"ConnectWise transformed us, providing a much-needed ticketing system that paid for itself within the first year.”
“I couldn’t have done it without Service Leadership, and the expert guidance I received along the journey. SLI transformed my business performance and transformed my family's ability to get some wealth out of a business. The SLI data showed me what good looked like for an MSP, and it was a wake-up call, It took away any opportunity to make excuses and provided a clear path to improvement.”
David S. Mulvey founded Advanced Network Products (ANP) in 1984 as an IBM value-added reseller (VAR), primarily serving large IBM customers in Philadelphia, then transitioned into a Cisco Systems VAR. Over the years, the company established itself as a reliable partner for enterprise-level clients.
However, by 2011, Mulvey recognized the need for a strategic shift to ensure the long-term sustainability and growth of his business.
“In 2011, I decided to transition down market to serve small-to-medium (SMB) customers. I wanted to have more customers with less revenue rather than a few customers with a lot of revenue. This was at a time when the IT industry was in a recession (2008-2011). It felt too risky to continue as a project-oriented VAR, and I needed to re-engineer the business. I knew I had to transition into a recurring service revenue business to avoid the huge macroeconomic swings that effect IT spending within enterprise clients. And, with that, to become a true MSP, I sought out ConnectWise, which ultimately led me to Service Leadership,” said Mulvey.
Key Challenges
Transforming a business, especially one as established as ANP, comes with challenges. Here are some key challenges faced during their transformation:
- Operational Chaos: Initially, the business lacked a robust ticketing system and efficient tracking mechanisms, leading to operational inefficiencies and chaos.
- Financial Instability: The transition from serving large enterprise customers to SMBs created financial instability. During the IT recession of 2008-2011 the company was barely making money and was financially untenable.
- Cultural Shift: Shifting the focus from large enterprises to SMBs required a significant cultural change within the organization, including adjusting to different customer needs and expectations.
- Pricing Strategy: Determining the right pricing strategy was challenging and underpricing its services affected profitability. Moving down-market mandated the business hire a new team of server and workstation experts.
- Client Communication: Communicating the necessity of price increases to clients was a challenge, as there was a fear of losing customers.
- Standardizing Services: Simplifying and standardizing service delivery was necessary to eliminate confusion and improve efficiency, but it required significant effort and adjustment.
- Continuous Improvement: Maintaining a continuous improvement mindset and regularly assessing performance against industry standards required discipline and commitment.
ANP: Journey to Best-in-Class Performance
By 2012, ANP had fully embraced the MSP model and began to evolve their services away from projects and towards recurring services. One of the key steps in this evolution was adopting ConnectWise's ticketing system (ConnectWise PSA). As an early adopter, ANP quickly realized the immense value it brought to its operations.
“In that first year of use, the system paid for itself. We got about $42,000 of time and materials billing that we never would have captured without a ticketing system.”
Mulvey was also using data from another vendor to determine how well their company was financially performing. He thought he was doing fine, but realized he wasn’t until he joined IT Nation EvolveTM peer group and started benchmarking with Service Leadership Index® (SLI).
This provided the framework and support he needed for his business. Their guidance combined with SLI was instrumental in helping to navigate the complexities of the MSP landscape and achieve his ultimate goal of selling the company.
IT Nation Evolve and SLI
When he joined an IT Nation Evolve peer group Mulvey was on the brink of bankruptcy. Here he discovered the power of the SLI. By comparing his company's performance against the best-in-class, he was able to identify areas for improvement. He used this data as a guidepost to map what good looked like across 80+ metrics. This turned his business around.
“[When I joined IT Nation Evolve], I was barely making money, and the business was financially a mess. The SLI data showed me what good looked like for an MSP, and it was a wake-up call,” Mulvey said. “It took away any opportunity to make excuses and provided a clear path to improvement Once you learn “what good looks like” you can begin to engineer your business based upon data rather than my original approach which was emotionally-based decision making.”
Through persistent effort and learning from peers in the Evolve meetings and using SLI, Mulvey refined his business practices. “Year after year, we outperformed our own expectations,” he added.
Addressing Core Challenges
Mulvey detailed his approach to tackling the core challenges he faced using SLI data.
“I knew I had to start at the top of the funnel. Initially, I wasn't selling hardware at the right margin. Best-in-class product margins were around 18-20%, but I was selling at 5-7%. By gradually raising prices and fixing service costs and increasing service revenue, we improved our service gross margin. I learned that if the marketplace has set a selling price, then I needed to go back to my suppliers and negotiate higher purchasing discounts.”
The continuous optimization efforts paid off. ANP became more efficient, customer satisfaction improved, and the business grew steadily. Mulvey 's strategic shift to SMBs proved successful, and the company thrived in the competitive IT services market.
Successful Exit
Remarkably, when he sold his business, he exceeded EBITDA projections, coming in significantly higher than the best-in-class benchmark. This exceptional performance was the result of nearly a decade of meticulous optimization and strategic planning.
Mulvey credits the SLI data for transforming his business performance.
“Like everything, I was just totally dialed in and because it was dialed in, it made the business way more valuable. I never would have known any of that if I didn't have SLI."
By the time Mulvey sold his business in 2023, he was outperforming the best-in-class in almost every SLI category you could pick.
“I couldn’t have done it without Service Leadership, and the expert guidance I received along the journey. SLI transformed my business performance and transformed my family's ability to get some wealth out of a business.”
