THINK OF YOURSELF as a systems manager rather than a solution developer? You may be missing out on an opportunity to collect high-profit revenue and separate yourself from run-of-the-mill competitors by adding custom application development to your service offerings.
Tim Montgomery, president of TIMIT Solutions, says margins can vary from 15 percent for simple jobs like .NET or Java work to 50 or 60 percent for artificial intelligence (AI) and machine learning (ML) projects that require hard-to-find data scientists. TIMIT, a three-person firm with offices in Boston and Albany, N.Y., uses a network of developers and consultants around the globe. Montgomery says AI and ML projects are still rare, but welcome.
For Freelock Computing in Seattle, an early focus on website development helped boost monthly recurring revenue as automation reduced hourly billing for IT services. The firm now offers what founder and President John Locke calls “website property management” to keep sites secure, up to date, backed up, and recoverable. “This approach gives us much more monthly retainer income,” he says. Freelock even hosts sites for some of its smaller customers.
Monthly contracts don’t apply to all development, however, says Montgomery. “Customers who want mobile apps, say, tend to be one and done. We’re in regular contact, but they don’t need new products often.” When Freelock delivers custom applications, though, clients usually want support, which typically means monthly contracts.
Different development skills often require different people, says Montgomery. “Is your developer a good end-to-end tester? Security expert?” He adds, “Many programmers don’t want to work for MSPs because they think hardware is boring.”
TIMIT, in fact, often partners with MSPs that don’t offer software development but have clients in need of help, adding that his firm can either work directly with the customer or through the MSP. “When a new MSP comes to us, we show them our development process; they show us their monitoring and managing process,” Montgomery says. “We define the message and take it to the client together.”
Locke, too, says several IT integrators have asked his firm to take over website development and support for their clients. “They do desktop and server support and we support the website and do new development,” he says. More often, however, those partnerships are with marketing agencies rather than channel pros. That said, Freelock works with several IT groups on a “white label” basis, with his firm’s website monitoring and redundancy services appearing as another line item from the MSP.
Partnering with a software developer makes sense even for integrators that have some application expertise, notes Locke. “They may have a webmaster in-house who can do CSS and HTML on WordPress or Drupal, but they ask for our help for security and backup. Sometimes they lean on us as they learn.”
Montgomery says he likes working with MSPs. “They have a large number of clients and their customers sometimes say, ‘hey, you’re doing a great job with our hardware, but we have a problem application,’ so they call us when they need software development.”
So as beautiful as new computers and network routers are, now may be a good time to add software development to your catalog, or partner with a developer, to help with customer retention and your bottom line.