At the Channel Partners Conference & Expo last month, one of the more interesting sessions was a look at where the managed service provider (MSP) business may be headed next.
The “What’s Next for MSPs?” session was billed as “some of the industry’s best-known MSP business owners” offering attendees their views on “what’s on the horizon, what’s next for their business and what direction they see themselves taking.”
Two of the expert MSP business owners participating in this session were Nancy Sabino, VP of Sales & Marketing at Synetek Solutions, and Juan Fernandez, Chief Encouragement Officer of the MSP Growth Coalition, who organized the session and chaired it. Both spoke with Channel Insider about their observations from the session, our latest in a series of articles on innovation in the channel.
Specialization Matters for MSPs
Holding his hand in front of him so that his fingers and his thumb were barely an inch apart, Fernandez said, “The reason I was super successful is because I delivered this,” nodding at his hand to indicate just how very focused his offering was. “It was only this! And everyone’s like, ‘Oh, you could do all these other things.’ And I replied, ‘You know what I’m going to do? I’m going to do this. You know why? Because I’m making a lot of money doing this. And I built my whole MSP around this little, tiny thing that I could be best at.”
Sabino agreed. “Juan is absolutely right. I built my MSP around this as well,” she said, gesturing similarly. “I think you have different areas that you can focus on if you have the people to do it. That’s part of what makes the MSP community so different. It really comes down to the talent that people have available to them, and what resources they have. Because of that, we all offer something completely different. We differentiate ourselves from each other, and that brings on the need for even more collaboration within the community.”
Speaking of those MSPs who persist in trying to be all things to all people, Fernandez noted, “That was what we were leading to with the innovation component of the session. We are seeing a dying breed, and we’re watching it become extinct in front of our eyes.”
The panel also discussed the key performance indicators (KPI) many manufacturers seem to try to impose upon MSPs, saying that those KPIs drive them to look more like each other than they need to be. Fernandez refers to it as a “market target component” rather than their “business profitability component.”
Fernandez noted that one way for an MSP to stand out is to have your own intellectual property (IP). That makes an MSP far more attractive, he said.
The Future Is Already Here
Fernandez said there was a point in the session when Sabino “blew everything apart.”
Sabino was last on stage. “When the microphone got to me, everybody had already spoken,” she said. “I basically said, I’m gonna call everyone out and say everything that everyone has just said is here today. We’re not talking about things that are ‘what’s next,’ which is what this session is supposed to be about. It’s all currently being done or should be done. We need to be looking to our future.”
Both Fernandez and Sabino described a list of issues they felt needed the group’s focus, including:
- Automating business processes
- Getting serious about talent acquisition and retention
- Partnering with other MSPs and VARs to grow
- Building powerful cultures
- Next-level mastermind groups
- New ways to help our clients to adopt new technologies
- Marketplaces are the future, so how can you put it all behind a single pane of glass?
“For me,” said Sabino, “it was the collaboration piece amongst MSPs, where right now we have some roundtable groups, which are peer groups. But I’m seeing that what’s next is going to be a lot more robust collaboration than that. That it’s going to actually be doing business with each other, partnering up with one another, in order to compete with the conglomerate MSPs that are being built.”
The conglomerate MSPs Nancy Sabino referred to are venture capital firms that are buying up many MSPs and bringing them together as a unified national or even global presence.
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The Importance of Independent MSPs
Sabino differentiates her colleagues from the conglomerates, noting, “What’s missing out of the ones that are being built is the community aspect. We have other organizations that are building the community aspect, but tying it into the logistical part, which addresses how we then work together within the community. I think that’s the difficult part.”
Fernandez said recent acquisitions may be hurting the channel overall. “Those were all being created, but they keep getting bought up right about the time that they’re about to do something great like that. Seems anytime you get a group of great people together, all of a sudden they get bought, and it’s like, okay, well, that was a good idea.”
Identifying What’s Next for MSPs
Sabino and Fernandez identified three clear issues that are of key importance to the channel going forward:
- The need to specialize and focus on being great at one specific thing
- That means that MSPs will need to learn to partner proactively
- The community needs to truly value their independence and preserve it by resisting the temptation to be consumed by a conglomerate
Fernandez warned against the industry becoming commoditized. “Without your own unique IP, you’re just part of a service organization.”