Virtual CIO: How One MSP Moved into the Boardroom

eric rockwell centrexIT

Eric Rockwell (pictured), president and CIO of CentrexIT has figured it out. His 10-year-old San Diego-based managed services business, a member of HTG Peer Group number 1, makes it a point to serve on each customer’s board of directors and attend the board meetings as the virtual CIO. That way Rockwell is there for the business discussion where he can contribute ideas and suggestions, helping customers shape a technology strategy to achieve their business goals. He doesn’t have to wait until after the meeting is over to hear about decisions that have already been made and then try to fit what he offers into those decisions.

And that’s a strategy that’s been effective. CentrexIT reports revenue growth of 67 percent year over year. The company currently has 20 employees, Rockwell told me.

Virtual CIO — What it Means and What CentrexIT Offers

“We provide a full IT department,” Rockwell says. “We attend their board meetings; we help them align their business objectives. We provide the design necessary to fulfill those objectives. We can offer full time project managers and engineers, help desk services, field work, and everything else they would need.”

(TruMethods recently introduced a cloud-based service for virtual CIOs. More information is here.)

Rockwell calls these types of services “above the line services.”

Rockwell’s Services Quadrant

He categorizes managed services in one of four quadrants, with above-the-line-services being the most profitable and strategic. Virtual CIO is above the line. Also above the line is the concept of sharing a percentage of profits with the customer business in exchange for providing those IT services. CentrexIT hasn’t gotten to that level quite yet.

Below the line are standard managed services and reselling, both of which focus on price more than value, Rockwell says. One of the below-the-line quadrants is transaction –based – all about the price of products and solutions. The other is more about automation and the standard sorts of services MSPs provide such as remote monitoring and management, but it is also focused on cost and price, gravitating more towards total cost of ownership than value.

“Once you get above line, top left or right the major shift is about how you sell instead of what you sell,” Rockwell says.

As far as being the virtual CIO, Rockwell knows that these companies only really need a CIO for about four hours each quarter. But it’s important that the virtual CIO is at the company’s board meetings to consult on projects. Once Rockwell was able to do establish this virtual CIO relationship with one client, he took the approach to other clients as well.

Standardization to Keep Costs Lower

Another success factor for CentrexIT has been standardization on certain technology vendors including Microsoft, Cisco, Computer Associates and Lenovo.  “Every network that we design is 100 percent Cisco powered and Cisco based.” The company has also been standardized on N-able and ConnectWise since 2004.

CentrexIT focuses on vertical business and hosting line-of-business applications. About half of its business comes from companies in the healthcare vertical, but it also counts among its customers the USS Midway Museum.

To offer these services, CentrexIT has built out a huge virtualized server farm with several hundred servers in a massively redundant infrastructure. The company has also partitioned off space for just for bigger clients. Rockwell reports that customers prefer the opex to the capex spending, plus it is a more cost-effective profit center for CentrexIT, too.