Managed services providers (MSPs) are well equipped to remotely monitor and maintain the critical systems of their SMB clients, but who’s monitoring them?
According to channel startup MSP CFO, managed services providers often deliver detail-oriented services to their clients, but often do only a so-so job of managing their own business and account practices. That’s why company directors Larry Cobrin and Michael Kraner founded what they call “the virtual CFO, providing a very specific vertical of outsourced CFO solutions to the MSP space.”
Meeting up with ChannelPro-SMB at the Sept. 10–13 Datto Partner Conference in Washington, DC, Cobrin and Kraner introduced their business and made a case for the value of their offering.
From MSP to CFO
Having operated his own MSP business in New York City for over 12 years, Kraner says MSP CFO was borne of his own experiences. “As MSPs, we were always focused on managing the clients, client issues, client meetings,” Kraner explains. “It was very hard to take the time to focus on the financial side of running the business.”
Whether it was setting the right budgets or properly analyzing labor use, Kraner said his company had a lot to learn. It wasn’t until his company learned to “build out the metrics and get proper PSA integration” that it grew.
PSA to the Extreme
Professional services automation (PSA) tools have long been touted as a must-have for MSPs. After all, a good PSA can manage ticketing, invoicing, inventory, and more. According to Kraner and Corbin, however, a PSA’s value runs a whole lot deeper.
“There’s a mountain of information MSPs have at their fingertips [with a PSA],” Cobrin says. “They often have thousands of time records per engineer. They have all the invoices that go in that. They have all their product information.”
The trouble, Cobrin explains, is that the information is “sitting there in ConnectWise or Autotask in a manner that is very hard to understand.”
That’s where MSP CFO comes in.
In addition to helping MSPs properly integrate a PSA, the company also provides business model, revenue model, and labor utilization model consulting. Most important, it helps MSPs access and unpack data to “make good decisions on the financial side.”
Take “client contribution,” for example: MSP CFO can help MSPs determine which clients are less profitable than others. “We look at the entire revenue stream for that client,” Cobrin says. “We figure out all the costs associated with having that client—the labor costs, any direct marketing costs, the costs of goods sold. We really load up all the costs associated with servicing that client.”
Once the total cost of particular clients is tallied and referenced against revenue and profit, Cobrin says many MSPs come to some surprising conclusions. “What’s the relationship really worth?” Cobrin asks. “When we go out and price recurring revenue contracts, we need to consider everything.”
Data Drives Everything
So, who is the target market for MSP CFO? Simple: MSPs. “We work for MSPs,” Cobrin says. “If there is an MSP that is making good use of its PSA—in terms of ticketing and invoicing, but not in terms of other ancillary information—then that’s our key client.”
What does it cost? A little less simple: It depends. “It’s a combination of a few different variables,” Kraner explains. “It could be the number of engineers, monthly transactions, and overall revenue. We design a package that’s a recurring package similar to what MSPs themselves offer.”
“As an outsourced solution, we can provide great efficiency,” Cobrin adds. “If you want to take it to the next level to get better information, that’s what we do. Data drives everything.”
GEOFFREY OLDMIXON contributed to this report.