Now That's IT: Stories of MSP Success

Transforming Your Business: From VAR to Successful MSP with David McKenna

• N-able • Season 1 • Episode 3

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What if you could transform your business by making one bold move? Discover how David McKenna from Running Computers did just that, shifting from a value-added reseller to a successful managed service provider. In this episode, David shares the journey of embracing Intel's server platforms and partnering with N-able, which ultimately led them from 500 customers to 12 – and why this was the best decision for their company.

Building trust with customers is vital, and David reveals how Running Computers has become a part of the decision-making process by understanding their clients' businesses. Find out why they don't have a sales team, and how organic referrals have been the key to their success.

Looking for strategies to ensure your company's long-term success? Listen as David McKenna shares how Running Computers has tackled pricing, avoided technology use by his children, incorporated travel into parenting, and focused on the right areas of the business. This is an insightful conversation you won't want to miss!

N-able also produces Beyond the Horizon. Hosted by industry veterans, this podcast delves deep into the findings of the annual MSP Horizons Report, providing actionable insights to transform your IT business. Listen & Subscribe Wherever You Get Your Podcasts.

'Now that's it: Stories of MSP Success,' dives into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn Managed Services into the thriving sector it is today.

Every episode is packed with the valuable insights, practical strategies, and inspiring anecdotes that lead our guests to the transformative moment when they knew….. Now, that's it.

This podcast provides educational information about issues that may be relevant to information technology service providers.

Nothing in the podcast should be construed as any recommendation or endorsement by N-able, or as legal or any other advice.

The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent.

Views and opinions expressed by N-able employees are those of the employees and do not necessarily reflect the view of N-able or its officers and directors.

The podcast may also contain forward-looking statements regarding future product plans, functionality, or development efforts that should not be interpreted as a commitment from N-able related to any deliverables or timeframe.

All content is based on information available at the time of recording, and N-able has no obligation to update any forward-looking statements.

Pete Roythorne:

Coming up on. Now That's It. David McKenna of Running Computers explains how a bold move changed the path of his company.

David McKenna:

We went from 500 customers to 12.

Pete Roythorne:

It was the best decision And what they're doing today, nearly 30 years later, to continue to evolve the business.

David McKenna:

If you're not agile, you cease to add value and you cease to exist.

Pete Roythorne:

Welcome to Now That's It. Stories of MSP success. We'll be diving to the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn managed services into the thriving sector it is today.

Chris Massey:

Thank you very much for being with us today. I want to just start off, give you an opportunity, you know. Tell us a little bit about your background and maybe a little bit about why you got started in the managed service industry.

David McKenna:

So running computers has been operational since 1994. And every time I think about how long that is, it scares me. More and more means I'm certainly getting older. We really started as a value-added reseller And we thought we were one of those companies that could just make money selling hardware. The value-added reseller part is really where we sort of distinguished ourselves. We tried desperately to add value wherever possible. So apart from assembling custom systems, we obviously did onsite installation and we honored the warranty onsite as well And we did it reasonably successfully. And as Intel started actually launching their server platforms, we embraced that. We had a few customers who needed servers And so we really sort of embraced servers. And when itanium came out, it was this massive niche and we saw huge value in it And we convinced a lot of people that if you were doing real-time SQL replication, itanium was the way to go. It was really the first 64-bit platform And that kind of really got us on Intel's radar. And I was actually part of Intel's board of advisors for five years And we actually moved to managed services because of that, which is really the reason why I told you that One of the things that Intel introduced us to while we were on board of advisors was Enable.

David McKenna:

They did a co-branded product at one stage where they offered as Enable It was branded as some Intel product with some different name And we started using it and we loved it And, like a lot of things that Intel did, they kind of just dabbled their toes in there and then withdrew them And we kind of started using it quite seriously within our business. So they put us in touch with Enable And obviously I started dealing with Mike Cullen and with David Weeks And I think we were probably their first customer in South Africa And because I kind of saw the advantage of the product, i went to them and said pricing's insane. How many do I have to buy so that it isn't crazy? And that's kind of where we started. And from there on it's kind of just been a journey where we went from being value-added reseller to managed service provider And that's where we started to do the service provide.

Chris Massey:

I remember that journey as a former value-added reseller turned managed service provider in America as well. What were some of the challenges? Obviously, managed services back in 1994 didn't really exist right And folks were probably very used to. When something happens, even when you started to deliver those services on top of the VAR business, what was it like to go to market and we're going to charge you a monthly fee to ensure that your business is up and running, and sort of that managed services model. What was that like?

David McKenna:

So we were quite fortunate. We had a really large and pretty diverse customer base And we had a business where we were kind of hiring technicians as quickly as we could find them. And actually one or two of our customers came to us. They were trying to do ISO accreditation and they wanted to sign an SLA, which was awesome, because we weren't going to them and saying, sign an SLA or else, and we had no idea how to deal with that. So we brought in a service delivery manager who was kind of used to being on the other side of the fence and she came in and taught us about SLA's and delivering services kind of for a fixed monthly fee, and so it was quite a natural progression, mainly because our customers were asking us for it.

David McKenna:

And probably about two years after that we looked at our customer base quite critically and we said, okay, we now, we love this model where you pay us in advance And this is really the only way we want to work with this. So we did that sort of 90 10 rule and we went from 500 customers to 12. It was quite bold and it was the best decision. Wow, because in addition to getting rid of customers, we unfortunately had to retrain staff as well. But it went from being a business where I spend most of my time managing people to a business where I really got to deal with technology again.

David McKenna:

And that is one of the problems with growing too quickly You kind of get stuck in the people part of it And people are great, but computers are much better. And I really kind of loved the fact that we could dive back in and get really technical And we weren't dealing with the fact that somebody's child was using their laptop and divxed and work. You know they wanted to play quake and they couldn't. Please don't call me on a Saturday afternoon for that. And so the move to manage service provider was quite a natural progression and really kind of cemented the business where customers who needed our services work repair to pay for it.

Chris Massey:

Yeah, that's amazing, david, and what a change to move from that number of customers to a quite a bit smaller number. So it sounds like to you that was the right decision. But, as the company you know, was that the point when you guys realized like this was it? This was smart, we made the right decision, this is why we're in business. What was that point if it wasn't that, where you realized this is it?

David McKenna:

So I think, as a small business, we evolve constantly. Yeah, i mean, if you're not agile, you cease to add value and you cease to exist. I agree. So we've probably spent the last three months as a business making a conscious technical effort to understand machine learning AI. So our staff are being trained on AWS is offering and on Microsoft offering not to use internally, but really because if we can't offer it to our clients if they want it, they'll get it from someone else, and if we can't push them to use it, they won't exist either.

David McKenna:

So I really think that we're trusted advisors to our clients and we have to look for any competitive edge we can give them, and so the business has just been a natural evolution of that. And I think what I love about the business is that the majority of our customers will call us and say we are thinking about doing the following Please, can we have a meeting to understand Is it a good idea? Is it a bad idea? How can technology help us? We're not on the receiving end of the decisions. We're part of the decision making process. Wow.

Chris Massey:

So it sounds like you have a, you have a partnership with your customers, right? I mean it's they. They've been trusted, obviously, their IT to you to take care of, but but they also trust you to say you know, this is what our business is looking for for the next 18 to 24 months And how can you help us? So what are what's, what are some of the things that you guys are doing at running computers that you know sort of sets yourself aside a part. It sounds like you're very innovative. You were early adopters, but you're very innovative. What are, what are some of the things you guys are doing?

David McKenna:

I think the thing that we do that gives us the biggest edge is we really understand our customers business. So we spend time with them, understanding what they do, how they make money, what their strategic goals for the next five years are. If you've got a customer who plans to double in size every year for the next five years, you have a huge IT problem on your hands. So being a part of that and understanding what's coming down the line is really critical, and in order to do that, you really have to understand their business. So it's also probably the part of my job that I enjoy the most spending a lot of time with clients really asking those really simple questions. So you want to do this. How are you going to make money? Have you considered this? Have you thought about that?

David McKenna:

And it's probably why our customers trust us, because we're not there saying buy this from us, your world will be a better place. We also try to go to them with options, so we'll say this is the problem you have. These are the four or five ways we think you could fix it. If I was picking one, i'd pick this one, and this is why. Yeah, it generally isn't the most expensive option. Sometimes it is and sometimes it's an absolutely cost free yacht. So I think being in that position and having customers who value your opinion really listen and understand you're not in it for the short haul and making a buck makes a really big difference. That's great.

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Chris Massey:

It sounds like you're very, very engaged You leading the technical team, very, very engaged with the customers, which I'm sure goes a very long way with the company And obviously they're trust in the company. Talk a little bit about when you gain a new customer, when you're prospecting. What's that experience like, how do you build that trust early on, and what sort of things does running computers do you guys go through as a company to again to sort of get them to believe that you guys are the right ones?

David McKenna:

So we have no sales team. We don't actively market or manage. If we take on a customer, it's organically through referral. When someone they trust has referred you to them, you really have such an edge. I mean there's none of that really cold hard selling. Someone they know and trust has said use these guys. We've used them for 15 years. They do X, y and Z And so完.

David McKenna:

But the fact that I have ñ, i think generally when we go, the only thing we could do that would be an obstacle is price And I constantly explained to our customers that we certainly are not cheap but that we really offer value for money. And I think generally through the course of our initial discussions where we really, rather than saying what are all these things we could build you for, we actually ask about their business and what their pain points are. I think it puts them at ease and generally money becomes less of a conversation. I can't actually remember the last time a customer asked me the price of some. You know I generally say to customers that if they want to, we'll happily play open cards with our costs and we'll show them where we do and don't make money. No one has ever taken me up on it. It's astounding, but we have value added tax.

David McKenna:

In South Africa It's at 15% On hardware. We haven't made that margin in the last 10 years. So when the receiver of revenue is taking more money from your client than you are, it's quite easy to justify your position And the money we make. On services. I think we really add enough value and our customers understand what we're doing that they don't generally question the price.

Chris Massey:

That's great, very good. You have a lot to be proud of and what you've built over the years at running computers, but is there something that you personally look back on and go? I'm really proud what we did here. This is a really awesome thing.

David McKenna:

Well, i have four children and three of them have now left home the last one officially two days ago. So I'm pretty glad that I managed to feed and school them and that they're leaving the net Sure. And I think that even though we own a tech business, our children weren't allowed technology until they were 16. If they wanted something earlier than that, we had Lego, mindstorms and a whole bunch of educational things. They got their first mobile device when they were 16. And despite them thinking that we were horrid parents, i think the internet is a really horrible, scary place. I'm not really convinced kids should be on it And to substitute that, we kind of took them to see the world. So one of the things we did with them was we took them to a different place in the world every year, and certainly running computers afforded me the opportunity to do that, and I think that's probably the thing I'm most proud.

David McKenna:

That's great Is that we got to spend some really good time with our kids growing up. We got to show them the world, and I'm not sure I could have done it if I wasn't sort of owning and running the business.

Chris Massey:

Fantastic, great, great story. Good, i'm really proud of you. That's an amazing thing to hear about your family. Talk about the future. What's the future look like for running computers? Is there some big master plan? Is there some M&A? Is there some organic growth? What does it look like?

David McKenna:

So we have a couple of businesses in the group And so most of our growth is happening in things other than running computers. So we have an infrastructure business where we do fiber optic and data cabling. We have a data security business where we do governance, risk and compliance. We do manual and automated pen tests and a lot of advice around those things. And then we own a sizable share in a fintech business that writes wealth management software for most of the local banks in the country and most of the wealth managers And a lot of our time is taken up making sure that those enterprises can grow.

David McKenna:

So there isn't actually this big strategic. how do we take running computers and get big? I think we were big and it was awful And so I think it's. how do we take running computers and continue to service the customers? we have grow slowly and organically with customers we like. That's really, really important. We have a customer who doesn't fit our ethos. We try desperately to fire them as quickly as possible because it's just bad for the whole team. You know you have one customer who just isn't like your team and doesn't appreciate what you're doing for them. It really brings down the tone of the entire business. So the master plan is to continue to employ the people we employ, hopefully, make sure that they're better paid than their compatriots and in other similar businesses, and make sure they have an opportunity to put their kids through school. That's great.

Chris Massey:

Well, thank you, David. It was really a pleasure talking to you. Thank you so much for sharing everything about running computers. Sounds like you have an amazing MSP and I wish you and the company the best of luck in the future.

Pete Roythorne:

Great Thanks, so much To receive updates about future episodes. Be sure to subscribe to our podcast on YouTube or your preferred podcast platform and follow and enable on LinkedIn. We appreciate your support and encourage you to leave a rating or review, as it helps us reach more listeners who can benefit from the wealth of knowledge shared on this show. Remember, success is not a destination. It's a journey, and by immersing yourself in the stories of those who have walked a path before you, you'll gain the tools, inspiration and confidence to achieve your own triumphs. Stay tuned for more exciting episodes of Now That's It Stories of MSP Success.

Pete Roythorne:

This podcast provides educational information about issues that may be relevant to information technology service providers. Nothing in the podcast should be construed as any recommendation or endorsement by enable or as legal or any other advice. The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent. Views and opinions expressed by enable improve their knowledge and their experience in the podcast is not an endorsement of them or any entity they represent. Views and opinions expressed by enable employees are those of the employees and do not necessarily reflect the view of enable or its officers and directors. This podcast may also contain forward-looking statements regarding future product plans, functionality or developmental efforts. That should not be interpreted as a commitment from enable related to any deliverables or time frame. All content is based on information available at the time of recording and may not update any forward-looking statement.