Mark Scott, the former CEO of managed services provider N-Able Technologies of Ottawa, is trying to change the way technology is delivered and consumed.His start up, The Utility Company Ltd., wants to redefine outdated business models for the small-to-medium size business sector.
The president and CEO of the new firm, Scott believes the industry will transition to utility computing the way the software as a service has emerged in recent years.
Microsoft, Google and hardware vendors pushing virtualization are furthering the per use, per month utility model, he believes.
“The whole idea for the Utility Co. has a lot to do with what I have seen in the market today and in enabling businesses. There is a titanic shift towards the utility model with Microsoft Live and the Google desktop. We are in the early stages of adoption,” Scott said.
Service per user
The Utility Co. has three points of value, he said. The first is technology as a service in a per user, per month model. The second is a beyond managed services franchise system. And, lastly there is a connected office product offering.
These three offerings try to address two major problems small- and medium- sized companies have today, Scott said.
One is over-spending. Citing research studies from Gartner and Forrester along with information from author Nicolas Carr, Scott believes the average business spends $360 per user per month on technology for an industry total of $400 billion annually.
The second problem is of that money spent on IT – only 15 per cent of it is actually being utilized by the businesses.
The technology as a service model attempts to address the under-utilization issue. Connected Office provides consumption-based technology that can cover a business’ operations, communications and management. Also part of the Connected Office is a utility service centre with help desk, network monitoring, security and storage.
Customers can buy one of three types of offerings from Connected Office: Classic at $30 per user per month, the managed offering at $90 and the utility offering at $165.
A CRM offering is in the works. This offering would cost an extra $100 per user, but would also contain accounting and Web site services.“We developed a business technology assessment tool that can read and gather all the data for IT spending and how it is utilized. You can walk through the assessment and the average SMB spend is $360 per user per month. If you are a 10 person accounting firm you spend about $3,600 a month on average, while utilizing only 15 per cent of it,” Scott said.
“These are staggering numbers if you look at it.”
Currently, Scott has 10 franchisees on board. The plan is to have 90 by the end of the year. His vision for the Utility Co. is for more than 2,000 exclusive market outlets across North America.
Franchise fee
There is a $30,000 fee to obtain a franchise. The Utility Co. provides 90 per cent of the services remotely to the franchisee. The gross profits are approximately 45 per cent, while net profit is 20 per cent for Connected Office.
“If a customer pays $80 a month then 20 per cent of that is your profit on average,” Scott said.
Also part of the franchise cost is a seven per cent royalty fee and a five per cent back office fee.
The target market for the Utility Co. are businesses with five to 100 employees. Scott said that there are three million businesses in North America that have between five and 50 employees and 190,000 who have companies with 50 to 100 employees.
Scott expects that half of the franchisees will be from the channel.
“There are two types; the start-up, and the synergistic franchisee similar to Tim Horton‘s and Petro Canada. The VAR can keep their brand and expertise but leverage our brand,” he said.
