MSP Answers

MSP Answers

01.6.2015 Contradictions: Article 38


I love how the human race is so adaptable. It is probably the reason we are still on the planet today. One of those areas of adaptability is in the sayings we have created to suit a range of different situations. If we have a group of people together trying to achieve something and it isn’t working we say that, ‘too many cooks spoil the broth’ but if it is all working smoothly we then say, ‘many hands make light work.’ If a couple seem similar we exclaim that ‘birds of a feather flock together’ but if a pair seem like they have nothing in common then we all nod as we sigh with ‘opposites attract.’ Standing on the top of a tricky mountain pass I am not sure if I should go immediately after hearing ‘he who hesitates is lost’ or I should pause after thinking that you should ’look before you leap.’ Risk is an area that obviously generates different opinions amongst people. Some believe that it is ‘better to be safe than sorry’ whilst others know that if there is ‘nothing ventured then there is nothing gained’ and just to finish off the concept of classic contradictions, all of us in business believe that you only ‘get what you pay for’ but the purists believe that the ‘best things in life are free.’

With all of these contradictions I want to add a major contradiction.

One of the core concepts in relation to running an MSP business is signing clients up on a contract – usually an annual contract. It gives certainty to both yourself and the client. There are a range of performance deliverables on both sides and hopefully the expectations are managed.

Today I want to talk about a concept that is completely the opposite. This concept may not apply to your normal MSP arrangement but it is one you can keep up your sleeve for special clients or different scenarios.

It is the ‘no contract leave at any time’ arrangement. It doesn’t sound like a great idea but just think this process through for a moment. Is it so crazy? I know a Web developer who used to have an incredibly tight structure for client engagements. He had a solicitor do up a contract process so tight that it was impossible to break the contract. The clients would sign a form to accept the initial quote and then sign a form at three separate stages of the development with milestone payments and agreed components being delivered at each stage. Then there was the contract for ongoing maintenance.

Despite the fact that this engagement was legally watertight, he found he still let some clients out of the contract if they weren’t happy. His logic, quite correctly, was that it was better to let an unhappy client leave than to make him stay just because of a contract. What also started to occur was that his staff were slightly complacent when they knew they had a client locked in for a period of time.

So, in the end, he threw away the contract concept altogether. No signatures to start the work, no contract, no minimum terms. There is a quote for the initial work and a scope document for the Web site but that is about it for paperwork. The ongoing maintenance and SEO plans are just PAYG plans with no minimum terms and no guarantees.

This particular organisation said it is both refreshing and demanding. Clients love the open approach and the staff at the organisation like the simplicity but it also creates its own positive pressure. This company would rather have clients stay because they are ecstatic with the services being provided than stay because there is ink on a watertight contract.

When the client is free to leave at any time, the client actually assesses the value of the arrangement on an ongoing basis and, if the money is paid each month, you know you are providing what the client wants. The staff of the Web development organisation are now much more in tune with what the client wants because they all know the client can walk at any time.

In certain circumstances, I think it is a brilliant strategy. I am sure there are some people out there who just hate contracts and it would also appeal to them.

So, as much as I am a fan of locked-in SLAs for an efficient MSP business, I think there is a place for the null contract arrangement that allows true value to be seen from both sides of the arrangement.

If this Web developer wanted to be even braver, the next step would be to ask clients to just pay a monthly fee equivalent to whatever they thought was the value delivered to the company. Now that would keep you on your toes!

Tell me if you like contracts (either as an MSP or as a consumer) at md@smallbusinessrules.com