In Part 2, we look at how you should be offering higher-margin services in some of the IT areas causing most concern today – cloud, big data and security, for example. These are the areas where companies readily admit to needing outside help.
Meeting these needs will enable you to increase revenues, drive the growth of your MSP business and increase your value in customers’ eyes.
The right resource available to meet this demand
Of course, it’s not as simple as ‘just freeing up’ your senior technicians; they need to have the right skill sets to be deployed on these kinds of projects. It makes sense then to ensure that your valuable, client-facing people have access to the training they need to keep existing skills up to date – and the opportunity to develop the new skills required in ‘in-demand’ IT areas. It makes sense too that they have the time to develop relationships with your customers; to progress towards acting as their virtual CIO or CDO.
The opportunities are there
The good news is that annual growth in the SMB managed services market is predicted to exceed 20% over the next five years – and there are significant opportunities for MSPs.
Managed security services for example, are expected to grow by 22% in 2016; IT operations management by 40%. And Office suites in the cloud are already growing at a rate of 50% year on year.
These opportunities are being driven by new customer mind-sets: companies are looking for more help in an increasingly complex IT world and are willing to transfer more management responsibility to trusted partners. The ideal scenario for many would be a ‘one-stop’ provider to ‘manage away’ IT complexity.
The customer mind-set is extending beyond managing devices
Customers are looking for MSPs with specific, combined expertise; managing devices is still important but is expected to happen as a matter of course. MSPs who can offer this combination of ‘bread and butter’ services with sought-after skills in, for example, vertical market SaaS, compliance and a cloud-first approach to applications stand to gain.
A cloud-first mentality
Cloud services are one area that where you should be deploying your skilled technicians, with companies having to turn to third-parties for help according to CompTIA’s recent survey:
“With respect to cloud computing initiatives, 45% of organizations did use outside help. And the data indicates that many of these engagements could be coming under the auspices of a managed services contract. Among users of an MSP, 52% said they worked with an outside firm for cloud initiatives in the past year, compared with just 21% of organizations that do not use an MSP in any capacity.”
Companies today are not necessarily looking for MSPs who have their own clouds. Many want their MSPs to manage multiple third-party clouds, such as AWS, Azure and so on. MSPs who can offer the whole package – from on-premise support to third-party cloud management are in big demand.
According to CompTIA“Cloud services have re-written the rules for managed services. The customer mind-set is extending beyond managing devices toward managing and monetizing information – data from on‐premises, cloud and social systems.”
Missing out on the big data party?
While customer demand is clear, perceptions of MSP performance in cloud services and big data are mixed; respondents to the CompTIA survey report a ‘curate’s egg’ situation, with MSPs performing reasonably well in parts when it comes to cloud (notably back-up and storage) – but perceived as ‘laggards’ in big data.
Companies are looking to MSPs to drive the big data conversation. This is not to be confused with back-up or storage discussions; they are worrying about what to do with the data itself.
Even small businesses now want data integration and management across multiple systems: web, CRM, mobile, social, and so on. Most don’t have a chief data officer (CDO), and are struggling to gather, manage and monetise the data they have.
There is a huge opportunity for MSPs to become virtual CDOs to guide their customers in this area; and MSPs who control their customers’ data workflow stand to earn the closest working relationships.
Security, compliance and cyber security
At the same time, the new technology models like cloud and mobile are creating a ‘perfect storm’ for security, according to CompTIA:
“With new models, there are new loopholes to exploit; and with greater technology reliance, there is a greater potential for disruption. Add in escalating privacy concerns and critical regulatory concerns, and it is easy to see how IT security is becoming much broader than firewalls and anti-virus software.”
Cyber security in particular – is of ever greater concern to businesses, given their increasing reliance on digital processes, mobile computing and the spread of BYOD.
Sony, dating website Ashley Madison and most recently TalkTalk in the UK are among those high-profile companies forced to grapple with the fall-out of cyber-attacks on their systems.
These incidents reinforce a widely accepted ‘truth’; that cyber-attacks happen to governments, banks and large enterprises.
The reality, unfortunately, is that it’s not just the ‘big boys’ who are under attack. Small companies are being targeted every day – with significant impact on the businesses of those without effective security measures in place. According to PwC, the average cost of a small business’s worst breaches costs between £65,000 and £115,000 on average.
Malware and hacking are top threats causing concern, with almost half of all respondents to the CompTIA ‘Trends in IT Security’ study citing these as serious worries. Human error is also a growing concern.
How does this impact MSPs?
If one of your customers has a cyber security breach, the huge amount of resource needed to rectify the situation will be a significant drain on resources – possibly affecting your obligations and projects for other customers.
So security is both a responsibility and opportunity. You must ensure your customers are fully aware of the risks and follow good practice in security procedures (use of encryption, two-factor authentication, password protection, regular data back-up and security testing, for example); and you should also have the appropriate resources in house (or through a partner) to take their security ‘to the next level’.
Some 47% businesses using MSPs are using them for Cybersecurity (compared with 43% in 2013). There is no doubt it is an area for growth – provided you have the right resources available to seize the opportunity.
Your customers still need you to keep the lights on
BUT, while focussing your team on opportunities presented by cloud, big data and security – don’t neglect your existing strategies; the bread and butter of the MSP business. Many prospective customers have yet to adopt mainstream MSP services; and as they grow, the burden of managing IT internally will only increase. So there is still plenty of opportunity to get a foot in the door at an early stage.
Device, application and user management haven’t gone away; these nuts and bolts are still the foundation of the expected MSP service – without which none of the other high-value stuff can happen.
So, as you refocus and redeploy your skilled team to take your business to the next level by offering services in higher-value areas such as cloud, big data and security – don’t risk customer satisfaction levels dropping within your bread and butter business.
Think about using a partner’s skilled team to take over the day-to-day grind of ‘keeping the lights on’ so you can stand out from the crowd across all of the services you offer.
Part 3 of this series [‘Are your skilled resources focusing on delivering an exceptional experience to your customers – not just a service?] looks at shifting customer expectations; and considers how you can differentiate yourself when what was once ‘nice to have’ has become the new ‘table stakes’.