[56] – Introduction to the MSP Series: Part 2

Welcome to PSA Impact, your podcast for all things PSA, RMM, and MSP, with your hosts, Rayanne Buccianico and Chris Tim. Learn how to get the most out of your PSA tool and manage your business by maximizing profitability and increasing efficiency within your MSP business. Let's listen in. Hi, everyone, and welcome to another episode of PSA Impact with your hosts, myself, Chris Tim, and my co-host, Rayanne Buccianico. Hey, Rayanne, how are you doing?

I'm doing great today, Chris. The sun is shining and spring is almost upon us here in Florida, but it's probably not quite there yet for you guys. No, we are in the middle of our coldest month of the year. Well, not in the middle of it. We've just started.

So February is traditionally the coldest month of the year. So at the end of that, yes, I guess we'll be going into spring like you guys and all will be good with the world. So we finally stopped talking about COVID and Brexit and parties in the government and all sorts of other stuff. And so everything is good with the world so far in the UK. That's great.

So Rayanne, what do we want to talk about today? Well, Chris, I know that we've had this series going on, having MSPs on the air, and I really want to get back to that. But the top conversation going on in the channel right now is what to do with Microsoft and their new pricing changes. Can we just think through this? I was talking with another client and then trying to work through the best way to handle this problem.

I thought, you know, we should just let's have an open conversation and figure out the best way to go about this. So I'm sure you've heard about Microsoft pricing changes that are coming up starting March 1st. Yeah. Absolutely. I have.

I think anyone who hasn't heard of them, I think has lived under a rock for the last six months because it's been talked about for a very long time. Yes. And I see the same thing all the time with my clients kind of asking the best way to handle that stuff. I have a very specific question for you, and I'm certain that it's going to trigger one of your favorite topics. So here's my question.

All right. So come March 1, you get a new customer and the new customer says, I need 20 Microsoft Business Premium licenses. And so you tell them, being the good MSP that you are, well, you know, there's this new pricing rule and can continue to pay monthly, but they're going to charge you a 20 percent premium for every license if you continue to pay monthly. Or you could sign an annual contract, pay annually and not have to pay that additional fee. Right.

So customer says, that sounds great. Give me 20 of the annual licenses and on we go. And then two months later, same customer calls you and let me back up a minute. So you go into your PSA, you set up the annual contract for the 20 licenses and you send them a bill and all is well. Two months later, customer calls and says he needs two more licenses.

Now, those two licenses are going to have a start date of May 1 and end date of April 30th, whereas the other licenses have a start date of March 1 and an end date of 28th of February. Right. So logic says you need to have a separate contract in order to be able to track these things. Now, what happens if you have 10 separate start dates for these annual licenses? What is the best way to track it in the PSA?

Great question. And of course, you have triggered my absolute favorite topic to talk about. I knew that I would. And I knew that you would have an answer, but I thought we could talk through the whole thing together. Absolutely.

Well, I don't necessarily have the answer, but I have a couple of things we can certainly talk about in that. So what you've mentioned there exactly would need to be multiple contracts to be set up every time because you've got different starts, different start dates and different end dates. So logic says we need separate contracts for each one of those. The problem comes in when you have to do that 10 times, 100 times, 50 times, you're going to have a shed load of contracts for customers that have to be maintained and updated and all those kind of things. So it's not really a workable solution in that respect.

So I guess there's a couple of ways we could really look at this. One of the ways that we could do it is if it's just a matter of billing a 365 license and you want to be able to just bill an amount upfront. So I don't know, a thousand bucks for the year for those Microsoft 365 licenses, then why not just do it as a one-off charge? So you could then add that as a one-off charge either to a contract or to a ticket or whatever the case might be and bill that thousand dollars and you just bill it one-off. The problem with that, of course, is what happens at the renewal.

What could we do that we could build a report or some sort of tickler to say, all right, give me all of the licenses that are expiring next month because you may not want to renew them. Yeah. So I guess what you could do at that point is, so there's, again, a couple of ways to do this. Potentially you could have a ticket with that charge on it and then you could have a user defined field on that ticket that would say expiration date, whatever, and then you could do a widget or a report or something against that expiration date on that ticket. So that's one way to do it.

The other way would be to then potentially just put in a to-do on the system. So as soon as you create that charge, you then put a to-do on the system that says, okay, the to-do needs to remind us in whatever date, right? Three months. I wonder if you could set up a workflow rule to automate that to-do. Like every time something, this material code is used, do this.

You cannot at that point because it doesn't do workflow rules for charges specifically. Yeah, that's a bummer. So, I mean, probably a user defined field on a ticket is going to be your best option. And then you could trigger off a notification or a to-do, because what you could then do is to say, hey, so when a ticket is closed and it has this user defined field against it, then create a to-do for six months time or a year's time or whatever the case might be. So once the ticket is closed, but the process on that would then be having a ticket with a ticket category that you could call, you know, NCE or whatever you want to call it.

And then that ticket specifically would be to go and set up this charge, which you then put against the ticket, and then you close that ticket down. And then what you would do is when you close the ticket, you would have UDF somewhere on it that would say, you know, whatever the date is. And then you can just use that date and say, when we close a ticket with that date on it, trigger a to-do for six months time, a year's time, whatever the case might be. And that's one way to work around that. That's at least just thinking, you know, and I haven't tried this or actually, you know, I haven't looked into this in great detail, but I think that would work.

I think that would give us the ability to have that working, because the way I look at it for all these licenses, I think a contract is going to be an overkill as well if you're just adding one Office 365 license every time, right? Because you've got to go through the whole rigmarole of setting up a contract. So why not just put it as one single license and you're good to go as a charge? The other thing you potentially could do is create that as a configuration item and then have a subscription against it. So again, set up the configuration item, which you would then get an expiration date on, and then set up a subscription against that configuration item to bill whatever amount every year or something to that effect.

And that would have the same effect because then you could just have a widget that says, show me all subscriptions or configuration items expiring on X, Y, Z dates. Yeah. And I've tried that subscription against the configuration item. It gets real messy and complicates things pretty quickly. A couple of other things that I was thinking, I wonder, because with this new pricing model with Microsoft, you can add licenses, but you can't reduce them, right?

So I wonder if it makes more sense, instead of every time somebody hires a new person and they need another license to add on another annual subscription, what if you had, let's say I have 20 people that I'm never going to be without these at least 20 people, but I may, from time to time, bring on a couple of extra people during our peak season or temporary employees or whatever, but I may not keep them all year long. So what if you had those 20 employees on the annual contract and then the auxiliaries would come in on a month to month, sure, you're going to pay a little higher, but maybe you don't even need the super business premium license for that. Maybe you could get away with the business basic or even something lower end than the full-blown business premium all in Microsoft. So I wonder if that's also an option, because I know some of the distributors are coming out with these new SKUs. So you've got the old SKUs and you've got the new SKUs.

And so they will have to talk to the contract in your PSA at the same time. Yeah. And I think that's where the problem is going to come in. And actually, just as you were talking about that, I was thinking of the option that I said about charges, which is fine, it would work. The problem is when you then have integration with vendors, Pax8 and all these places that automatically write the service into the contract, it's not going to be easy to look at the count of how many of those each person has, because it's obviously not going to write it in as a charge.

It's just going to simply put it in because it's going to want to write it in as a service. The other thing we potentially could do with these, and again, I would need to play with this and test it in more detail, but the other thing we could potentially do is to actually have this as a billing product. So because then we could, but again, that would require it being a configuration item. So we could create it as a configuration item, although it would still require you, I guess, signing that billing product to each one of those configuration items. It's a messy situation because I think, unfortunately, because Microsoft is forcing people to kind of sign up for a whole year, I think that's where the problem is going to come.

You're either going to have to maintain multiple contracts if you want, you know, integrations from vendors to automatically update those contracts. Thing about that, though, is when you've got your integration in with your vendor, you add a business premium, it's going to update that contract, and then it's going to prorate it through the end of the year, which is fine in the PSA world. But in reality, you know, that contract is not being prorated in Microsoft's brain, right? So that license is running for 12 months based on the date of purchase. And if you start mixing and matching it with prorated contract dates in your PSA, I can see how this will turn into a big fat mess, unless we can come up with a solid solution.

Yeah, I think this is where the problem is going to come, you know, if it was just a case of, you know, having a yearly contract and then adding it and prorating it during the course of that year, then it would just be simple because it would simply be a yearly service and a yearly contract. But because we're going to have them starting at different times, we're going to have multiple different contracts. And I think no matter which way we look at doing this in the PSA, and actually, I don't think this is even just an Autotask problem. I think this is going to happen in every PSA tool. I agree.

I think they're all going to run into this problem. They're all going to run into this problem that, you know, the billing of it is just going to end up being a nightmare, which is why I say that possibly the easiest way to do it, certainly in Autotask, is to say, OK, go in and just add it as a charge. Have it, you know, have a ticket, create the ticket, add it as a charge if they buy 20 licenses. And if they come back the next day and buy another 20, just add it as another charge and buy another 20 licenses. And it'll break all the integrations that you've got and it'll break all that kind of stuff.

But it might be the simplest and easiest way to do it rather than trying to faff with a million different contracts. I'm going to have to think more on that because that's a lot of work. No matter how you slice it, it's going to be a lot of work. And I know that there's a lot of MSPs out there struggling with the best way to handle this. And I guess you and I are struggling with helping them.

Exactly. And, you know, and I don't think this is a unfortunately, this is a Microsoft issue, not an issue with the PSA tool. So I don't think that even, you know, somebody like yourself and myself who know the PSA tool, I don't think this is a problem that we can solve overnight because, you know, the PSA tools aren't designed to work in that way. Well, they are. But if Microsoft wants you to sign up for a year every single time you buy a new license, the way the PSA tools work when you sign up a yearly contract is you sign them up for a year and then you sign up another contract and so on and so on.

So. Well, hang on. What about what if you just you sign up the customer or you bring in the tenant and you sign them up and they start off with 20 licenses. Right. And then three months later, they come in and they need a handful more licenses.

Maybe you just run those additional licenses at month to month until the end of the contract and then you add them in, you know, to the next full year for the next full cycle. You know, maybe that's the smarter way to go. Potentially. Again, however, though, if you were going to bill your customers for those monthly, I think this is where the problem is going to come in is a huge hike in the price. It's like 20 percent different in price if you do it monthly.

So or the other option is what you do is you bring it in and run it the same, you know, the same length of time as the contract that you already have. And then whatever's left over at the end of that contract, you can either have a new contract or just bill for that portion separately. So you can actually do that together. So what you could do is to say, OK, you know, well, till the end of the contract, this is going to be, you know, let's use the thousand dollar example I used then. So these 20 licenses are going to be a thousand dollars.

We got six months left on this contract. So therefore, we'll add six months worth of it. So we'll add. So the contract will bill for another five hundred dollars and then the other five hundred dollars that is left will just bill as a one off charge so that we're still billing it concurrently. And then all that will happen is in order to task, the contract will expire at the end of a certain period of time.

And then, you know, then you go ahead and do that. I mean, the other option is to just make the contract go on for for a longer period of time, but it's still going to prorate it. That's the problem, I guess, whenever you have your end dates of the contract, even if you made it three or four or five years and and still kept adding stuff to it, it's going to prorate those every time you add them. Well, I don't envy those MSPs out there with two thousand, three thousand Microsoft licenses that they've got to deal with, because that's that's a lot of work and redoing everything, including the SKUs and updating. And you have to contact your customers, too.

Right. So the customers can't be left in the dark on this. They have to know that they are signing on for a year of Microsoft 365. And they also have to know that there's no refunds. Right.

So if you sign up for a year and in six months you decide you don't want to work with your MSP anymore, guess what? You're still on the hook for the next six months for that 365 license, because, you know, as you know, Chris, Microsoft and and the distributors are now selling it to the MSP and holding the MSP responsible for payment of these licenses. And there's no like I said, you can't go down. You can go up anytime you want, but you can't go down. So do you know what I would do if I was an MSP?

And this probably isn't the answer that most MSPs want to hear. But I did this before when I stopped selling hardware, when I had an MSP business. Right. I eventually just said there's there's no margin in hardware. And I just got the client to buy the hardware themselves.

So what I would actually do at this point, if I was an MSP, is I'd go, OK, no problem. I'm almost a customer happy to advise you on the best Microsoft 365 licenses that you need. But you sign up with Microsoft yourself. You buy them yourself and I'll charge you for the consulting fee to tell you what which SKU I recommend you buy and blah, blah, blah. And I'll still help you set it up and I'll do all those kind of things.

So I'll charge you for that. But the actual buying of the licenses you do yourself through Microsoft, and I used to do that in my MSP business, is, you know, this whole thing you hear of MSPs going, oh, well, you know, the customer goes to, you know, they go into Amazon and they can find that hardware quarter of the price and it's this and, you know, I don't make any margin out of it. I got to a point in my MSP business, I just went, you know what? Actually, I could probably make more money by just consulting to my customer. So I would say to them, they said I can find it cheaper at Amazon.

I'd say, let me charge you a hundred bucks or whatever it is. I'll have a look over it, make sure that the specs are correct. I'll give you the thumbs up. And then what you do is you click the link, you put your credit card in, you buy the server yourself. And then what I'll do is I will set it up and get it working and do all those kind of things for you.

And I'll charge you a fee for that. And actually, that invariably works out a lot more than I would make by marking up the server. So that might be something that actually is going to end up potentially happening is MSPs just go, you know what? Just buy that stuff directly from Microsoft and and I'll just consult. I'm hearing quite a few people, you know, thinking about that, just getting out of the my, you know, the Microsoft CSP program altogether.

The only struggle with that is, is that if you want to maintain or consult with the client and help them set up, configure everything and keep it running and do the backups, you can't do it from your tenant and just simply switch accounts, right? You're going to have to log out and log back in as their admin person. But I guess you could, you know, you could charge a fee for that every month, right? So I would of course, I would be bundling that in. So I would then say, OK, whatever that might be every every month, you know, maybe you're going to say, OK, well, you know, for us to log out, log back in, log into your tenant, make the changes, add the users, change the users, whatever the case might be.

There's 10, 15 minutes every time we do that. Potentially that might happen 20 times in a year. Therefore, the cost is going to be X. So you just add that as part of your managed services. And that's all I would.

I totally agree. I mean, it will be interesting to see how all of this plays out here in the coming weeks and the coming months. And this isn't the first time that Microsoft handed it to the MSPs, you know, especially in the SMB market, right? Last time was the the end of life for SBS. But this one, I think, is is a bit more far reaching because it really hits everybody.

And and it's just making it much harder for, you know, the MSP or the IT service provider to to be able to manage it and, you know, make a couple of bucks off of it. We're not talking about huge margins here either. How many hoops do you really want to jump through in order to get your two dollars a month? Well, my point exactly right is that's the exact reason I stopped selling hardware. And if I was an MSP right now, that would be the exact reason I would stop selling 365 licenses is I would simply just say I don't make anything out of it.

I'm not going to jump through a million hoops and satisfy Microsoft. So so I do one or two things is I either I would look for a different solution for the customer, you know, and if 365 was obviously the thing that I recommended to do, then my option to the customer would be, OK, those are your choices. You either buy it yourself and you sort all that stuff out yourself and I'll I'll consult or we switch you to a different product, a Google or some other product and go from there. So and I think that will actually I mean, a lot of the MSPs I'm talking to are already looking at switching to, you know, to the Googles of the world. And I think but I suspect it's only a matter of time until they start doing the same thing, which actually leads me to to think I should probably you know, I have three different businesses that I run and I have Microsoft 365 accounts on all of those businesses.

So I guess I'm going to get hit with a huge bill at some point for those those businesses with all of those upfront costs for a year. So and I manage a couple of 365 tenants myself, and so far I haven't taken the first step to converting them to an annual license or, you know, making any changes whatsoever. So I probably need to do that myself, too. Yeah. Yeah.

I mean, the other option is, you know, I guess another another simple solution to this is and I know it's a it's a bigger cost upfront every month, but maybe it's just worth sticking month by month and paying the extra money for it, you know, and just saying to your customers, look, because the other thing is and again, you know, this would be me personally, you know, if my Microsoft 365 licenses for 20 or 30 users were going to cost me a couple of grand a year, I probably wouldn't want to pay a couple of grand upfront. I would be much happier to just pay that at $50 a month or $60 a month or whatever, whatever it works out at even $200 a month, you know, which is easier on the cash flow rather than outlaying a huge sum of money upfront. So you might find that actually a lot of companies are just quite happy to pay the extra. You know, I say 20 percent. I don't actually know what it is, but I think it's quite a substantial 20 percent.

Yeah. Yeah. And it's you might actually find that that's the case. You have that conversation with your customers and you go, well, it's three thousand dollars upfront or one hundred and fifty dollars a month, which would you prefer? And I'm sure 95 percent of the time they'd probably say, well, we'd rather just pay it upfront every month.

But but then again, I'm not I'm not sure. And this is where, you know, maybe an MSP will probably be shouting at whatever they're listening to this on at this point. But, you know, I don't know if that is if you sign them up monthly, if that if they still tied into the 12 months or if they pay monthly and pay the extra 20 percent, can they get out at any time they want? But if that's the case, if they can get out any time they want and don't have to commit for the year, then just just tell them it's 20 percent extra going to now cost you this. And then you don't have then you just keep your order task in the same way as you've always done.

It's just month by month, the price just goes up. Well, I don't know if we solved any real issues here today, but it was a really interesting conversation. It's given me a lot to think of. And I think I might even try that UDF to see if I can make something happen, you know, like to do. Well, I'm going to play around with that because that's an interesting idea.

But thanks for a great conversation today. Yeah, it was great. It's not strictly PSA related necessarily or anything to do with the PSA tool. But I think it's an interesting thing to talk about is how would we solve the billing problem in the PSA tool? So, you know, and at this point, I'd love to do a shout out for for anyone that's listening to this, that has any ideas and any advice on how they would do it or how they tackling this problem.

I think this would be something that we could happily get an MSP on the podcast to talk about what they're doing to tackle it or if anything that we've suggested has actually helped anybody or, you know, so if you're an MSP out there listening to this, I would love to come on the podcast. We we would absolutely love to have you on and talk about this in more detail. Absolutely. I think I might reach out on some of the socials this week and see if, you know, we can find somebody who's willing to talk with us. Absolutely.

Absolutely. I'm sure we can find many, many people. So what a great conversation. And as always, my favorite thing to talk about. So all that's left for me to say, Rayanne, is your PSA is the key to your MSP success.

So go out and make an impact on your world today. Thanks, Chris. Good to see you. Thanks, Rayanne. Good seeing you, too.

Thank you for joining us today on PSA Impact. We hope you've learned something and that you'll join us next time when we answer new questions posed by our listeners.