank you for joining us on the show. We’re gonna see you in a week.

Until then, folks, please do remember you can’t spell channel. Without MSP.