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
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
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.