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The 5 Levels of vCIO Operational Maturity

Jan 30, 2015

vCIO Operational MaturityThe Operational Maturity segmentation makes a lot of sense when trying to understand where to go with vCIO services and which next possible steps to take.
It demonstrates the current maturity of services in a descriptive way, explains the differences, and provides hints and tips toward the next step.This article demonstrates how to proceed as a virtual CIO with respect to levels of operational maturity.

 

vCIO Operational Maturity Level 1

The virtual CIO in its most fundamental version is an ad-hoc advisor for IT infrastructure needs. If the general MSP service does not contain this particular service, the service provider needs to have a high-level managerial discussion about the IT infrastructure.

In order to be able to sell higher level projects and services, the delivery could be free advice, or it could be based on a very limited charge. It could be initiated by the vendor (as a solution opportunity), or it could be proposed by someone on the client side (via problems).

This service does not contain any level of regularity nor a disciplined approach, however, year ends and quarter ends could be excellent opportunities for these types of reviews and conversations.

  • Goal: readily available advice on IT infrastructure
  • Regularity: ad-hoc
  • IT/management focus: 80% - 20%
  • Time investment per year: 1-5 hours
  • Challenge: how to charge for the service
  • Value proposition: a better understanding of the infrastructure


vCIO Operational Maturity Level 2

For more mature IT managed services providers, getting only ad-hoc and free advice prevents a business from being profitable. A more structured method is needed to add service to the fixed MSP package.

Remote monitoring and centralized services are a huge step toward efficiency, but limit natural meetings and face time with clients. The motivator for these companies is seeing their trusted advisors more in person.

The structured approach means annual IT roadmap planning and quarterly business reviews. These meetings aim to bring the MSP services to the table and discuss opportunities and problems with company leaders.

The limitation of these services lies in the IT infrastructure focus. The MSP does not concentrate on other aspects of the business — IT solutions, services — but on the IT infrastructure.

  • Goal: create a structured layer of IT infrastructure management
  • Regularity: annual, quarterly
  • IT/management focus: 65% - 35%
  • Time investment per year: 5-10 hours
  • Challenge: to engage the clients in the IT infrastructure conversation
  • Value proposition: to help the client to get more from their infrastructure

 

vCIO Operational Maturity Level 3

The limitation of the IT infrastructure focus is preventing the MSPs from becoming trusted advisors in both IT and the business. The Quarterly Business Reviews lack client engagement, real business value, and push toward the MSP for an IT infrastructure specialist role when the IT infrastructure becomes a commodity.

MSPs realize that customers need IT management in general because their IT complexity has increased. It has created a void in leadership roles in mid-sized organizations.

To fulfill this role in this maturity level the IT companies detach the vCIO services from the MSP contract and focus. The vCIO service becomes a separate service focusing on the whole IT instead of just on the infrastructure. It is a general management role in the IT discipline rather than a high-level role for the IT infrastructure.

It is a very structured approach to annual, quarterly, monthly, and weekly cycles and processes. The cycles define the roles and services of the vCIO with responsibilities and documentation..

The primary focus of the vCIO is to raise the IT management maturity with policies, regulations, education, and productivity of the system, finding general solutions to the different problems and implementing those accordingly.

  • Goal: help the client take advantage of their current opportunities
  • Regularity: annual, quarterly, monthly, weekly
  • IT/management focus: 50% - 50%
  • Time investment per year: 25-40 hours
  • Challenge: separate the service from the Managed Service contract and mindset
  • Value proposition: help the client utilize IT for business

 

vCIO Operational Maturity Level 4

This level of maturity of mid-size clients requires a proactive way to leverage IT in order to promote operational efficiency, continuous improvement, and lean operations. These clients need a more IT-savvy, agile workforce. It requires a more mature vCIO service, where the vCIO is focused on process, management, and business. They use IT as a resource in order to build a better company. They take a proactive view of internal and external collaboration, communication, the analysis of process bottlenecks, and the reporting needs of managers. A big part of the job is finding bottlenecks and developing a viable, integrated solution, getting confirmation of the proposal, and implementing the solution.

The vCIO focuses on operational excellence with ongoing and project-based services. This requires more time and business application focus. Though many jobs will be done locally many others are sourced on a global scale, and creating and managing the solutions marketplace is significant.

  • Goal: help the client take advantage of their current opportunities
  • Regularity: annual, quarterly, monthly, weekly
  • IT/management focus: 35% to 65%
  • Time investment per year: 35 to 60 hours
  • Challenges: scale the vCIO service, adjust to the business model
  • Value proposition: to build a better, more efficient company using IT


vCIO Operational Maturity Level 5

In level 5, the objective is to influence the general strategy of the company and gain a competitive edge with technology. A new product line, different sales distribution channel, or game-changing technology are new ways of monetizing company value. It requires extensive industry knowledge, a vertically-related solution stack, and a high level of consultation skills. It focuses on technology and IT-related strategies and therefore has a limited scope and room to play. Usually, knowing what is hot in the world of technology and the implementations of those solutions could leverage opportunities for clients.

The execution is the second issue. Finding opportunities is one thing, however, often these initiatives are hard to manage, involve multiple disciplines, and need substantial project management. That is why at this level the vCIO needs to have greater capacity to deliver value. Most of the time customizations, custom software, and application development are necessary for success as these nascent solutions and products are not yet proven or mature.

On the other hand, to implement and make successful projects, a higher level of IT maturity is needed for the client as well. The vCIO has to educate the company and make sure the general knowledge set is present, so that the team is able to adopt new technologies successfully.

It is the highest possible added value for the business.

  • Goal: give the client a competitive edge with technology
  • Regularity: annual, quarterly, monthly, weekly
  • IT/Management focus: 20% - 80%
  • Time investment per year: 60-120 hours
  • Challenge: focus on technology-related solutions instead of general management
  • Value proposition: competitive edge with technology

Remarks

Managed services providers have to move sequentially from lower maturity to the highest maturity. It is not possible to start at level 4 without having the practice and experience from the preceding levels. This rule applies to the clients as well. The customer has to be mature enough to be able to adopt projects and initiatives at the higher levels. The higher the maturity, the more vCIO work is needed, not just for the projects, but to manage the documentation, policies, and more complex environment.

The MSP contract has to be separate from the vCIO contract from OML3. If the two services are one, it means the vCIO is MSP-focused, and it is OML2, regardless of the skill set and richness of the service. The biggest hurdle is to move from the OML2 to the OML3. On one hand, it is a separate package, pricing, and service. On the other hand, the business and consultative skills are as important or more than before. This could require new skill sets for the company or extensive education in consultative skills.

Denes Purnhauser
Written by Denes Purnhauser

Denes grown his MSP from 5 people to 17 staff in less than a year by implementing business problem focused sales process with vCIO. He has been transformed the client engagement processes of hundreds of MSPs.

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