Ep. 123 Managed Services Unleashed Transforming the Business Landscape for 2024! with Jake Sherrill
Welcome to the podcast designed to fuel your success in selling technology solutions. I’m your host, Josh Lupresto, SVP of Sales Engineering at Telarus, and this is Next Level BizTech.
Hey, everybody, welcome back. We are wrapping up a key track here, managed services unleashed, transforming the business landscape in 2024. On with us today with a beautiful backdrop. We got Mr. Jake Sherrill of Tier 4 Advisors. Jake, welcome on, man. Josh, thanks for having me. I’m joining you from Charleston, South Carolina. I’m out here for my 14-year-old baseball tournament that starts in about two hours, but excited to be on the podcast with you. Thank you for the time. Love it, man. Well, let’s jump in. Give us a little bit of backstory before we get started here. How did you get into this space? Windy path, direct path, any fun stories along the way?
Yeah, so got my insurance license when I was 19. You probably didn’t expect to hear insurance license on this call, but joined my dad in the insurance industry after I got injured playing college basketball, as a matter of fact.
Saw the agency model very early on in my career with insurance, obviously. A lot of people know of insurance agents. And then through my career, got a job at a data center vendor, Cisco Var, and then heard about the channel and decided to start Tier 4 Advisors back in 2013. It’s been a heck of a run ever since. I love it. And for anybody that doesn’t know, the basketball thing makes sense if you’ve met Jake. Because Jake, you’re all of what, six, five, six? How tall are you? Yeah, no one’s counting, but six, seven, I guess, if I’m standing up straight. But I always tell people it’s overrated unless you can make money from it. But all good. It is what it is. I love it. All right, so give us a little bit of a walkthrough here, Tier 4, your approach, how you go to market, what you offer, all that good stuff.
So when I started the company, it was really on the premise of not being a vendor, right? So we like to assist with strategic sourcing and IT procurement. We’re a little bit different than a lot of the partners maybe in the channel focusing on circuits or telecom.
This company started really, as a certified data center professional, started doing data center projects. So we focused a lot in the data center,
managed services, disaster recovery, things like that.
So, and I love that. I love that unique approach, right? You’ve definitely formed a good name for yourself in that and it surely has launch padded from there. So kudos to you, good success there.
Give me a lesson learned. I always love to hear people that have built businesses and kind of grown these things, maybe something from a previous mentor, great advice, or something you learned from a mistake kind of along the way of this journey.
So it was interesting when I started Tier 4, I had an opportunity to meet with a CIO of a fortune, let’s just call it 100 Company Atlanta. And what I found interesting was that the CIO told me that he would take his company to the cloud back in 2012, actually before I started Tier 4.
So you think about the cloud back in 2012, that was very cutting edge, bleeding edge back then. And he said, I would take such and such company to the cloud if my people knew what they were doing with the cloud.
And something that I learned through that conversation was the fact that sometimes you’re in the right place at the right time, you just got to take advantage of an opportunity. Because I told the CIO, I said, “Hey, I can do that for you.” His team is made up of people that have been on his team for 20 plus, 25 plus years.
One of the folks actually retired after 31 years working for his team. And so again, one of the things that I learned was if given an opportunity and you can actually deliver on it, jump at it and see what you can do. Yeah, I love it. I love it. Just figure out a way, right? You get nowhere if you just say no. But if you find a way, you know, you figure it out. You just kind of learn things and hey, less mistakes next time, but mistakes are okay.
100%. 100%.
All right. So getting into the kind of the topic of today, right? We’re talking about this idea of managed services. And I know that’s a very broad brush. But if you look at the trends, how everything’s gone over the last few years, I guess from your perspective, why? Why is this so much easier of a conversation than it was five or 10 years ago? Is it a talent shortage? Is it a knowledge gap? Is it more than that? What are you seeing out there?
Yeah, so I have some interesting visibility into this because I had a chance to invest in a company called Robinson Key that we later rebranded to the Tier 4 Group five or six years ago. And my partner, Betsy Robinson, started that company about the same time that I started Tier 4 Advisors. They do full-time, part-time contract placement. In fact, you can find out more information about them at Tier4Group.com if you’re interested.
But seeing that side of the business from a talent perspective, it’s very interesting around finding and retaining talent. I think it’s safe to say that cool, well-paying Fortune 500 companies with good office environments and a lot of perks have no problem hiring talent.
Anybody, though, that’s maybe from the Fortune 1000 to the Fortune, call it 50,000, for a lack of a better term, they have a heck of a time finding and retaining talent, right? And even if they get lucky and find good talent, it’s retaining the talent.
Also, I think there’s a bullet point to be made that if a W2 employee makes a mistake or a team makes a mistake, what is your recourse as a company? Right? Do you fire those people? Do you sue those people? I don’t know. I mean, there’s a lot of different maybe schools of thought. I think managed services have become more popular over time because the economics have changed. They’ve become more affordable compared to full-time W2s. Not always are you saving money, but oftentimes you are. You also have, in some cases, some might argue, security by having an SLA or an MSA compared to maybe having internal folks.
So long story short, I like to say if it’s not secret sauce, there’s nothing wrong with outsourcing it, right?
Not saying that In-N-Out Burger wants to outsource the making of their special spread or their special recipes. But when it comes time to lay tile or fix the roof or doing certain things that may or may not be secret sauce, I think it’s a no-brainer.
Focusing on partners that do that thing all day every day is a pretty good strategy, in my opinion. So I want to pull on that thread a little bit more, and we’re going to get to some examples here in just a second. So if you think about for the other partners, right, the other selling partners out there in the community listening to this, with all this drive towards managed services and all this need for help, I mean, where do you see the opportunity? Where do you see the other partners missing out?
Yeah, so from a partnership perspective, you got to stay relevant with changing technologies and strategies, right? A hundred percent.
I think it’s important, you know, a lot of our agents in the industry have been selling managed WAN, managed telecom, maybe even BPO for a number of years.
And when you look at infrastructure as a whole, the managed services are only becoming more and more relevant and only moving further and further up the stack. So if you’re not talking to one of your clients about managed services across the entire IT department, someone else is. A lot of opportunity and not only managed infrastructure, managed telecom services, managed security. But I would argue even some of the things around change management, AI implementation, some of these other new leading edge, cutting edge categories that you need to, again, if you’re not,
at the top of your game, at least have a partner, you know, plug for Josh LaPresto and Telaris, who can back you up on some of those conversations with some of your clients. So let’s jump into that, then let’s go into an example. So walk me through a deal you got into, managed security, managed connectivity, and just maybe talk to me about what was the business problem and the tech stack before, and then what did it all kind of look like after?
These are fun questions, by the way, because I could give you 30 different stories. I mean, I could probably give you a couple hundred stories. But the one that we decided that I was going to talk about today was a Fortune 200 client who came to us with a absolute hodgepodge of different internet connectivity vendors, primary, secondary, tertiary.
Hodgepodge of point of sale POS, hodgepodge of Wi-Fi stuff in their stores, hodgepodge of different pieces of hardware in all their stores. The project had started and stopped two separate times. They came to us with the thought of, this is the third time we’re trying this, we need this to work.
There’s visibility at the very top. There’s visibility with our franchisees. We need this to work this time. And so when you think about lessons learned of kind of what I shared earlier, we knew without a doubt that we were going to be able to add value in this conversation.
When we got involved, there were about, I think, eight or 10 different vendors that they had kind of thought about gathering bids from. Interestingly enough, shout out to Comcast, who ended up winning the project.
But when we got involved, I said, “Hey, why are these few vendors not on your list?” Comcast was one of them. And it’s interesting because you’re sitting in a room with 10 or 12 people that are very confident.
They’re not going to be able to tell you that they already know what they’re doing. A couple of them, you can feel like they’re wondering, “Why is tier four here? Who are these guys?” So I’m sitting at the table and I say, “Why is vendor A, B, and C not on this list in no particular order?” But Comcast, again, was one of them. And they said, “Well, we didn’t think about them,” or whatever their excuse was. Funny, to fast forward a few months down the road, Comcast ends up winning the deal as the vendor to provide all those services. So again, telecom aggregation, services aggregation, strategic sourcing, even enterprise architecture, strategy and planning, all things that we brought to the table in that conversation, did a phenomenal job. By the way, shout out to Eric McVeigh, Kelly Higgins, Tina Mantella, Sam Galbraith on our team, just knocked it out of the park for that client. Awesome. Love that example. Those are always fun meetings. Those are good. Walk me through, let’s think about a misconception here.
I don’t know. As we started to try to do managed services many, many years ago, right, everybody was like, “No, I’ve got a team. I can manage this. I don’t need help.” And obviously, that’s changed. But I mean, are there any misconceptions now to kind of dispel out there as you talk to customers about having help managing that tech stack versus trying to do it yourself? You did talk, I think you kind of gave the example about the in and out secret sauce, but any other kind of misconceptions related to that? So, you know, I think the misconception is oftentimes by an IT department who thinks they’re all going to get fired. They’re all going to lose their job. You know, if we outsource this, well, why are they going to need me? Right? So there’s a very delicate dance. You have to have that conversation.
Sometimes it’s a leader-to-leader conversation, and I use that term all the time, a leader-to-leader conversation. So I’m my title. I don’t really personally care about my own title, but some people do, as founder and chairman of Tier 4 Advisors.
You’re going in and talking to the leader of an organization. It’s a leader-to-leader conversation.
Politically speaking, it should be what’s best for the organization, right? And so I think everyone always has their own agenda. But again, misconceptions are, “If we do this, am I going to lose my job?” I would, my argument back to people who have that sense is, “Is this what’s best for the company? Yes or no?” If the answer is yes, then I challenge them, you know? Are you good at what you do? If you’re good at what you do, you’re going to have five job offers within the first month or two. You’re probably going to get a pretty good severance as well. Right? So again, misconception could be also deemed as politics, could be deemed as agendas. It’s a delicate dance. You got to figure out what’s best for an organization.
I think also the misconception could be at a CFO or the board level, where the misconception is, “This is going to be a lot more expensive than running it in-house.” Again, that’s not always true. Sometimes it is, but it’s a value-add conversation as well. Are you getting more services from a managed services vendor? Are you getting better service from an internal team? Those are all parts of these projects. That’s where they get very complicated. It just depends on the project, and you got to manage that. You got to manage that conversation. You got to manage those expectations.
Good stuff. Let’s jump back into another example. So walk me through – I know you guys killed out there at Data Center and Cloud. So walk me through maybe a managed cloud deal, similar story. Right? What was the business problem before? What was the tech stack before, and kind of what did that look like after? All right. So another one that was a little ways back, but I wanted to share this story because I think it’s important to reference the role of a trusted advisor. Right? All right. So I don’t want to give away too much because some people might be able to back into who this would be, but let’s say it’s more than 100 hospital beds, less than 1,000. And we’re going to say in the southeast United States, just for context. So the hospital comes to Tier 4 and says, “We need help getting a better handle around our disaster recovery.”
Okay. The first question I asked probably was something to the effect of, “Well, tell me about what your current disaster recovery plan is.”
Beautiful primary data center, production data center in the basement of a building on campus. Okay. So when I say beautiful, that’s kind of tongue in cheek.
But it doesn’t go down a lot. So unless there was, you know, maybe a major disaster or flood or God forbid, some other stuff, primary is probably pretty resilient.
But again, there’s disaster recovery for a reason.
We take this thing out to bid for disaster recovery COLO, and we do kind of a cost of ownership, total cost of ownership for buying all the hardware, the team that it would take to run it, the software, et cetera. It doesn’t make a lot of sense. So we pretty quickly get into the conversation around disaster recovery as a service. D-RAS, as a lot of people will call it.
And we take this thing out to bid and these bids are coming back and we’re talking hundreds of terabytes for D-RAS. These bids are coming back at $200, $300,000 a month in our city.
And the IT director running the project is just like, “There’s no way. There’s no way we can do this.”
And so we start to get creative. And I don’t want to say I’m proud, but I’m pleased to say that part of the value ad that we, Tier 4, and I brought to this conversation was that we were able to back into the idea or the realization that they had purchased a brand new SAN storage.
They purchased brand new storage for production ahead of schedule, which allowed their storage for their D-R environment to be relatively new as well.
A lot of these D-RAS conversations are typical economic conversations. The vendor has to go out and buy a bunch of hardware. They got to man the environment, so to speak. They’re buying software.
They’re paying for power, co-location space, connectivity, et cetera. So we backed into basically going from $200,000 to $300,000 a month to trying to get creative with some of these vendors and saying, “Hey, we have our own storage.
What if we, instead of giving you a big setup fee and a big monthly, what if we gave you our storage for our D-R environment that you’re going to manage?” And the vendors came back, a number of them, and said, “We’ve never done that before.”
And we’re like, “Yeah, we’re aware that you’ve never done it before, but what if we could try to get creative to get the cost low?”
I’m going to say long story short at this point, but long story short, $79,000 a month, MRC, five-year contract, D-RAS, for a sizable hospital system in the southeast going from praying. Praying was their strategy for D-R. And I said, “What do you mean by praying? We pray that we don’t have to use our D-R.” That was their strategy when I got involved.
They were going to use D-RAS to go in D-RAS instead of $200, $300 a month, much more affordable, and got creative. That was a big value add that came from a channel partner being involved there, not only from the client perspective, but from a vendor perspective. There was no way they were winning that business at $240,000 or $310,000 a month, but they won it at $79,000 a month. So pretty cool use case right there. Yeah, I love that. I love the fact that it’s a five-year deal too. That’s crazy. That’s just wild. That’s conviction.
Well, and let’s talk about the first second, if you will, because a lot of these deals, how long does it take to install?
Right? How long does it take to even kind of find the water cooler, as they say, right, of getting a new job? So you’re going to sign what, a two-year deal on something that’s going to take a year for it to even work, and then you’re going to go find another vendor in a year? I mean, that’s where part of the value add of having, again, someone in the channel like a Tier 4 Advisors comes and play. These clients at times, or even the vendors, they’ll give you a bid or a quote for two years, and you’re like, “Guys, that ain’t going to work.” I mean, you don’t want to be negotiating a new contract in two years on either side of that.
Now, again, I’m not necessarily an advocate for even signing a large megawatt colo deal for 10-plus years, unless it’s the right fit, or they’re going to be growing from a megawatt to three megawatts to five megawatts. But those deals are not very often for a lot of channel partners. But be smart. I would say be smart and strategic. If you’re a client or if you’re a trusted partner in signing these shorter-term deals, some of those things don’t need to be that short. A three-year or five-year for a lot of these things makes sense. And economically speaking, is a win-win for everybody. Yeah, I love it. Great points on that. Great points. Get crafty. Get creative. What you see isn’t always what it has to be. I love that.
Okay, so final couple thoughts here. If I’m a partner, I’m listening. I want to dive a little bit deeper into managed security, managed cloud, data center, things like that. What would you advise the other partners out there, maybe just some of your favorite discovery questions to kind of open up that talk track a little more? So you’re asking for my secret sauce here at Tier 4 Advisors? Well, like your least favorite ones.
I’m going to assume that some of my frenemies are listening to this.
So, you know, we haven’t really talked much about security, but huge opportunity. Huge opportunity.
I don’t know what the numbers are, but I think it’s fair to say hundreds of thousands, maybe even billions of people out there. Kind of like we have a pilot shortage and a nurse shortage. You have an IT security and compliance shortage right now, probably worldwide.
Again, if you’re not having those conversations with your clients, someone else is, right? Just because you helped them with a DIA circuit a year or five ago doesn’t mean that that client’s always going to knock on your door to come out and find a new MSSP.
So security from a channel perspective, I would still put as blue waters. If someone wanted to use the analogy of red waters as connectivity at this point, fairly saturated. But I would be peeling the onion back. You know, I’d be asking people what their challenges are, finding and retaining talent. You know, have they had a security event in the last year or five? And if they have, chances are they still have nightmares at night from that experience.
But just peeling the onion back, be a good question asker. Don’t be the partner that’s, you know, spending 10 minutes selling your product and 50 minutes buying it back.
You know, ask a lot of questions and listen. A lot of opportunity out there for sure. Yeah, I think the thing that I’ve seen in this is that sometimes we have so much to offer right in this community. The customers just don’t know, right? And so they might have a go to market motion that they’ve already used for all these other services. And sometimes it’s just an awareness of, oh, I mean, how many times have we heard that? I didn’t know you could do that. I didn’t know you could do that, right? I’ve heard that conversation a lot because there’s, you know, hundreds of suppliers. There’s so many different OEMs within those suppliers and the list is long.
That’s right. 100%. And again, I mean, if you’re not an expert personally in certain things, at least be good enough at asking questions and saying something to the effect of that sounds great. On our next call, I’m gonna have Josh LaPresto, one of my partners on the call and we’ll dig a little bit deeper in there or something like that. Love it. Love it. All right. Final thought here, Jake. So, you know, we’ve got a lot, you know, evolving here from a tech landscape perspective. We’ve got all kinds of fun technologies out there that are in our face every day. But if you just kind of look at where this managed service landscape is going, albeit cloud, albeit security, albeit network. Any predictions from you of what this looks like over the next couple of years? Is anything different?
I think next couple of years you’ll have a couple of minor changes, but nothing major. I think, you know, if we’re talking a decade down the road, it’ll be interesting to see at what point are IT departments entirely outsourced or at what percentage of an IT department is outsourced. I don’t know what the numbers are now, but, you know, I’m just thinking of, you know, a typical client. So let’s say $500 million a year in revenue, you know, a few hundred employees or, you know, 500 employees, IT department of, let’s say, 8 or 15 people. You know, a lot of those type companies are leaning on managed services partners, managed service providers for SOC, NOC, DRAS, hardware deployments. You could call them a VAR, but they’re more MSP.
They’re buying all their software or a lot of their software through those partners, things like that. I think that trend will continue to grow and become more popular.
If or when, you know, Microsoft, for example, you know, who would have done Microsoft Teams for Dialtone 10 years ago? Nobody, right?
But as some of these larger organizations become more and more everything to everybody, there’s a little bit of risk there. But you still are going to have conversations around, hey, what vendors do X best? And, you know, if you know the answer to that, I think the opportunities are going to continue to grow.
All right, we’ll wrap it up right there. Jake, thanks so much, man. Good nuggets. Lots of good stuff on here. Appreciate you coming on, man. First guest to wear sunglasses and do it outside. I don’t know. Maybe best guest, best dressed, steeple, all of the above. You can’t beat Charleston. Hey, shout out. If you have never been to Charleston, South Carolina, check it out. Awesome. Lots of history. Good food. The beaches. Easy to fly in and out nowadays.
Love it. Love it. All right. Good stuff. That wraps us up for today. Okay. We’ve got Jake Sherrill, Tier 4 advisors, founder and CEO. I’m your host, Josh Lupresto, SVP of Sales Engineering. We’re talking managed services unleashed. Until next time.