EP249 – From License Costs to Lasting Value - Mastering M365 & Copilot ROI
with Phil Hames & Ian Luckett

IAN: In this episode of the IT Experts Podcast, we're going to help you unlock the hidden potential around Microsoft 365 and Copilot.

INTRO: Welcome to the IT Experts podcast, the only podcast to help MSPs scale to 1 million, and if already there, get to five and go faster at the end of the day. Isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN: So good morning, good afternoon, good evening. Welcome to the IT Experts podcast. We've got a cracking show for you today. Yes, it's all about AI. No, it's not. It is going to be a bit about AI. We're going to be talking about Copilot, we're going to be talking about Microsoft, and, but most importantly, what we're going to be sharing with you today is how to use the Microsoft stack to sell more managed services, to educate your clients in the new technology that's coming up. And Phil Hames, the MD from TBSC, who are a Microsoft partner who unlocked the untapped potential in Microsoft 365. So welcome to the show again, Phil. How are you doing?

PHIL: Yeah, doing very well, Ian. Thanks.

IAN: Good stuff. Phil, do you want to just before we get cracking, we did do a podcast before I remember around some of the tools that you guys had around Microsoft 365 utilization. I believe that one was, but now, today we're going to be, we're stepping it up a notch. We've moved into the future, we've moved into AI, and we're going to be talking about Copilot. Now, many people, or some people may know that I am not skeptical around is it AI, is it automation? Is this shiny ball that I hear our MSPs in the growth hub talking about all the time really going to help them sell, manage services? Or is it just going to be a nice little thing that you're going to show someone, they're going to get wowed by it and then they're going to go away in the distance and tell all their friends at a cheese and wine evening rather than actually engage with your business and make some money. So before we get into demystifying all of that stuff, Phil share with the world, who are you, what'd you do, and who'd you help?

PHIL: Yeah Phil Hames, MD of TBSC. We are a Microsoft ISV partner, so we don't sell any Microsoft technologies. We just help customers to optimize the usage and security and get the best out of their Microsoft 365, and now co-pilot.

IAN: Excellent stuff. And are you in, based in the UK are you, is it like global Europe? Where does your business cover.

PHIL: Yeah, so we are based in the UK. Our offices are in bay in Stoke. However, we tend to be dotted around Europe got some developers in India, some in Australia. And so we like most organizations in technology, we've got people in different countries.

IAN: Amazing. And one of the things that we were just talking about a minute ago was how you guys have, taken the Copilot thing, learn how it works, gone full feet in, full, deep in and you've, and you created a product that that we'll talk about a little bit later on. One of the things that I just wanted to just kick off with is that, in the channel we've got this, maybe it's a love hate relationship with Microsoft. There's only one Microsoft out there. They've got a monopoly. They don't sometimes really care about the smaller MSPs and what they do with their pricing. And it's you get what you are given and you are damned if you do and you're damned if you don't thing. And then they go and release an AI module as you would imagine, like everybody else, which is Copilot. And some people think it's great and some people think it isn't. But you've got to use these things, haven't you? How do you view the kind of the overall Microsoft stack right now in terms of the MSP's ability to demonstrate the value to a general SME business that they're going to work with as an end user. Is it a good package right now? Does Copilot work, is it integrated properly? What's your kind of walks and all pros and cons on where do you think Microsoft are at now with their solution?

PHIL: So I think for Microsoft, it's the number one important thing to be focusing on. So if you are a Microsoft partner and you are not focused around Copilot, then Microsoft are not going to be focused around you. So you have to make that decision. What are you, why are you going to do about it? And with your customers? If you are not going to start them on the co-pilot journey, then somebody else is because Microsoft are going to be pushing all of the partners to do it. So somebody's going to get in there and is going to be taking your customers. You are also, if you are focused on co-pilot. Then you're going to be able to go into new customers and you're going to be able to share your expertise with them. So it's a terrific opportunity and I think you just have to make that decision to get into it. And that was the same for us. We were using ChatGPT extensively. We thought it was great. But then we realized we had to get into Copilot and what we discovered was Copilot is integrated into all of our Microsoft 365. So our business processes are integrated and since then we've pushed ourselves into it and it's enabled us to get great benefits out of it. So I can dive into that a little bit more, but I think that's the key thing. You have to be in Copilot now.

IAN: This is just like part of the stack and you're, quite clear there. If you are not into Copilot, someone else will be, and they will come and take your customers because they'll be explaining to them and how it's working and the benefits of it.

PHIL: Yeah. So it's not a silver bullet, it's the same with everything. It's like when spreadsheets came out, people said, that's great. What are we going to use it for? And I remember my first job. I was working in an organization and they said we need to be able to look at what our most profitable lines are. So I put all of the lines in the catalog in there, what the cost price was, and worked out the margins and the sales, and we found out very easily 80% of the profits come from 20% of the lines. Now, that was an application, and since then, everybody just uses spreadsheets and it's going to be the same with Copilot in the future. So the things I would say is, first of all, make the decision and then start to look at some of your business processes internally start using it yourself because this is what you've got to do with your customers. So start looking at your own internal processes. So for us, development is important. So we were developing a new technology for Copilot optimization. So we specked out all the APIs, we specked out where we could get the type of technology without doing any programming. So using the Microsoft stack, we used AI through Copilot to find the right developers with the right skills. We put together the project plan, we put together specifications, and we gave it to the developer, then we started to produce it. So we've cut down our product development time, I would say by, it's now 10% of the time. It takes a day to what would've been taken, like 10 days or more. So we've cut that down. We can now develop stuff so fast and we've eradicated a lot of the things. So that was how it affects us. In our marketing, we're doing the same things now, so you got to use it internally. The other thing is that, if you're working with your customers, you've got to do the same thing. So the first thing is look at what they're going to use their applications for. So pick out some of their key applications, not a specialist application. It's one of those things, those 20% of things that they do that is going to affect 80% of their cost or 80% of their revenue opportunity. Start with some of those important ones, and then when you implement it, measure who's using it so quickly. You can do the training, you can get the people up and running, and then what you're able to do the next day. You want to be able to say, look, these are the people who are using it, these are the people who are not, and then you need to do this on an ongoing basis. So go back to them and say, here are the top users, let's find what they're doing so we can cascade it through the organization. So you are constantly identifying best practices, benchmarking and pushing it through like you would with any implementation. Out of that, you are not just doing this education and create, helping them create their apps. You are also going to be doing the security. So you're going to be looking after the data. You are going to be looking after their SharePoint to make sure that John Smith in sales cart look at everybody's salaries and things like that. So you're going to have lots and lots of managed services wrapped around it. And I think it's more than just selling them a license and saying, oh, I'll come back next month and see how you're getting on. You've got to be able to work through with them and you, then you can pass your experience onto all your other clients, because you'll see what works in lots of organizations and you can then pass this on to everybody else who you're working with. You've become, oh, I've seen this before, this is how we solve that problem.

IAN: Do you know what Phil, as I listen to this, we've embraced AI. I think it's great from a marketing point of view for generating ideas and things like that, but they can't, there's a little thing in the back of my head that going, is this not just, a bit of a shiny ball you give an MSP. A torch. And they'll be all over it like a rash. Because it's going to be something shiny. It's going to be something new. And where I struggle sometimes with this is that you hear people go, oh, we went to an event and we taught a lot of people about Copilot. How'd it go? Yeah, it's really good. Everyone was blown away. They've never seen the functionality before. They were really wowed. And, from what I from my perception on that, rightly or wrongly, is that's going to be like cheese and wine evening chatter because it's going to be, hey look, we did this thing, it was brilliant. What I really want to do here is I want to work out how, investing into, okay, so I think step one is investing co-pilot yourself so you understand it so you can then educate your clients rather than having a specialist in it, you are all knowledgeable in it like you are with Outlook and setting up servers and all of that kind of stuff. But what I really want to try and, extract here is how can you take something that's not actually kind of hardcore managed services being Copilot, which is nice and fluffy and new, and wow, you've got this spreadsheet and, oh look, it's given me this analysis on what people are doing. How does an MSP take that and then bring it into a sales conversation or an education conversation to demonstrate why they need managed service, wrapping around it, and then to use it as a lead magnet sort of thing to bring it in to the prospecting funnel. How do they do that? Because at the minute, I think that it's unclear to me, and I think it's unclear to many on, on what that route would take. And they're going to lose a lot of opportunities because it's just going to be that, wow, that was great. They turn around and walk off in the other direction. How do we overcome this?

PHIL: So everything I read, about where AI is failing to deliver is about return on investment. So if you're talking with a customer, somebody you know, the MD, the financial director, they're not bothered about the technology. They're just really bothered about return on investment. So you've got to have things that are contributing to it. So I think you're quite right. A lot of it initially is a bit about automation and it's not really artificial intelligence. It's automating certain business processes and speeding up certain business processes. I was talking to a guy in a quite a large systems integrator, a managed service provider, and he said, I'm currently using Copilot probably a hundred times a day. He said, without Copilot now, I would need two assistance. That's, he said, this is the return on investment. So he'd got a new business area he was heading up and he said, this is how we're using it. So you've got to be able to translate that into return on investment. So the first thing is, if you put it in there, is everybody using it? If they're not using it what else is their training? You need to wrap around all of the things with it. So I think that's the key thing. But then look at where it's going to go. It's going to go from automation people are using it for research in other aspects business processes, but let's say maybe in two years, three years, you're going to be putting agents in you can also already put agents in to do automation tasks, but these agents are going to be like some sort of alien workforce, so you're going to have to manage those as well. You can not manage agents in the same way that you manage a physical employee. And you need to be looking at how active are the agents, what are they doing? Are they doing the things you want them to do? And some of them will be automation agents, some of the research agents, which you've got already in Copilot, but then you're going to have the ones that are the real artificial intelligence that are thinking for themselves and making decisions. So you need to be thinking three years time, where am I going to be in that? And there's lots and lots of managed services around it, and that is, is really going to be, I think, the future. Unfortunately, some job categories will go, and other job categories will be created. And in some cases, organizations won't recruit further people because they'll be put in agents in, and this is the balance, but that's the return on investment. And the other thing is how do they generate more revenue through automation and having artificial intelligence. So these are the things, but if you're going to talk to a customer, I would say first start talking about return on investment.

IAN: Yeah. Yeah. I think that's it's an interesting point and, depending on who you talk to oh, it's going to do the world, oh, and there's not going to be no jobs and all of this sort of thing. The one thing that, that we've embedded it for in, in the growth hub is replacing. Tasks some of the, I'm going to say the lower level tasks where you've got repetitive thinking. We've all got so much time in a day. Yeah. We've all got families and friends we want to spend time with. For most people who will be listening to this podcast, they're extremely passionate about their businesses. It doesn't feel like work. Some of them maybe not, but it doesn't feel like work and they really enjoy doing it. And that's why sometimes it's hard to put the phone or the laptop down and things like that. But we've only got so many hours a day when our brains are actually capable of thinking. And I remember, every many people have probably seen, the video with Jeff Bezos where he says, my job is to make two or three decisions a day. That's it, that's all I do. But those decisions are so powerful and so big and so impactful on everything else, in terms of making everything better. And that's where I think we need to get to is that, do we really want to have people who are triaging tickets and having low level activity of repetitiveness whereas you could elevate people up so they're thinking more strategically. So I think there's a real positive spin around this with regards to that. Another thing on the ROI side of things is something we've been talking about , quite a bit about how do you get in a conversation with somebody about managed services. And the way you do it is you just say to them, you say, let's talk about business risk for a minute. Let's not talk about me or you, but let's talk about what's your business risk. And if their business risk, if their number one business risk, isn't it, then they're probably living on another planet or they've never even looked at it before, probably the latter. How can we, involve this bolt on this addition, the Copilot thing into the office 365 stack to start to have a risk conversation.

PHIL: Yeah, so there's two aspects to it really one is if you're going to be implementing artificial intelligence, whatever your type of artificial intelligence, there's going to be a risk factor. If you're using ChatGPT, then where's your data stored? Is your data at risk in ChatGPT? The same thing in Copilot. So if let's say, John Smith in sales has got access to certain SharePoint sites and he can use Copilot, then he can access confidential information that you might not want him to have. The other thing that we do is, we started off doing a Copilot readiness assessment, and one of the things there was to look at just the basics that if you're implementing Copilot, have you turned identity protection on because last thing you want is for a hacker to get in and start.

IAN: Yeah. Yeah.

PHIL: Trying to be your FD. So all of these things, the other thing is have you got malware? Have you got viruses? Have you got a suitable backup facilities? All of those things within your normal Microsoft 365, the average for secure score in Microsoft 365 is just over 50%.

IAN: Wow.

PHIL: And so we've done about 850 checks in organizations. Yeah, we've found only 10% of organizations are above 70%. They're really leaving themselves exposed when they implement Copilot. So there's a whole series of things to be done. You need to be checking your SharePoint, you need to be checking the security on 365. And they're the things, they're the basic things.

IAN: Yeah.

PHIL: The bigger the organization, the worse they are.

IAN: And what I've just heard there Phil, which I absolutely love, is basically here's Copilot. Here's how it can help you in your business. It's absolutely amazing. And by the way, if you just turn it on and don't do anything else around the security and the assessment and the usability and all of that kind of stuff, you might as well just leave the front door of the office open when you go at night.

PHIL: Yeah. We found one big organization they installed not hundreds, but thousands of Copilot, let people start using it, and then we checked their security alerts and they'd got ransomware already installed and malware installed in their 365 tenancy. This was a big organization.

IAN: We got to the bit I wanted to get to, and I knew we'd get there, Phil. I knew we'd get there.

STUART'S INTERRUPT: Hey, just a quick one from me, for everybody that's listening, Stuart here. If you're serious about growing your MSP, but you're not sure what helps right for you, then just grab our ultimate MSP Growth Guide. It's a really simple way to check out what's out there for support that could really help you work. There's no fluff. There's no filler, just facts. Or alternatively, if you want to meet us face to face and see how we do things up close, come along to one of our events. They're regularly put on. They're all in the links below. Go check them out, and now it's back to the show.

IAN: Thanks, Stuart.

That's it. Co-pilot is great, but you put co-pilot on your own. You might as well just invite anybody into work in your business and not check them. Get them to sit down, don't give them a password and crack on. So that's that whole risk and risk conversation. Talk to me about when we, when the MSPs are talking to prospects and they're, looking to do the partner model, so we're trying to understand your business, et cetera, et cetera. We talked about an ROI and how you measuring and testing and what you are using it for, but there's nothing more powerful is there than actually putting it in and using it for a strategic project, for a problem that they've actually got for something that's going on in their business right now where they're going. And there must be something there, the huff factor, I'm going to have to trademark that I think is whenever you feel like that stop, because that's when something, either a process or a system or a person is not working properly. How can an MSP turn that conversation into a, let's see what we can do with co-pilot and your stack to deliver this project.

PHIL: Yeah, so it basically comes down to them creating some sort of strategy for it. Don't just put it in and say. Let's look and see what happens. There's so many organizations. They'll say, oh, we've given it to these people, but so and so's on holiday, and so's really busy and such. So it doesn't go very far. So you've actually got to identify with them. What are you going to use it for? Like one organization I came across, they were having problems with answering calls for people who were making the inquiries. It was in agriculture and things like that. So, people are calling in, could be farmers, could be other agriculture at least, and then they have to have somebody on the phone recording what's happening, then they have to make a decision about it, and then they have to allocate it out to a specialist to take some further action. So they used artificial intelligence to record the calls. So they don't, and then it automatically goes into a form and then they put some limited choices in some decision making to decide who it goes to. So they were able to cut down on the amount of people they needed in their responses to their customers, and they were also able to speed up the response time. So that's the thing that was a big issue for them, and they solved it through artificial intelligence. So the same thing with your customers, any customer, what are you going to use it for? And there's these semi repetitive tasks that they're doing that you need to start knocking on the head and they're the things that you can put in there. And then once you've started it off test and see if it's being used. And then keep on working that through so you get a hundred percent of the people who you expected to do that process. And then you can move on to the next one, wrap around all the other services, like the security and picking out the right users for it, that type of thing.

IAN: So the best way, or one of the best ways to, this is almost like a whole new product in the product stack, isn't it? AI implementation or project implementation where you can help them to, because, I wouldn't suggest an MSP does this for free. And if they've got a strategic project they want to deliver, they could scope the project out, this could become part of a key part of professional services rather than, okay, we don't plug in service anymore and putting hardware in and all of that kind of stuff. This project could be a project to optimize some of their systems and workflows, optimize their use of Office 365, and deliver that as a project. Is that how you see this panning out?

PHIL: Yeah. And it's encompassed in the 365 entirely. So the first thing you're going to do is if they say, oh, we're thinking about taking Copilot or testing it out, the first thing is you say, don't do it until we've run a readiness assessment. Let us check your security. Let us check your usage. Let us make sure. Usually we'll find when you do a health check on their 365, we'll usually some find somewhere between 15 to 25% of cost savings just on their 365, which they can then use to fund their Copilot. I'm just thinking if you look at the sort of projections of the future, is it going to be it without artificial intelligence in the future? Everything in it, it's going to be, have some integration with artificial intelligence. If you're not in artificial intelligence. And for Microsoft that's co-pilot, you are not going to be in it at all.

IAN: No. It's kind like a, it's a not an option. It's a must have it. How did MSPs do a readiness check for whether they're Copilot ready? And what does Copilot ready mean?

PHIL: Okay. So you've got, things like your check-in. One is obviously your security. So you're going to look at things like your secure score. You're going to look at your security alerts, you're going to look at their data backup. Are they cleaning out their data before they're backing it up? Have they got immutable storage? Have you run a cybersecurity check on it? They're the things that we would do in our readiness assessment. The other thing you're going to look at is, are the users, sensible users. So you're not going to give Copilot to somebody who just stores all their data on their laptop and never uses OneDrive and never uses SharePoint and things like that. So you need to do those checks. And the other thing is just do the basics for them and then, and for us, we automate all of that. But you can do it either manually or whatever you want, but you charge them for that service. And then you start to, and you are in conjunction with that, you are creating this strategy. So you want to know it's safe to use, and then you want to also create the strategy for what they're going to use it for. I think the worst thing that we see is people say, oh, we've just given it out to 20 users or something like that, or we gave it to these senior executives, but they're not always the best people to have it. So create your strategy and then start to wrap your services around that. Also specialize if you are good in healthcare, then specialize in doing something that you can transfer from one company to another if you are in education?

IAN: Oh, no, you're not suggesting that MSPs niche, their marketing and their business models are, you feel for crying out loud, that would be such an alignment with what we agree with. Yeah, so you build a product for a manufacturing and then guess what? You've built it once, what you are going to do, go and build it again? No. You just then rinse and repeat that strategic model around AI in other manufacturing businesses. You've just played straight into my hands, mate. Well done. It's just, I'll pop a check in the post.

PHIL: Yeah. It's just the sensible thing, isn't it? It's a bit like, you write a book and then you keep on, selling. You don't write one book, sell one copy of it. You write one book and if you write, a bestseller, then you've got an income stream and that's what you've got to do. Think of a bestseller.

IAN: Okay, Phil brilliant show. Thank you very much. I think there's some real golden nuggets in there for every for every MSP to take away. But from your point of view, what's the top three things that they need to be doing after putting the putting the Spotify down today?

PHIL: Yeah I think number one is if you're not already doing it, use Copilot yourself. You can't really walk into a customer and recommend it to them, and then when they say, how are you using it? You can't say, oh, I don't really use it, I use ChatGPT. You need to be, have the answer for that and how you're using it, how it's transforming your business. So the second thing is package up what you are going to offer. So you need it to be repeatable. So this whole aspect of if you specialize in a particular area, then you have your services, for that, your application. So you've got some level of expertise, but also have everything that you can do for them, like your readiness, assessment, all of your security, things that you need to put in place for them and then how they can start to measure the usage. No point putting it in and then finding out a month later that only five people out of 50 have been using it. Yeah, you need to have that all automated and differentiate yourself from somebody down the road who's just selling them a license. And then the final thing is focus your conversations from the beginning, right the way through on return on investment. So if you're not delivering a return on investment, then why should they be buying it? You need to prove that in some way and work with them to understand how you can do it. So there's two ROI things. One is return on investment. The other that people say is return on ignorance. So if they're not doing an AI. Then they're ignorant of this whole aspect, so they've got to get into it. And as a MSP you've got to be able to know about it so you can advise them. And I would say for the future, if you're not in AI, how are you going to be in IT? So you need to tackle these things now.

IAN: Love it. Some really deep things there. I think for all the listeners to listen in or to take notes on today. Phil, let the world know how they can get in contact with you and I believe you've got a little bit of a a special offer for all the IT experts podcast listeners.

PHIL: Yeah, so you can go to our website, TBSC.cloud, or you can just email me at p.hames@tbsc.cloud, and one of the things that we've been doing with quite a lot of partners is a very fast Copilot readiness assessment. So we look at their secure score, we look at their security alerts, we do a cybersecurity check, and we will also look at the users and we'll pick out the ones who are interacting on the web applications rather than just using their locally stored information. And we'll also do a license review and show you if they're optimized on their licenses. So it takes 10 minutes to set up. We don't need any acts, admin credentials. We just need somebody to work with us on doing a connection through the API, it's read only, it's secure and it's approved by Microsoft.

IAN: That's brilliant. Thank you very much for that, for all the listeners been a great show. Thanks very much. Good luck with your endeavors to the back end of this year and beyond, as they say. And yeah, look forward to hearing you probably next year when there's the new thing, the new thing, you'll come back out again. But thanks for your time today, Phil. Really appreciate it. Bye now.

OUTRO: Hang on a minute. Just before you go, and if you're curious about how this episode links with the ability to scale your MSP to a million or, or if you are already there, accelerate to five, then we want to invite you to come and take the MSP Mastery quiz. And in just three minutes, you're going to get a 360 degrees scan of your business where you can identify the one or two tactics that can help you find more time engage in, align your people and help generate more leads in your MSP. It's really simple. Just click on the link in the show notes and if you have enjoyed this episode, we'd love to get some feedback from you by means of a rating review on Spotify or iTunes, or your podcast platform of choice. We really appreciate every single one of them. Now, you can go and enjoy the rest of your day and we look forward to catching up and connecting with you soon. All the best day.