It is not an understatement to say MSPs are changing the world. MSPs are providing IT functions that SMBs can’t reasonably provide for themselves. Thanks to MSPs, these SMBs have IT Operations technologies and processes that rival that of large enterprises. That allows smaller companies to focus on their core business – and not get mired in IT functions that aren’t their core competency. At the same time, MSPs bring clients into the future, allowing them to easily adopt next-generation technologies such as cloud services.
Without MSPs, SMBs would be held back – spending time, money, and resources just to keep their IT operations running, and would not have the ability to embrace new technologies that drive competitive advantage.
The proof of this is in the pudding. Because of their strategic significance, the MSP market is growing far faster than the overall economy. According to the report “Managed Services Market” by MarketsandMarkets, managed services will rise from $145 billion this year to $242 billion in 2021. That’s a healthy Compound Annual Growth Rate (CAGR) of 10.8%.
As an MSP you have important work. It is not just a job — but a mission to change the world of SMB computing.
The Growth and Transformation of MSP Organizations
The need for managed services has transformed the MSP landscape. As more clients demand services, MSPs have grown to accommodate them. This scaling has created new tiers of MSPs that have customers (and operations) across larger geographies – regional MSPs and global MSPs – that are changing the dynamics in the market place.
These “super-MSPs” are 100% focused on growth and expansion and employ professional sales, marketing, and technical delivery organizations to acquire new accounts and often displace smaller less mature MSPs.
SMBs Now Have Enterprise Needs
As suggested earlier, MSPs are delivering increasingly sophisticated services to clients. That’s because SMBs in general are increasingly demanding and requiring the same technologies and approaches pioneered by enterprises. This means SMBs are now adopting IT functions such as end-user security, password management, Multi-Factor Authentication, network/systems management, and InfoSec (threat monitoring and firewall management), all of which are required as SMBs’ dependence on their network and data to run their businesses grows.
The only way SMBs can truly match their larger enterprise brethren in terms of services is with help. According to research, 69% of SMBs surveyed in 2015 stated they are looking to outsource parts of their IT infrastructure.
Kaseya data indicates that approximately 50% SMBs surveyed in 2016 are either already outsourcing or considering outsourcing many elements of their IT function, including: Cloud application monitoring, cloud services monitoring, private clouds, backup and recovery, security services, and disaster recovery,
SMBs Transformed by MSPs
There are two problems that SMB IT pros need to overcome, both of which are solved by managed services. First, it’s hard for small overstressed teams to secure the network, ensure IT service performance, and fix all the problems that constantly arise. The bigger issue is that struggling IT teams have virtually no time to think strategically. That leaves them both vulnerable and at a huge competitive disadvantage in their industry.
On the micro level, using an MSP can transform an SMB in terms of efficiency and business possibilities.
That means SMBs can focus on innovation and differentiation – a huge business booster. At the same time, they can be far more efficient since their IT systems are optimized and have excellent uptime – not to mention the benefit of flawless backup.
On a macro level, the more MSPs take over SMB IT services, the better that huge portion of the economy operates. SMBs are the major driver for jobs in most places, and if they achieve greater efficiency, save on IT, and increase their ability to innovate — that can be transformative for the whole economy.
The mainstream IT press is likewise getting onboard the MSP train. CIO recently ran a piece by consultant Eric Brow extolling the virtues of MSPs:
“The role of the MSP is an important one in the small and medium business (SMB) space. An MSP provides the ability for a small or medium business to offload those pieces of their business that aren’t driving value or competitive advantage. For example, a non-profit that focuses on delivering meals to the elderly should – in most cases – hire a managed services provider to manage the IT for the organization. IT isn’t a key driver of value of this organization and should be outsourced to an MSP,” Brown wrote.
Best Practices in an MSP 2.0 World
Today’s MSP 2.0 world is in part a manifestation of the success of the MSP model. MSPs have matured from part-time operators and small 1-5 person technician-dominated companies five short years ago to larger process-centric organizations with strong technical capabilities combined with professional sales, support, marketing, finance, and management teams. As we discussed above, as the market has consolidated and as larger companies are outsourcing their IT services, super-MSPs have evolved to handle this growing scale.
In order for MSPs to succeed and thrive in this new MSP 2.0 environment, MSPs must evolve. This evolution requires that MSPs:
Embrace the changing dynamics of the market: The MSP community is made up of many diverse types of MSPs with different strategies and goals for success. Some MSPs want to offer multiple services to many different types of customers. Others are looking to expand into larger SMBs, and yet others are running a lifestyle business, and are not interested in significant growth. Rather they just want to continue to operate a steady business serving their customers. Every MSP – no matter their ultimate goal for their business – needs to understand and react to today’s changing market environment.
Change their investment profiles: To meet these broadening customer requirements, MSPs are now forced to evolve faster and invest more time, effort, and money on technical expertise as well as R&D to understand what customers require and build out that service portfolio. This puts tremendous strain on the MSPs margins as it requires direct investment to meet and address these changes.
Leverage a modern Unified MSP Growth Platform: Old point systems and first generation tools used in the legacy MSP 1.0 world are no longer enough for MSPs to ensure their ability to continue to succeed in an MSP 2.0 environment. A new unified platform should combine the business management need of an MSP with the richest current and forward-looking suite of software applications that MSPs can build managed services around to generate revenue and meet all the needs of their increasingly demanding SMB customer base.
According to Kaseya’s 2016 MSP Pricing Survey, MSPs who consistently grow over 20% per year do so by unlocking the hidden revenue in their client accounts. These MSPs have augmented IT support services with cloud application monitoring, end point security, single sign-on, network management, and backup and disaster recovery.
As a bonus, expanding the number of services both enabled a higher price for IT Support Services, and increased customer retention by making it harder for competitors to displace them.
The platform must be continuously innovating and be one step ahead of what the SMBs are asking from their MSPs, so that the MSPs on the platform are seen as thought leaders and can deliver what clients need, when they need it.
Strive to be Trusted
As MSP develop tighter relations with clients, they offer more and more strategic advice and become part of driving the client’s business. The term for this is ‘trusted advisor.’ Being a trusted advisor means you help clients spot the future, find the technologies that offer specific competitive advantage, then pilot, deploy and manage these new technologies.
Trends over the last few years have only made this movement more important. Much of this has to do with the cloud, which is rapidly on the move, and the staying power of on-premises infrastructure. With this combination of issues, there is a need to manage and integrate both environments, often resulting in hybrid clouds.
One of the seminal works on this topic is a white paper from Nemertes Research “Shift to ‘Enterprise Technology’ Relies upon Vendor Partners for Managed, Cloud Services” written by Robin Gareiss, founder and executive vice president of Nemertes. According to Gareiss, the drive to a provider becoming a trusted advisor comes from shifts in technology and how IT views itself. Gareiss argues that enterprises are shifting from Information Technology (IT) driven to what she calls Enterprise Technology (ET) focused.
“Not only does this shift change the way business leaders view IT, it also alters the organizational structure of IT itself. In the ET world, the technology team becomes more strategic, and as a result, it relies more heavily on trusted partners to handle tactical functions—and in some cases, assist in strategic direction of the company,” she says.
IDC also sees enterprises and other shops needing help from strategic advisors. “We predict that business innovation focused on creating a wider variety of solutions targeted at new business opportunities and challenges will drive a profound shift in the role of the IT organization,” says Chris Barnard, associate vice president at IDC. “Enterprise IT groups cannot afford any longer to be just watching, studying, exploring, or experimenting with cloud services, mobile devices, social technologies, or the other core elements of what we call the 3rd platform. They must develop deep competence in all of these technologies, often with the help of third parties with expertise in ‘as-a-service’ strategies.”
You can start this trusted advisor transition, if you haven’t already made it, with existing clients. Dig deeper into their technical affairs. Go the extra mile in managing and monitoring devices and their network, and proactively offer new ways of gaining efficiency and supporting innovation. They’ll feel the benefits and pass the word along.
The biggest issues are to have a progressive attitude, build deep expertise, and exude the proper confidence.
Moving to a higher level, Trusted-Advisor-style status is critical. We all know that break/fix isn’t dead, but is certainly no path to riches. To thrive in today’s MSP 2.0 environment, you need deeper relations with clients. Otherwise, you risk becoming an easily replaced commodity.
Be the Best MSP You Can Be
There is a difference between highly successful MSPs and those that don’t achieve their potential. Discover the secrets of MSP growth and prosperity with our eBook “Building a Bionic MSP Practice: Best Practices from the Highest Growth MSPs in the World.”
In this Playbook “IT Complete: Your Roadmap in an MSP 2.0 World”, we outline technical solutions that help MSPs achieve 2.0 status, and gain the rewards MSP 2.0 offers.
The Kaseya MSP 2.0 Definition: In order for MSPs to succeed and thrive in this new environment, MSPs must evolve. That requires that MSPs:
- Embrace the changing dynamics of the market
- Change their investment profiles
- Leverage a modern unified MSP Management Platform to ensure their ability to continue to succeed in the era of MSP 2.0. Such a platform should combine the business management need of an MSP with the richest current and forward-looking suite of software applications that MSPs can build managed services around to generate revenue and meet all the needs of their continually demanding SMB customer base.