Taking Your Managed Services Business to the Next Level

By Frank Ohlhorst  |  Print this article Print

Looking to gain a competitive edge amidst the ever-growing sea of new managed services providers? Here's how to take your business to the next level.

The MSP market is booming, and new players arrive every day.  Some do very well, others struggle, but all share one element in common – the desire to achieve growth that leads to increased revenue.  However, growth is complicated and can be somewhat risky, often following a torturous path that ultimately ends in uncertainty. That is just the nature of the IT services industry today.

Nevertheless, many have overcome the odds and have made the transition from a boutique MSP to an enterprise-class MSP.  Growth comes at a price, however, namely significant investments in personnel, software and hardware, as well as increased bandwidth costs and maintenance contracts. It’s a situation that has scared many away from the MSP market and caused others to hang up their hats and abandon MSP-related opportunities in favor of sticking with more traditional IT services. That creates a question – has the opportunity to become a high-end MSP now passed?
The High-End MSP Opportunity

The short answer is no. Opportunities abound for solution providers looking to build successful MSP practices, and better yet, the path to the high end is no longer blocked by a requirement for hefty investments. Solution providers can thank the cloud for that, where economies of scale have made high-end services affordable, easier to get and most importantly, rebrand-able.  The cloud can deliver elasticity that allows data centers and services to grow and shrink as needed.

That elimination of waste and the ability to almost instantly reconfigure to change scale brings an affordability to the channel that can be translated into high-end services, which can be bundled and resold by even the smallest of solution providers.

A solution provider looking to dive into the MSP market can turn to large providers such as Rackspace, Amazon elastic cloud and several other large hosts to build out a virtual infrastructure leveraging cloud-based services to start. However, that is not where the magic truly lies simply because most any solution provider can do the same thing.

The magic comes down to what services you are looking to provide as a MSP and how you combine and formulate those services. Traditionally, MSPs were defined as little more than remote support agents, who offered desktop and server maintenance via remote management.  In effect, that was the managed service. However, with the plethora of cloud-based solutions ranging from Infrastructure as a Service (IaaS) to Desktops as a Service (DaaS) to Software as a Service (SaaS), the definition of the MSP has expanded. All IT, whether physical or cloud-based still needs management.

That expanding definition is driving the opportunity for growth. To seize that opportunity, solution providers must redefine themselves, and that is the tricky part. Moving upstream requires planning, forethought and of course, the appropriate, channel-friendly cloud services vendors.

Building alliances with cloud services vendors will become the foundation for any high-end MSP. The trick is to leverage those alliances to create a suite of integrated services that are unique for your particular market target (think vertical markets), yet adaptable enough to support a la carte offerings. Perhaps the biggest challenge is finding a way to manage it all – the "all" being the services, the vendors, the customers and the revenue picture.

Professional Services Automation Tools

That is exactly where PSA (professional services automation) tools fit into the picture. The bad news is that PSA is yet another layer that must be added to the foundation of an offering. The good news is that PSA is now available as a cloud service from vendors such as ConnectWise, Autotask and others. PSA in the cloud simplifies management and reduces the need for a significant upfront investment. What’s more, many cloud services vendors have formed alliances with PSA vendors, baking in the integration with PSA platforms and offering channel programs that support rebranding. An MSP want-to-be can build a relationship with a PSA vendor as the first step to building a customized managed services offering, and that offering will have the advantage of simplified billing, profit analytics, and high efficiency that benefits from an economy of scale, all at a palatable price point that a solution provider can markup and for an ongoing revenue stream.

While competition in the MSP market is on the rise, driven by cloud services and the low barrier to entry, there are still opportunities for solution providers to differentiate themselves. Look at technologies that are still new to cloud services such as disaster recovery, unified communications, desktops in the cloud, infrastructure as a service, security as a service and even hardware as a service. Each of those offerings has the potential to replace traditional solutions, but that potential relies highly on the solution provider and not the vendor.

It’s Still About the Relationship

Whatever the offering, solution providers need to sell themselves before selling the technology. Of course, platforms and technologies are important, but with managed services a relationship built on trust is the single most important element for success. Nevertheless, there are still important considerations that a solution provider must address.

Solution providers must build relationships with their cloud vendors and carefully vet which vendors fit well for the solution provider’s MSP business model. Solution providers can leverage vendor channel programs to do just that.

Frank Ohlhorst Frank J. Ohlhorst is the Executive Technology Editor for eWeek Channel Insider and brings with him over 20 years of experience in the Information Technology field.He began his career as a network administrator and applications program in the private sector for two years before joining a computer consulting firm as a programmer analyst. In 1988 Frank founded a computer consulting company, which specialized in network design, implementation, and support, along with custom accounting applications developed in a variety of programming languages.In 1991, Frank took a position with the United States Department of Energy as a Network Manager for multiple DOE Area Offices with locations at Brookhaven National Laboratory (BNL), Princeton Plasma Physics Laboratory (PPL), Argonne National Laboratory (ANL), FermiLAB and the Ames Area Office (AMESAO). Frank's duties included managing the site networks, associated staff and the inter-network links between the area offices. He also served at the Computer Security Officer (CSO) for multiple DOE sites. Frank joined CMP Technology's Channel group in 1999 as a Technical Editor assigned to the CRN Test Center, within a year, Frank became the Senior Technical Editor, and was responsible for designing product testing methodologies, assigning product reviews, roundups and bakeoffs to the CRN Test Center staff.In 2003, Frank was named Technology Editor of CRN. In that capacity, he ensured that CRN maintained a clearer focus on technology and increased the integration of the Test Center's review content into both CRN's print and web properties. He also contributed to Netseminar's, hosted sessions at CMP's Xchange Channel trade shows and helped to develop new methods of content delivery, Such as CRN-TV.In September of 2004, Frank became the Director of the CRN Test Center and was charged with increasing the Test Center's contributions to CMP's Channel Web online presence and CMP's latest monthly publication, Digital Connect, a magazine geared towards the home integrator. He also continued to contribute to CMP's Netseminar series, Xchange events, industry conferences and CRN-TV.In January of 2007, CMP Launched CRNtech, a monthly publication focused on technology for the channel, with a mailed audience of 70,000 qualified readers. Frank was instrumental in the development and design of CRNTech and was the editorial director of the publication as well as its primary contributor. He also maintained the edit calendar, and hosted quarterly CRNTech Live events.In June 2007, Frank was named Senior Technology Analyst and became responsible for the technical focus and edit calendars of all the Channel Group's publications, including CRN, CRNTech, and VARBusiness, along with the Channel Group's specialized publications Solutions Inc., Government VAR, TechBuilder and various custom publications. Frank joined Ziff Davis Enterprise in September of 2007 and focuses on creating editorial content geared towards the purveyors of Information Technology products and services. Frank writes comparative reviews, channel analysis pieces and participates in many of Ziff Davis Enterprise's tradeshows and webinars. He has received several awards for his writing and editing, including back to back best review of the year awards, and a president's award for CRN-TV. Frank speaks at many industry conferences, is a contributor to several IT Books, holds several records for online hits and has several industry certifications, including Novell's CNE, Microsoft's MCP.Frank can be reached at frank.ohlhorst@ziffdavisenterprise.com