How These Channel Partners Are Winning the Talent Retention Battle
A roundtable of technology advisor, MSP and MSSP leaders sat down earlier this month to discuss their shared challenges.
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The companies in the roundtable vary drastically in their business models. Four of them belong to the technology advisor (agent) model, in which the partner consults with the end customer to recommend an as-a-service vendor, which in turn supports and bills the customer directly and issues a residual commission to the advisor. Two of them fit into the traditional MSP model that provides IT support/help desk services for an ongoing fee. Two of them do some MSP work but brand themselves more as MSSPs and perform ransomware remediation.
And companies like these cross paths frequently without necessarily competing with each other.
For example, KeyStone Solutions is an MSP but sells entirely through technology advisors. WheelHouse Solutions is an MSP, but it belongs to the TDM family of companies, which includes a technology advisor and a technology services distributor (TSD). The MSSPs may refer clients in the direction of security-conscious MSPs. In the meantime, the technology advisor community as a whole is partnering more and more with MSPs and MSSPs, viewing them as strategic suppliers rather than rival partners.
No matter one’s business model, succesfully hiring and retaining talented people can make or break one’s business.
“Our business is built on strong relationships, and our new team members must be established to create the success we require,” said Opex Technologies CEO Courtney Humphrey, who added that Opex tends to pursue individuals with deep experience and a “significant rolodex.”
However, many MSPs and agents view hiring as a challenge. For example, 18% of respondents in the latest MSP quarterly survey named hiring their top challenge.That trailed product supply (19%) and customer base expansion (21%). On the agent side, 31% of Q1 survey respondents cited hiring and retention as a top challenge – putting it at the top of their concerns.
Roundtable members went on to discuss where they’re finding succes and where their finding challenges in the area of hiring and retention.
Channel Futures asked partners about what sort of entities threaten to lure away jobs.
For Kat Lopez Shelby, who co-owns the Texas-based technology consulting firm Shelby Technology Solutions, said she faces the risk of her people moving to work for a client. Her firm serves businesses in the oil-rich Permian Basin
“I know you know can write into your employment contract verbiage to combat this, but I live in Texas, and we’re a right-to-work state. At the end of the day, they’re going to go where they’re getting paid the most and have the best benefits. Which can be a struggle for a small business to compete with,” she said.
Kevin McDonald, chief operating officer and chief information security officer at the MSP and MSSP Alvaka Networks, pointed out a staffing competitors that many partners have faced over the years: vendors.
The large suppliers historically could reach into deep pockets to dole out the highest salaries and benefits – with health care a key differentiator.
But McDonald said the vendors’ shine is lessening in the eyes of prospective employees. And that’s due to the endless stream of layoffs that have hit the news in the last six months.
“Frankly, the layoffs in the big companies has caused less draw to them, because they had benefits and sick pay and all this stuff that you can’t compete with as a small business. Now that they’re laying people off, that specter is gone,” McDonald said.
The technology advisor community in particular has seen an increase that seems to be going in the opposite direction of vendor staffing. The latest survey of agents found that 44% of them grew their headcounts in Q1.
And many of them are bringing over people from the vendor side.
“Find out who’s moving and who’s shaking, and what suppliers are getting rid of great people because we have seen incredible assets being released,” Kairos Data Communications‘ chief revenue officer Lucas Salvage said in a keynote panel earlier this month. “The supplier community is doing us a favor because I think what we’re seeing is go fire these people that are incredible folks because we will certainly gobble them up and create more of a strategic brand and a strategic organization.”
Even if partner firms can’t match the base salaries people were getting at vendors, they’ve found ways to make compensation more attractive in the long run.
Technology advisors, for example, can offer their employees a piece monthly recurring commission they earn from suppliers, which allows for an individual to continually stack earnings upon earnings each year.
“I think that almost everyone on our team is making more money than they made in their previous position … For our sales folks, we’re getting high caliber people that were making big comp at their previous job. I can’t match that comp plan day one, but I can give them a road map that they’ll make twice as much as they’re making, because of the residual nature of our compensation,” said Courtney Humphrey whose North Carolina-based technology advisor firm Opex Technologies employs 26 people.
Those sorts of incentives aren’t just happening on the advisor side. Chris Torbit, is the managing partner of St. Louis-based WheelHouse Solutions, which belongs to the the TDM family of companies that includes an advisor and a TSD. All three of those companies recently tied all of their employees to a particular revenue stream
“That kind of golden parachutes them in a way never to leave. We’ve had already had team members stay 15-20 years, but now they’re getting more income into that,” Torbit said.
KeyStone Solutions, a Chattanooga, Tennessee-based MSP, often hires young people who are newer to the industry, chief strategy officer Richard King said. The company operates a progression program, in which it funds employees’ certification processes and then ties salaries to their certification levels.
And that system is keeping folks engaged, King said.
“They’re pushing to get the certifications for the money, which then gives them the talent to be able to do the work. And they’re getting that work. And then the younger people coming in– they’re able to move up quickly,” King said. “I feel like because they’re staying, they’re getting endearment out of their job. Because your higher level engineering guys– they just want to work on hard stuff.”
Partner leaders also see their workplace environment as a key opportunity to differentiate themselves from other employers.
For example, these smaller partners can offer a flexibility that corporate behemoths can’t rival. For Opex Technologies and other partners, vacation days don’t technically exist, because employees always have the option to take time off.
“It’s family-first kind of mentality, because I have kids and other people on the team have kids. So if they’ve got something going on, it’s no-questions-asked,” Courtney Humphrey said.
Production of course matters to these partner organizations. For a technology advisor, those production metrics might revolve around sales activity. For an MSP, it might revolve around ticket resolution. But the actual logging of 40 hours in tends to not matter as much, according to many of the partners who shared their management style.
“I frankly don’t care if you’re working two hours a day if you’re producing high numbers,” Kevin McDonald said.
Partners in the roundtable varied on their adoption of remote work. Some of them remain fixed with in a certain geographical location and continue to meet regularly in the same office. Others have seen employees moving out into less expensive states.
Kevin McDonald said Alvaka’s employees have been working remotely, except for its network operations center members. He said the last three years have been its most productive yet.
Referrals play a big part in most partners’ businesses, but they play a particularly strong role for newer, smaller firms.
Three the partners in the room – affiliated with the technology advisor category – launched in the last three years. In the case of Eric Ludwig’s Illinois-based firm RISE Technology Advisors, while the firm has made two hires in the last six months, they’ve still need to “bootstrap” their business he said. And referrals hve been essential in doing that. Ludwig and co-founder Ed Wu have turned to some of the IT leaders they’ve engaged with over the course of their careers to develop referral partnerships.
“There is an adjacency in every technology product. A need for network, security, layering on managed services. We’re looking for introductions and our partners are looking to complete a solution with someone unbiased. It also allows partners to suggest ways to engage their client’s client as well using technology services. It’s a great way for partners to open their rolodex and broker introductions,” Ludwig said.
One of those partnerships recently resulted in a substantial contact center deal, he said.
“We’re investment-light, so our referral framework is really positive. People stay engaged because they start getting paid and it continues every month from those referrals.”
Partners seem to be more and more eyeing cyber insurance as an arena for referrals.
For Pamela Diaz’s extended services provider Entara partners with cyber insurance brokers, who bring clients to Entara to help them ensure that they qualify for insurance.
“It is hard to qualify for cyber insurance, and it is only getting more and more complicated each year. Clients will come to our team and say, ‘what do I need to do or implement to be able to get this policy?’ We go through it item by item and make sure they check all the boxes by implementing new recurring services, like an MDR solution,” Diaz said.
Based on what many partners were saying at the roundtable, a number of customers are staying away from cyber insurance, or at least don’t plan on using it anytime soon.
“There is a whole untapped market out there of the uninsured, the underinsured, and people who choose not to invoke their cyber policy because they know if they do, they most likely will not get another one,” Diaz said. “When we are working with a prospect, we really try to meet them where they are in their security and insurance journey.”
Idris Odutoye, who leads Maryland-based technology advisor ATA Trusted Advisors, said his firm is seeking people who want cybers insurance but still need to put together the solutions required to make them qualify for a policy. And that includes people who have already gotten a denial.
As one might expect, cost serves as a key barrier for customers to purchase cyber insurance.
“They were giving this stuff away 5-10 years ago, and now everybody’s coming up for renewal. And it’s like, ‘No, maybe we’re not sure it’s free,'” Odutoye said.
But that’s where technology advisors like ATA can help clients form budget room for cybersecurity.
“In our space what’s unique is we’re not just selling security. So we can go in and do some cost optimization and other stuff. They can now take those savings and pay for the cybersecurity,” he said.
Channel Futures recently wrote about the changing value proposition of technology expense management. Namely, expense management for telecom, mobility and cloud are playing a more symbiotic role with other technology investments
“A lot of digital transformation initiatives, which have gotten lot of the glory over the last couple of years, generally need a supporting effort to create space in the budgets,” Resourcive president Kyle Hall told Channel Futures earlier this year.
Entara operates both an MSP business and an MSSP/remediation business. But Diaz said the company is using its incident response business as its main funnel for its MSP business.
Diaz said starting with cybersecurity services creates a very logical entry way into MSP services.
“Diversifying our lines of business has been very impactful for us. We get so much pull-through from doing remediation for organizations that experienced a security incident,” Diaz said. “The key component of any managed services sale is trust. That is very hard to establish in a normal sales process. But if you’ve already met them on their worst day, they trust you. They get your value, and they feel comfortable continuing the relationship because they know you’re trying to help them proactively avoid another incident.”
Every single partner model represented in the roundtable engages with their client around cybersecurity in some shape or form.
However, a customer’s investment in cybersecurity will dictate if and how certain partner types will get involved with them.
For example, MSSPS who provide remediation services but also provide MSP services may be turning away customers who aren’t willing to adopt the necessary security infrastructure.
But an MSP, on the other hand, might make the customer sign a form that says they acknowledge that they aren’t taking the MSP’s advice to adopt a stronger posture.
“If you’re not going to take the recommendations and you just want to use your help desk, that’s fine. But I’m not going to be on the hook,” Torbit said.
At the same time, many MSPs – like King’s KeyStone Solutions – do offer virtual chief information security officer (vCISO) services. At the same time, they may be looking to focus more on education and prevention and leave the remediation and incident response side to the MSSPs.
The actual sale of cybersecurity products and platforms is another question. The most recent Channel Futures MSP quarterly survey found that cybersecurity sales increased for 62% of firms in the first quarter. The tech advisor channel is seeing strong growth in cybersecurity sales, with 36% of firms reporting growth in Q1. However, many advisors admit that they are waiting for more mainstream vendors to adopt their partnering model.
One challenge partners face is how to tell clients the brutal truth that the client is lagging behind on cybersecurity. How do you tell an IT leader that they’re getting a failing grade in protecting their IT? And how do you get them to put aside their ego to work with you on changing that?
Diaz said it’s important to come to an understanding of how much risk a new client minds accepting. Then, she said she brings up Entara’s security recommendations in the context of how they can reduce risk.
“For example, if you start to patch, does it reduce your risk by 80%? If you implement an MDR solution, does that reduce your risk by 15%? We’ll say, ‘Here is what you are missing and the amount of risk you are opening yourself up to, and also the amount of risk you are opening our organization up to. These are the things that you have to do to work with us. These are the projects that must be completed before we can even onboard you as a client, because we’re not taking you on until you’re in a better place.’ The technical debt and risk you take on with new clients can be massive in some cases,” Diaz said.
One challenge partners face is how to tell clients the brutal truth that the client is lagging behind on cybersecurity. How do you tell an IT leader that they’re getting a failing grade in protecting their IT? And how do you get them to put aside their ego to work with you on changing that?
Diaz said it’s important to come to an understanding of how much risk a new client minds accepting. Then, she said she brings up Entara’s security recommendations in the context of how they can reduce risk.
“For example, if you start to patch, does it reduce your risk by 80%? If you implement an MDR solution, does that reduce your risk by 15%? We’ll say, ‘Here is what you are missing and the amount of risk you are opening yourself up to, and also the amount of risk you are opening our organization up to. These are the things that you have to do to work with us. These are the projects that must be completed before we can even onboard you as a client, because we’re not taking you on until you’re in a better place.’ The technical debt and risk you take on with new clients can be massive in some cases,” Diaz said.
Channel partner organizations of all shapes and sizes are tackling the problem of hiring and talent retention.
Channel Futures gathered together a panel of technology advisors (agents), managed service providers (MSPs) and managed security service providers (MSSPs) for an editorial roundtable at the recent Channel Partners Conference and Expo at the beginning of May.
Although these three partner models vary in how where they earn revenue and their technology focuses, they share the common challenge of finding and keeping good people. Partners in the recent Channel Futures Q1 surveys of MSPs and agents found that both groups see staffing as a key challenge. And roundtable members backed up that trend with their own observations.
That comes in part as inflation and other factors have caused wages to rise. One MSP leader noted that salaries have gone up 15-18% since the start of COVID-19. Partners have always faced the challenge of competing with the well-resourced corporate world to offer employees benefits and pay that keep them around. And now, they’re finding new ways to find and keep their folks.
Some MSPs and technology advisors, both who generate a stream of recurring revenue, are harnessing their models to loop their employees into that revenue. Another MSP is using a progression program that ties raises to certifications levels. Other firms are touting the flexibility they offer to employees, both in terms of working location and hours.
Talent Retention Participants
The attendees included:
Pamela Diaz, CEO and President, Entara (MSP/MSSP)
Courtney Humphrey, CEO and President, Opex Technologies (technology advisor/consultant)
Richard King, Chief Strategy Officer, KeyStone Technology Solutions (MSP)
Kat Lopez Shelby, Co-Owner, Shelby Technology Solutions (technology advisor/consultant)
Eric Ludwig, Co-Founder, RISE Technology Advisors (technology advisor/consultant)
Kevin McDonald, Chief Operating Officer and Chief Information Security Officer, Alvaka Networks (MSP/MSSP)
Idris Odutoye, Technology Advisor, ATA Trusted Advisors (technology advisor/consultant)
Chris Torbit, Managing Partner, WheelHouse Solutions (MSP)
Entara’s Pamela Diaz
Opex’s Courtney Humphrey
Keystone Solutions’ Richard King
Shelby Technology Solutions’ Kat Lopez Shelby
Rise Technology’s Eric Ludwig
Alvaka’s Kevin McDonald
ATA’s Idris Odutoye
WheelHouse’s Chris Torbit
The roundtable conversation focused heavily on strategies partners are employing for talent retention. The think tank also touched on how organizations engaging with clients on cybersecurity, as well as how they’re engaging with cyber insurance brokers.
Channel Futures recapped key tends from the conversation in the 12 slides above.
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