Monday, January 19, 2015

Hot in Cleveland: UCG Sees Payoff from MSP Vision

UCG is delighted and honored to be featured in IBM Midsize Insider. Many thanks to Paul Gillin for a great interview and for succinctly capturing UCG's journey. Please enjoy the article!

James Kandrac founded United Computer Group, Inc. (UCG) In December 1987. He was 26 years old, married with a six-month old child. Having worked at IBM and a small leasing firm that he helped grow to $125 million and a public offering, he had a passion to run his own business. More than 27 years later, UCG – an IBM Advanced Business Partner – has 1,500 clients and a robust business providing backup, disaster recovery and systems integration and support services for a variety of IBM platforms.

Never satisfied to rest on his laurels, Jim noticed several years ago that business was changing and that UCG would need to latch onto the cloud computing phenomenon that was rolling across the industry. UCG began building out a managed service provider (MSP) business in the days before it was fashionable. It was hard work at first, but the company is now reaping the rewards of its foresight. Jim tells what he has learned in this Midsize Insider Q&A interview.

What convinced you to launch an MSP side to your business?​

Nearly 10 years ago UCG started to see an overall decline in annual hardware sales. ​Clients that would normally upgrade or replace systems every two or three years due to growth or obsolescence were stretching out to four and five years, mostly due to available capacity. We decided to provide solutions that were needed and would "stick" for long periods of time. The top two IT needs at that time were and continue to be security and disaster recovery. ​

​What MSP services do you provide and to what kind of customers?​

BaaS, or backup as a service, and remote hardware disaster recovery for IBM i and Intel-based systems. We also offer test, development and logical partitioning or LPARS.

How has your experience launching this business differed from your expectations? Any surprises?​

I thought that within one year, we would reach a specific goal of X number of clients and revenue. It took seven years. Selling and supporting an MSP practice takes a large investment of time, money, and resources, while at the same time running the day-to-day operations side of the business.

How well is the business performing and what do future growth prospects look like?

The first two to three years were like any other start-up; slow and difficult. Since year four, however, UCG has grown the MSP business 25% per year on average.​

What’s different about running an MSP from running a more traditional systems integration company?​

You’re more involved on an ongoing basis. You need 7X24X365 support, and emergency calls can come at any time. You have to be committed to solve client problems and to be able to focus, execute and deliver.​

Are you serving the same customers or a whole new class of customers?​

It’s Marketing 101: Sell new products and services to an existing client base and then branch out. In 2007 most of our business was within 200 miles of our headquarters in Cleveland. Last year we had close to 150 MSP clients in 30 states in the U.S., Canada and Europe. That’s in addition to the more than 1,500 clients UCG has served regionally since our founding in 1987.​

What bumps in the road did you encounter along the way?​

Selling MSP services takes time. Prospects must be educated and you need the buy-in of both the IT team and the C-level executives. Initially, there is a significant capital investment and you must be focused and committed. MSP services are not a part-time offering. To do it right, you need to jump in with both feet.

What advice would you have for integrators who are reluctant to adopt the MSP model?​

If you feel you have a service offering that is truly needed in the marketplace, do a survey or focus group with selected long-term clients and then be ready to work diligently to make the business successful. Solving client issues and pains is paramount; deliver an excellent client experience every time, without exception. You have one reputation. Once you've lost it, you can't get it back.​

About the Author

Paul Gillin is a veteran technology journalist who's covered the enterprise IT market since the early 1980s. His background includes 15 years as editor-in-chief, executive editor and reporter at Computerworld.
In 1999, he joined Internet startup TechTarget as vice president of editorial and helped grow that new-media technology publisher to 450 people and an initial public offering. For the past five years he has specialized in helping B2B companies understand the complexity of social media while continuing to write, speak and advise on trends in enterprise IT.
Paul is the author of three books about social marketing: The New Influencers (2007), Secrets of Social Media Marketing (2008) and Social Marketing to the Business Customer (2011), co-authored with Eric Schwartzman. He also co-authored a book about the Internet-enabled global game of geocaching with his wife, Dana (The Joy of Geocaching, 2010).
Paul writes a monthly column for BtoB magazine and maintains multiple blogs on media- and technology-related topics. He has appeared as an expert commentator of CNN, PBS, Fox News, MSNBC and many other television and radio outlets. He has also been quoted or interviewed for hundreds of news and radio reports in outlets such as The Wall Street Journal, The New York Times, NPR and the BBC. +Paul Gillin +United Computer Group, Inc.