662 Streamline Microsoft CSP Billing with Xeneth

[Uncle Marv]
Hello friends, Uncle Marv here with another episode of the IT Business Podcast powered by NetAlly, the show for managed service professionals and other IT providers where we help you run and grow your business better, smarter, and faster. Today is another vendor profile for the IT Nation Pitch It Accelerator program, and today we are profiling Xeneth, the software that provides billing automation solutions for managed service providers through its flagship product called MSPlus and joining me to talk about that is co-founder and managing director Cameron McFie. Cameron, how are you?

[Cameron McFie]
I'm great, thanks for having me on.

[Uncle Marv]
All right, so Cameron, thank you very much for doing this. I wish you luck in the Pitch It program, but why don't we tell everybody why you're here. You've got this product, MSPlus, and it's supposed to help us automate our billing?

[Cameron McFie]
Yeah, sure. So in short, it helps the challenge every MSP has with its time and money. So we do that through billing automation, particularly with Microsoft CSP and managed services contracts in particular.

So in doing so, we're helping MSPs not only build quicker, but allow the billing team to focus on other more important tasks rather than, you know, have two screens and do data entry basically. So some more interesting, you know, more strategic tasks.

[Uncle Marv]
All right. Now, as I understand it, this is really more for the Microsoft cloud solution providers because it works with 365, Azure. How much other managed services products does it work with?

[Cameron McFie]
So yes, so there's two modules to it. So there's Microsoft CSP, which is, it's helping particularly direct CSPs with their billing automation into ConnectWise, Autotask, Xero, ServiceNow, all sorts of different things. And then there's a managed services piece.

Now this is where, you know, that's your typical MSA, your per user per month, you know, bill that you're billing for your service you provide for IT services. So we can also, through that engine, bill other cloud services. But yeah, it's primarily for billing your managed service, your MSA, basically.

[Uncle Marv]
All right. And so I imagine that this is going to go out, grab all of our information, thus saving us time. Now, do you have an idea of how much time it would save?

Because for some people, you know, it takes hours and days to do their billing sometimes. So what types of savings can we look at?

[Cameron McFie]
Yeah, look, it kind of changes depending on the company. So we've seen anything from companies that are doing, taking 30 days and two people to do billing every month, and they can now do it in like a day or two because of our software. And now it's giving them time to do reconciliation and the likes, down to a smaller MSP that takes, you know, usually two days to do billing, and they can now do it in an hour, like an hour or less, basically.

So our software, it runs through in like less than a minute, but like to do the full billing run. But it's usually we advise people to go through and do their own reconciliation and forecasting and analysis afterwards, which we provide them all sorts of reports for them to do that.

[Uncle Marv]
All right. So I, you know, for disclosure, I run an MSP. Now I don't have my billing automated.

I have an admin person that does that for me. But in terms of, you know, the gap that this is going to cover, how much of a need is there out there for automated billing?

[Cameron McFie]
It's a good question, which is up to you whether you feel there's a need, but I think there's a massive need. I'm regularly seeing a case where people are under billing by a minimum of 5% in revenue. So, you know, think about that.

What does that mean for you?

[Uncle Marv]
You mean, so lost revenue? We're missing out on revenue.

[Cameron McFie]
Yeah. So that's like I've spoken to all my competitors and they're all got the same number. So it's about 5% is the minimum number and about 10% is the average number that we see.

Now, if you look at that from a report from Canalys recently at the latest event that you've been to, the OND event, there was an announcement there, it was basically saying that managed services is about $80 billion a year is what's being billed. Now, if you look at that as a 5% is missing, 5% you're under billing, that's like $4 billion problem globally. So, you know, I guess it's up to you whether you see that's an issue or not.

But to me, I think that's a massive issue.

[Uncle Marv]
Well, I was going to ask in terms of also, I mean, yeah, if I could save my admin person some time, that would be great. I know that there are some products out there. To be honest, I've heard of a few, I've not dug deeply into them.

But what makes this product unique versus those other products?

[Cameron McFie]
Sure. So we kind of hyper focused on the two modules, as I said, the Microsoft CSP side, we've quite expert in that area. And you'll see probably from our LinkedIn posts and the likes where we're trying to help you with CSP.

So we're not just, you know, a piece of software you run. We kind of help you with that CSP program as well and how to get best out of that from a consulting point of view and the likes. I guess, yeah, I guess that's the big thing for us around the CSP side, Managed Services.

We're helping in all sorts of other areas, but yeah, definitely time and increased revenue is the big thing.

[Uncle Marv]
Okay. Digging a little deeper, I saw on your page, there's this thing called split billing for user types. Can you explain that a little bit?

[Cameron McFie]
So basically we can split bills based on, let's say you've got a part time worker or a remote worker versus like a standard user. We use a set of rules. So basically we're pulling in the data from Microsoft.

We process through a set of rules in that Managed Services module. Those set of rules basically give you a number, a pool of users, if you like. And within that pool, you can then tally it down further to go, right, well, this is a remote worker because they've got, you know, an F1 license or, you know, they're a member of this group or, you know, some sort of attribute.

You can say that's a remote worker or that's a part time user versus a standard user and therefore put different pricing and different SKUs accordingly in Connectwise.

[Uncle Marv]
All right. So even once we get that parsed out and pulled in, we don't have to go back and double check to make sure everything's separated.

[Cameron McFie]
That's correct. That's the idea. Okay.

So it's basically automating that process every month. So you set up the rules kind of once, you might need to tally the rules every now and then if a customer wants, you know, sees a user that shouldn't be being billed, then you can kind of come and tally the rules later. But typically, it's a set and forget type of thing.

[Uncle Marv]
Now, a lot of the companies that are coming through the PIDGET program were all born out of previous MSP experience. So of course, I've got to ask, is this something that happened to you in your previous MSP?

[Cameron McFie]
Yes, well, not directly. So in our previous MSP, we had a hosting company as well, and we dealt with SPLA, which a lot of companies have dealt with. So the SPLA program, but part of that, we worked out we were under-reporting and we got a nice bill from Microsoft for $100,000 that we were under-reporting.

So that kind of sparked me getting billing right and getting reporting right to Microsoft. So not only was that a problem because it was under-billing and we had to pay Microsoft $100,000, but it was also that we couldn't back-bill that, you know, so that was our problem. We couldn't back-bill that additional money we had to pay Microsoft.

So that's a challenge. And then we went into, so I was then a CTO of a software distributor, and as part of that role, we found that company, which is a $200 million public company, was under-billing by 5%, so that's a lot of money they were throwing at the door every month.

[Uncle Marv]
So now this goes beyond just licenses, right? We're talking, you know, not just 365. Are you able to bill for storage as well and things like Azure usage and all of that?

[Cameron McFie]
Yeah, so we're billing the Azure usage as well. So it's the Microsoft CSP side, which is your Microsoft 365 and Dynamics and the likes, and also Azure, and we can break down your Azure per subscription. And if you want to get down even further, we can break down within a subscription and split that billing if you want, but I generally recommend people don't do that because then they end up missing things.

But you mentioned before about like what a differentiator is, I think. For us, it's about that billing accuracy. We're pulling in that bill from Microsoft directly as a source of truth, and that way we've actually got the pricing before and after.

So you don't have to remember to update the pricing, particularly with the Microsoft NCE program, like NCE billing model, where you've got different like monthly, monthly, annual, monthly, the likes, different prices. So we're handling all that for you. So that's where we see MSPs are missing out on billing the most is because of pricing issues, particularly in the CSP side and the managed services side.

It's just not getting back to it. They might start a customer, and then, you know, 10 years down the track, they haven't been looking to see whether that customer has increased in size, and they've been billing it the same. And then they work out they've been under billing for $15,000 a month.

It's a very common thing where people forget to audit.

[Uncle Marv]
All right. So going back to your experience with the cloud provider and working with MSPs, what was it that made you decide to start this and, you know, strike out on your own?

[Cameron McFie]
Oh, good question. I guess it was part of my role at Rhipe, that software distributor that I mentioned. I got to see a lot of MSPs and talk to a lot of MSPs as part of conferences and the likes.

And I guess I found, well, two things that was a common theme back then when I started, which was billing automation wasn't really a thing. Everyone was manually billing, like you mentioned yourself. That really surprised me, particularly in big companies, so big MSPs.

So we're seeing, you know, 50 million or MSPs manually billing, and it blows my mind. So I guess that's where I started the business, because it frustrates me to see these people throwing away money, just because of that operational piece. And it's not something people generally look at.

People focus on technology and solutions and how to better service their customers. But people forget that back-of-house piece, which is actually about helping you make money. But not just that, it's keeping that relationship with your customer, like if you're billing correctly with your customer, you know, they trust you a bit more as well.

So, you know, if you keep keeping them secure, you're billing them correctly, you're supporting them well, you know, you've got that customer for life, if everything's in line.

[Uncle Marv]
All right. Now, of course, you know, we talked about my billing practices, which are not typical. I'm not going to say that.

I imagine the bigger you get, the more opportunity you see for, you know, that lost revenue and the time savings and stuff. But besides that, you know, in dealing with somebody who's not quite ready, what are some of the challenges you think that you would face from MSPs? You know, that, yeah, we hear about products all the time, that's supposed to save us time, save us money.

Unless we're losing that, you know, 15 grand a month, you know, how are you approaching us as MSPs?

[Cameron McFie]
Yeah, sure. Look, it's not a fit for everyone. Like if you're a small MSP that's probably got 50 or less customers, it might not be something you need to automate.

Like if I'm being really honest, you know, some people can, you know, in one afternoon do their billing if they're a small MSP. And that's where that's not really a fit, like as you're mentioning, right? Where we're trying to help is probably got more than 50 customers.

I don't know whether that's a hard line, but, you know, it's that sort of number is where I think it becomes a pain point. For some people that's over 25 customers, for some people at 50. It's basically, for me, it's, you know, you said about choosing tools.

Where we're different is, you know, it's interesting. Someone mentioned to me recently that our tool is basically free in the sense that, you know, for every dollar you're giving us, we're giving you back $10 in increased revenue. Like it is a common thing.

So, you know, in that sense, we're basically free. In the sense we're giving you money back, basically, for running our tool. But as I said, it's not a fit for everyone.

Definitely where we're really targeting at the moment is probably the bigger MSPs. That, you know, MSP groups, if you like. So trying to buy all MSPs that have these big companies and big challenges.

But we can serve us all the way down. So we've got customers that have $2 million annual revenue, up to people that have $100 million annual revenue. So it's kind of anywhere in between, but we're probably focusing on that $50 to $100 million revenue is probably where our focus is.

[Uncle Marv]
All right. So I know that your focus, of course, right now is PitchIT. And you're part of the 16-week boot camp course that they've got going on.

And of course, looking forward to IT Nation Connect in November, beyond IT Nation and the PitchIT competition. What do you see happening for Xeneth?

[Cameron McFie]
I look, well, so the PitchIT competition has been good for us so far, around like just getting onto programs like this and I guess looking at our marketing likes. But beyond, basically, we are in a big growth scale. And I'm like, we're trying to hockey stick our growth.

At the moment, over the next three years, we're making a lot of changes in our business and bringing on more people. And, you know, really trying to automate that onboarding process and make that quicker and quicker. We were on a call a week ago, I think it's two weeks ago now, that we spent 45 minutes with a customer on MSP and found them $260,000 under billing in just two customers.

So we're down to that sort of level of 45 minutes is all it takes. But it's, you know, we're trying to make that even easier and make that quicker, basically, is the idea.

[Uncle Marv]
Nice, nice. Well, Cameron, I want to thank you for taking some time to come on the show. I wish you good luck in the PitchIT Accelerator program.

Obviously, we will see you at some point along the way, hopefully on stage being one of the final three in Orlando at IT Nation Connect. And were you actually at Pax8Beyond yourself?

[Cameron McFie]
I wasn't. I was in Sri Lanka training new employees. That was that.

But yeah, thank you. Thank you very much for the opportunity. And I guess a leaving remark I would say is we've got a free trial for people with up to 10 customers.

If you want to find revenue in your top 10 customers, then come and talk to us. Spend 45 minutes with us and we'll try and find you more revenue for free, basically. And if you see value from that, then we can move on from there.

[Uncle Marv]
Okay. There you have it, folks. Cameron McFie from Xeneth.com.

It's not how it sounds, folks. It's actually spelled X-E-N-E-T-H. I'll have a link in the show notes and you can check them out.

And then, of course, follow them throughout the PitchIT program this summer. So again, Cameron, thank you for coming on. Folks, we'll be back with more from the IT Business Podcast.

We'll see you soon. And until then, Holla!