This small MSP-turned-ISV is projecting more than $1 million in revenue growth this year with even bigger growth potential the following year.
Jerod Powell understands managed services. He knows, for example, that it is not about selling SharePoint subscriptions or disaster recovery as a service (DRaaS) — it is about selling a business transformation service. While that mindset is enough to put Powell’s company, INFINIT Consulting, in the minority of managed services providers (MSPs), there is something else equally important this CEO has learned. If you want to differentiate your business from other channel companies reselling IT solutions and services, you need to develop and sell customized, cloud-based software.
The Decision To Become An ISV
If someone had suggested to Powell four years ago that he should become an independent software vendor (ISV), he would not have given it much credence. However, over the past few years circumstances led him to that very conclusion. “We’ve always been consultative with our clients, trying to learn about their business challenges before recommending a solution, and that’s where we first started seeing a trend,” he says. “Organizations with 1,000+ Microsoft Office 365 users were having a difficult time managing shared contacts. And, the regular tool offered by Microsoft to solve the problem required IT admins to manually navigate screen to screen and write Windows PowerShell commands.”
Powell found further verification to his hunch online. “It was through researching LinkedIn Office 365 forums that we realized our customers’ business challenges were representative of a much larger group of companies. After digging into the problem further, we discovered that even though many partners had the skills to manually fix the problem by writing PowerShell commands, no one took the initiative.”
INFINIT Consulting’s blog brought further confirmation that the MSP was onto something. “Long before we identified this trend, we had written a blog titled, ‘How to Create Shared Contacts Lists in Office 365,’” he says. “Every month for three years it generated more clicks than any other article on our site. We originally thought the readers were consumers or small business owners who did not know how to set up shared contacts. But, after we started getting calls from larger companies and schools, however, we realized it was a pain point for big businesses, too, and that’s when we started seriously considering getting into the ISV business.”
The Risks And Rewards Of Becoming An ISV
A look at the 1 million-plus applications available at the Android and Apple app stores is proof that lots of app developers want a piece of this lucrative and highly-competitive market. “Early on I had to contend with the recurring thought, ‘What happens if I invest all this time and money developing the perfect program and no one wants to buy it?’” says Powell. Another fear was what if he came out with a great app that businesses did want but one of his competitors stole his idea by copying the backend code. “Aside from the GUI [graphical user interface], it’s difficult to protect against someone from copying the code,” he says.
Powell had enough data points to realize that the first fear was just the normal feeling that comes with taking risks and trying something new. To protect his company from piracy, however, he met with multiple intellectual property and patent attorneys and adopted a nondisclosure agreement [NDA], which provides at least some protection.
Once the above-mentioned fears were addressed, there was just one more issue that needed to be addressed, which was where was he going to find the right application developers to build his first killer app — and hopefully more apps after that. “The market moves quickly, especially when the cloud is involved, and I knew I had to move quickly or someone else was going to develop the same app before me,” says Powell.
After discovering that hiring an application developer in the San Francisco Bay area wasn’t going to work (thanks to the myriad of other tech companies in Silicon Valley), Powell knew he needed to find outsourced talent. “I knew I wanted developers with .NET and C-sharp programming skills, preferably with extensive REST (representational state transfer) API (application program interface) experience and ideally some expertise with Cortana Advanced Analytics, Microsoft’s machine learning language, which is designed for big data and IoT [Internet of Things] apps,” he says.
Through his network of peers and his own online research, Powell formed a list of 100 potential app developer candidates, and over the course of six months, he narrowed the list down to five. “After getting the final five, I assigned each company a different phase of the project, and I let them each know that they were participating in a competition with four other companies,” he says. “Looking back, I’m really glad I took that approach, as it enabled me to know which one was fastest, which one was most strategic, and which types of challenges each could handle. In the end, I kept all five of the finalists and to this day I work with each one depending on the specific programming need.”
One of the biggest lessons learned from this experiment, too, was that the most expensive app developers are not always the best ones, and it definitely pays to shop around. Powell also learned to recognize cultural differences when working with programmers outside of the United States. “I recall one off shore firm that said ‘Yes’ to everything I asked them for and when I finally needed them to get started on a project they were forced to admit they couldn’t do what I needed them to. They wasted six weeks’ of my time and forced me to have to start my search all over,” he says. “I quickly learned that that particular culture doesn’t like to say ‘No.’ I also learned that I had to validate each request to make sure the programmers could do what I was asking, and that they were not just trying to be nice.”
A Killer App Needs A Killer Sales Strategy
In addition to developing his first app, Powell needed to figure out how to price and sell it. “Microsoft provides IP worksheets that helped us determine our costs, the margins we wanted to make, and ultimately the price we needed to charge,” he says. “It also made me realize that this was going to be a long term commitment; once you’re in IP, you’re in it forever. Microsoft’s apps will change, and as a result we will have to continually keep our applications updated to support our end customers.”
The MSP also received guidance from Microsoft about how to sell its new app. “We’re now part of a Microsoft ecosystem that includes 50 partners that evaluate and give feedback on our apps [all under NDA, of course],” says Powell. “And, if they like it, they can resell it, too.”
Ultimately, Powell wants to build a channel. “Really successful companies have a channel. SkyKick is a good example of the kind of company we want to emulate. They offer a service that solves a Microsoft-related business challenge, which in their case entails helping companies migrate their on premise Microsoft Office products and data to the cloud. Their commitment to the channel has created a loyal following of IT solution providers. In fact, we’ve looked at other companies that offered similar services as good as or better than SkyKick’s, but the fact that the others did not understand the channel made them far less appealing than SkyKick.”
Powell is planning to make his company’s cloud management software available in a multitenant version for channel partners. Additionally, INFINIT Consulting is developing modules that will roll in other Microsoft products such as SharePoint, Skype for Business, and Azure Active Directory (AD).
Before the MSP-turned-ISV makes the next big transition and figures out the details of managing a channel while avoiding conflict with its direct sales, Powell says his biggest challenge is going to be managing what he calls the whirlwind. “We’ve been winning lots of business in the education market,” he says. “I started a conversation with one school administrator and I had only gotten out two sentences about our INFINIT Cloud Manager for Office 365 product and she said, ‘I’ll take it.’ We closed nine deals this week alone, and I’ve barely gotten any sleep — it’s been crazy.” In full disclosure, Powell shared that he has lost a couple of salespeople along the way because selling cloud solutions is not a fit for every salesperson. “Even though we’ve always prided ourselves on being consultative, some of our people had gotten in the habit of treating Office 365 sales like a product sale. I sat down with our team and told them, ‘We’re either moving forward or we’re moving backwards — we’re not staying the same.’”
Following the talk, Powell discovered that over the previous year, 300 customers had purchased Office 365 through his company, but they were not being managed. “Since then we’ve gone back and discovered there were a lot of new business opportunities with those customers. We even hired a customer retention manager to ensure we’re not compromising customer satisfaction as we continue to transition and grow.”
INFINIT Consulting is currently developing additional apps, including an INFINIT Shared Contacts Mobility Sync app and a global signature manager app, which it expects to bring to market in the coming months. “Things have really taken off this year, and we’re predicting 500 sign-ups per month and averaging $200 per person, which would add $100,000 every month in additional recurring revenue,” says Powell. “As long as we continue focusing on the simple mission of improving customers’ lives through technology, I believe we’ll continue to grow. That is what led us to become an MSP five years ago, and it is what led us to become an ISV and cloud services provider focused on providing business transformation services.”
Turn Your New Business App Into An $80 Million Opportunity
Jerod Powell, founder and CEO of managed services provider (MSP)-turned-independent software vendor (ISV) INFINIT Consulting, describes the past year of business as a whirlwind. After recognizing a common problem among large organizations setting up shared contacts in Office 365, he developed a cloud-based app to address the problem. Since launching his killer app, Powell’s business has been disrupted in every way, leaving him little time for sleep. One redeeming quality he has appreciated during this tumultuous time is his relationship with business partner, Ingram Micro.
“Shortly after making the decision to develop the app, I reached out to our Ingram Micro account manager, explained our situation, and asked for help getting in touch with executive level contacts responsible for running Microsoft Office 365,” says Powell. “Ingram Micro has also been instrumental in getting us plugged into the Microsoft cloud program and training our staff on the latest Microsoft cloud products and services.”
More recently, Powell took his business partnership with Ingram Micro to the next level by outsourcing Microsoft Office 365 helpdesk support to his distribution partner. “All of our level-1 support is now handled by the Ingram Micro Service Desk,” he says. “They answer calls in less than 60 seconds, and only if the problem turns out to be a level-2 or level-3 issue is it escalated back to us. This allows me to focus on only hiring higher level technicians and engineers and focusing on more profitable business activities.”
As helpful as the aforementioned Ingram Micro services have been for his company, Powell believes the best is yet to come. “I’ve been in talks with Ingram Micro’s VP of cloud business development who oversees their Microsoft CSP [cloud service provider] relationship and Cloud Marketplace. I shared our vision of developing products that resolve various business challenges large companies experience with Microsoft Office 365 such as sharing contacts among 1000+ users. Ingram Micro’s Cloud Marketplace is a platform that brings together a myriad of cloud products and services from lots of cloud vendors, including Microsoft, and it could be a perfect fit for our complementary products and services,” says Powell. “The Cloud Marketplace team has already discussed testing our first product potentially allowing us to syndicate our application via the Cloud Marketplace. We are currently working on making a few small changes, and we are getting close to submitting the app for approval. Once this happens, we will be well on our way from turning our idea of solving a specific business challenge into an $80 million opportunity. Having a partner like Ingram Micro that listens to smaller partners like us and gives us a chance to prove ourselves has played a key role in our growth over the past year — and the growth we’re projecting in the near future.”
Company: INFINIT Consulting
2014 sales revenue: $1.9 million
2014 sales growth rate: 12%
2015 projected sales revenue: $3 million
2015 projected sales growth rate: 58%
Verticals: education, financial services, manufacturing, non-profit, and tech firms
Vendors: Microsoft, Cloudiway, EVault, Gridstore, Nimble Storage, Quality Technology Services, Sharegate, Rize Technology Corporation, Ruckus Wireless, SkyKick, SmartDeploy, SoundConnect
Distributor: Ingram Micro
Phone: (408) 361-8888
Cloud Marketplace: https://store.us.infinitconsulting.com