Driving Technology Standards

www.Service-leadership.com
WHITE PAPERTotal Profit Solutions for IT Companies™
Driving Technology
Standards – Best Practices
for Driving Business
Strategies

www.Service-leadership.com
© 2017 All Rights Reserved – Confidential and Proprietary – Licensed Material
Table of Contents
Executive Summary ........................................................................................................................................................1
Why Drive Technology Standards ............................................................................................................................2
Progression Considerations ........................................................................................................................................4
Next Steps..........................................................................................................................................................................6

www.Service-leadership.com | Page 1 of 7
Executive Summary
To attain top quartile profitability, growth and Service quality, one of the most important things
any Solution Provider can do is to develop, adopt and enforce the use of technology standards
across the majority of their customers. Top (Best-in-Class) Solution Providers drive their
technology standards starting with Marketing, through Sales and then into the onboarding and
Service interactions with each prospect and customer, and do so in ways that increase their
market differentiation.
Driving the use of technology standards improves Service quality, scalability and profit, and
reduces overhead costs by narrowing and increasing the effectiveness of the go-to-market plan.
While true in Services-Centric firms, it is particularly true in Product-Centric firms, where too-
broad standards typically result in low Service margin and quality, which in turn often results in
low Sales enthusiasm for selling Services.
Employing a set of technology standards also helps improve market differentiation by enabling
a greater degree of specialization and expertise, which becomes evident through Marketing and
customer experience to current and prospective customers. As the standards-enabled, improved
Service methodology drives higher Service quality and margin, Service Revenue is further
accelerated by better account retention and improved referral selling.
Well-defined technology standards also improve a Solution Provider’s profitability by reducing
the number of operational variables that must be taken into account in managing to success,
thereby reducing complexity and investment across a wide variety of strategic to tactical factors.
Generally, by “well-defined” standards, we mean having only one vendor’s products available in
each segment of the technology stack. Higher-performing Solution Providers will know this from
experience. To firms at lower operational maturity, this often sounds counter-intuitive.
Lower-performing Solution Providers do not have well-defined technology standards in place or
they do not enforce them. For these Solution Providers, too many technology variables remain
in play to create an effective Service delivery methodology and an efficient Service operation. In
practice this disables the potential of the Service operation – a primary source of profit in most
Solution Provider businesses – to deliver predictable, scalable quality and profit. Without driving
technology standards, the low performing Solution Provider also allows the go-to-market
strategy to grow to an impractical breadth.

A key practice of higher-performing Solution Providers is that they develop and enforce the use
of technology standards, which is both an indicator and an enabler of Sales and Service
operational maturity. These higher-performing Solution Provider firms have two pervasive
characteristics: A focused, differentiated go-to-market strategy, and an efficient and effective
Sales and Service delivery methodology. Moreover, these higher-performing Solution Providers
understand that the most efficient way to clarify their own value proposition is to do so on the
basis of a well-defined and relatively narrow solution set – i.e., technology standards.
Top performers require full compliance with their narrowly defined, technical standards before
implementing Managed Services. Driving your technology standards should be done as early as
possible. Initially, though, your Sales teams might be confused as they have to re-prospect, and
learn new qualifying techniques against your emerging standards. However, once they make this
transition, they should see their time-to-close drop below pre-technology standard levels and
their average deal size increase dramatically – the sum of which yield a significant decline in
your Cost of Sales.
Why Drive Technology Standards
The reason for dramatically narrowing the range of technologies you will support under
Managed Services is simple and has been proven for decades: It is not possible to provide good
support on a sustainable, predictable budget across a too-broad range of technologies.
This is a basic management tenet of IT operations. Those Solution Providers that disregard it
find themselves faced with constant challenges of meeting committed Service levels and
continually aggravated Service labor costs.
Lack of standardization plays havoc with many cost and quality functions: The budgets for
technical headcount, technical training, tools, process development and automation are all
diluted across too many technologies, resulting in either strongly escalating costs or increasingly
poor Service quality, or both.
Solution Providers must and can dramatically narrow the range of technologies they support,
actively controlling what their customers buy and use across the entire technology stack. By
doing so, they start a virtuous cycle that is not readily apparent before taking the steps to
implement it.
 Customers (and therefore Salespeople) are primarily interested in Service quality, not
price.

 Narrowing the range of technology supported is the key enabler of Service quality,
especially as the installed base of contracts grows.
 When Service quality goes up, customer satisfaction goes up, which in turn increases
testimonials, Sales representative enthusiasm and willingness, and referrals (the primary
lead source of most SMB and mid-market focused Solution Providers).
 When the range of technologies is narrowed, the entire sequence of pre-Sales and early
post-Sales activities is shortened. The reason for this is that getting to the end-state
configuration is a known, well-tested and well-rehearsed process. The time needed for
assessments, pricing, proposing, negotiating, closing, onboarding, ramp to SLA
attainment, and first billing are all reduced as much as possible. This improves Sales cost,
Gross Margin, and cash flow. This shortened time also results – again – in a happier
customer and a happier Sales rep.
 Service Cost of Goods Sold (COGS) reductions are also enabled by narrowing technology
standards; in turn, enabling you to compete at lower prices (while maintaining above-
market Gross Margins). Interestingly, higher OML©
MSPs typically use value pricing and
therefore don’t compete as much on price, but the reduced COGS enable them to do so
when desired.
 Lower Service COGS also results in higher Service Gross Margins, which typically increase
the commissions, further building enthusiasm among the Sales team.
Narrowing the range of supported technologies results in more referrals, more testimonials and
greater excitement and commitment by the Sales team. It is also a key enabler of scalability,
which permits the growth of, and reduces attrition from, the account base. Taken together, these
factors mean that Revenue growth accelerates significantly when the customers are required to
comply with your technology stack.
Over time the MSP will realize dramatic improvements in operational and financial results.
 Greater Staff Flexibility: The more consistent your customers are, the easier it is for your
technical team to move between them. Staff levels can be lower because you don’t need
to cover as many different technical specialties. You can also spread off-hours work
across a broader set of people because the basics about any given account are the same
and known by everyone.
 Less Staff Training: If you only have one backup system or one type of firewall, you only
need to train your team on those specific products. Less documentation is required as
well.

 Lower Inventory Costs: Having the right parts on-hand for hot swaps is easier when
there’s a limited number to stock.
 Easier Software Management: The more consistent your software environment is across
customers, the easier it is to manage.
 Current Hardware and Software Benefits: By evolving your set of standards, and
maintaining customer compliance to those standards, your customers never use
outdated or obsolete hardware and software. Having a predetermined and universal set
of standards can serve as a catalyst for upgrading customers to current norms.
Progression Considerations
Progress can occur rapidly and does so when the leadership of the Solution Provider comes to
two realizations. The first is that they will need to drive towards a set of technical standards to
organize how they think about, manage and market their business. This realization lays the
groundwork for the second, more profound realization: They must drive these standards into
their customers and prospects with real discipline. This happens with the decision not to take
any more non-standard customers. Starting with your next prospect, the prospective client must
agree to adopt your technology standards within a reasonable period of time or you cannot
accept them as a customer.
While developing the standards can happen very quickly, driving these technology standards is
most safely accomplished without skipping levels. Effective progression requires changing the
culture to narrow the standards. You should also operate against these standards internally, and
evolve the Sales process and compensation to support the Sales team driving the installed base
and prospective customers to comply (or paying a substantial premium for non-compliance) –
all of which takes disciplined sequential improvement.
There are pitfalls in driving technical standards. The first is to make it an internally focused
exercise, without understanding the market and competitive environment, most notably what
will it take to be the Solution Provider of choice to your target customer. Additionally, your Sales
team needs to be retrained and fully enabled against your technology standards to most
effectively use the standards to narrow their field of view to customers who will adopt your
technology standards.
While Service drives the development of your technology standards truly, Marketing and Sales
must drive those standards into your installed base of customers and prospective customers.

In addition to operational improvements from progressing in this area, the Sales team also
benefits in very real and measurable ways. As you begin to impose technology standards, keep
an eye on key Sales metrics: cycle time to close, overall close rates, and average Monthly
Recurring Revenue (MRR) per Managed Services deal. The Sales team may experience
challenges until they have learned new prospecting, qualification, and Sales pitches. As the Sales
team progresses, you will start seeing a markedly faster Sales cycle, at higher prices and
increasingly against more and more of your technology standards.
The costs of developing technology standards for each major solution segment is significant. In
addition, you must consider the cost of keeping your technology standards updated as
underlying technology vendors’ product offerings evolve. This can run 3% or more of Top (Best-
in-Class) Solution Providers annual Revenues – in both hard costs and the soft costs of the
manpower devoted to this task. As a result, these top performers seek to control this cost and
speed time-to-market by partnering with relatively few vendors. Quality and completeness of
vendor-provided reference architectures are key vendor selection criteria.
Developing technology standards is not a stand-alone process, it is dependent on other areas
including:
 Relative maturity in Charging for Assessment -a key tool to understand the scope of the
remediation to your standards).
 Incentive compensation plans for your Sales team, Sales executive, engineer and Service
executive
 Sales Management Methodology
The incentive compensation plans and Sales Management Methodology plays a necessary role
as it helps to drive consistent behavior.
As the Solution Provider matures in this area, the initial signs of success include anecdotal
reports from Sales that technology standards play a key role in the prospect qualification
process and in positively differentiating your company. They are also reporting that leveraging
technology standards is both speeding up various parts of the Sales process and yielding higher
Revenue per close.

Next Steps
Every organization will have its own unique set of technology standards. You and your team
should start by first assessing the factors which will shape the technology standards for your
organization, including:
 What technology have you currently deployed in your customer base?
 Where does your existing staff have real expertise?
 What are your current practices for existing customers?
 What are your leading vendor relationships and what assistance can/will they provide in
helping you develop your technology standards?
Ideally, every customer has an identical environment. In reality, it’s never that simple. New
customers and even existing customers that you wish to deliver Project Services and/or
transition to a Managed Services model are likely to have a mix of hardware and software
already in place.
Once you have created your standard architecture, the next step is to determine which
standards are non-negotiable and which ones, if any, have flexibility. Higher-performing
Solution Providers have as much as 10% flexibility, but no more. Determine what is absolutely
required and what is optional. Make sure this is documented and fully understood by both your
Marketing, Sales and Service teams so that they can set clear expectations with, and express
clear benefits to, the prospects and customers.

About Service Leadership, Inc.
Service Leadership is dedicated to providing total profit solutions for IT Solution Providers,
directly and through industry consultants and global IT vendors. The company publishes the
leading vendor-neutral, Solution Provider financial and operational benchmark: Service
Leadership Index®
. This includes private diagnostic benchmarks for individual Solution Providers
and their business coaches and consultants. The company also publishes SLIQ©
, the exclusive
web application for partner owners and executives to drive financial improvements by
confidentially assessing and driving their Operational Maturity Level©
.
Service Leadership offers advanced peer groups for Solution Providers of all sizes and business
models, and individual management consulting engagements for Solution Providers from
US$15mm to US$3bb in size worldwide. In addition, Service Leadership provides global IT
vendors with advanced partner enablement assets, partner ROI models, management
consulting and advanced peer groups, as well as executive and industry best practices
education and speaking. Please visit www.Service-leadership.com for more information.
Contact Us
Paul Dippell, CEO
Service Leadership, Inc.
Tel +1 972-798-1288 x111
Fax +1 469-362-1179
Paul@Service-Leadership.com
Notice: All materials published (electronically or print) by Service Leadership are proprietary and subject to trademark and
copyright protections, regardless of where and how it is sourced. The terms and concepts of SLIQ©
, Service Leadership Index®
, (S-L
Index™), Predominant Business Model©
(PBM©
), Operational Maturity Level©
(OML©
), Normalized Solution Provider Charts of
Accounts©
(NSPCoA©
), Total Cost of Managed Services©
(TCMS©
) and Service Factory©
are proprietary to Service Leadership, Inc. All
Rights Reserved.

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