Without a doubt, the MSP space is evolving, especially with the COVID-19 pandemic still in effect. Anyone who has been in our industry for as long as I have will tell you that. The bad news is many MSPs are stuck in the past. They haven’t realized yet where our industry is or where it is heading — nor do they currently have the necessary tools, resources and mindset to survive. It’s time these MSPs come to terms with the following hard truth. They need to evolve or be left behind.
While there are several reasons why we’re witnessing this evolution, there are also numerous ways for MSPs to adapt and overcome challenges presented to them as a result of this inevitable change.
How the MSP space is evolving
For one, competition has changed. There are four times as many MSPs today as there were 10 years ago. That’s tremendous growth when you think about it. It’s now more important than ever for you to find out how you can stand out in an overcrowded marketplace. Don’t wait any longer.
There have also been plenty of private equity-backed roll ups in our space over the years. Some of my largest customers have been acquired by these firms. MSPs are also buying other MSPs. One of the top reasons why we've been seeing this is it's a great strategy for smaller MSPs looking to expand geographically. Growing organically takes too much time. Acquiring already established MSPs may be a better strategy for those unwilling to wait.
Lastly, many local MSPs have broken the $5-million barrier. These MSPs typically have dedicated functions for sales and marketing, which they didn’t have access to five years ago. Why does this matter? These MSPs are your competitors and can use these resources in an efficient way.
So what can you do?
Become a Proactive MSP
When I talk to MSPs about being proactive, many of them claim to know what I’m talking about. Most of the time, though, I find out they don’t. Their attitudes about being proactive oftentimes change significantly after I begin bombarding them with questions about process.
There’s a big difference between being proactive and having proactive intentions.
Here’s the thing: You’re not proactive if you don’t have at least one service delivery role that’s not assigned tickets, alerts or billable projects. The only way to be proactive is to build proactive roles and processes into your seat costs, so that you can afford to do it.
Operational functions within your MSP should work toward driving down the time spent on reactive tasks. For example, to reduce reactive noise levels (or reactive tasks) and build more valuable vCIO processes, MSPs must build an IT strategy that aligns client technologies with their IT standards and shows them the impact of possible misalignments. A company that has a proactive vCIO approach implements the alignment process and utilizes findings to make recommendations toward technical goals. They focus on the business impact and how this can impact their client’s business in a strategic way.
MSPs need to realize the true impact of reactive noise on their business and their clients.
What do our customers actually want?
The security threats right now are shining a light on the dirty little secret of managed services—our business models haven't evolved. Sure, we're all now billing customers monthly. That’s different. But what about what’s happening back at our offices? Really similar to how it’s been all along, right?
Let’s take a step back and ask ourselves the following: What business are we in?
Are we in the support business? The lifecycle management business? What about the cloud business? How about the hardware and software business? What about the security business?
To figure out what business we’re in, we need to ask ourselves, “What do our customers want?” Do our customers care about the technology we’re deploying? Probably not. What about running their businesses without any hiccups? Do they care about that? Probably.
It’s inevitable: In order for MSPs to survive in today’s market, they must not only take a proactive approach to IT, but adapt to the needs of customers. They must define roles and process to lower reactive noise, build solid strategic relationships, and have command over cost and value drivers if they want to succeed in today’s business climate. Avoid betting your business on trends. Trends come and go, but true value will last.