In Part 1 of this series, we explored how many MSPs are regularly deploying some of their most valuable resources on routine tasks: resolving daily network and server maintenance issues for NOC or handling basic user requests, such as password changes and new user set-up. We saw how this ‘misuse’ comes with an easily demonstrable and quantifiable financial cost.
But it also comes with a much higher ‘opportunity cost’; the result of not having appropriately qualified resources available to offer today’s in-demand services to your customers.
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[1] – 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%.[2] And Office suites in the cloud are already growing at a rate of 50% year on year[3].
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.
“I want the MSP to be half-a-step ahead of me. To understand who we are and give us some guidance before we really need it. And if the market is shifting, tell me before the shift can potentially hurt my business.”*
Chief Product Office, Financial Services
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.
“I know lots of MSPs can manage our technology. But what it really comes down to is can they support our existing and future workflows? I’d pay a premium for that.”*
CIO, Technology Company
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:[4]
“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.”
“Whenever we’re considering a new IT service, our first move is to see if it exists in Amazon’s cloud or if it can be deployed in Amazon’s cloud. We’ve looked at all the major clouds and that’s now our standard based on price-performance.”*
VP of Sales Technology Company
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.
“I just can’t find them. I’m talking about MSPs that are data driven and really understand how I need to gather and manage data.” *
Director of IT, K-12 School
“There’s a huge gap between big data and the IT channel. Partners that understand how to show you the value of data are few and far between.” *
VP of IT, Real Estate management Company
“Our service providers understand data pipelines. But they don’t really understand the value of the data flowing in those networks. How to manage it. And how to get more of it.”*
COO, Media Company
Security, compliance and cyber security
End-users still want help with enhancing security and compliance – 38% of respondents to the CompTIA survey cited this as a key driver for managed services adoption.[5]
Quotes are from qualitative, one-on-one interviews with end-user executives (eg. CIOs and CEOs), who had outsourced some or all IT services to MSPs. Interviews were conducted during March-April 2015 as part of CompTIA’s 4th Annual Trends in Managed Services Study, published May 2015.Helpfully, the cloud-first mentality has somewhat lessened the reluctance to outsource compliance, and an increasing number of companies are passing the buck to partners with compliance expertise rather than navigate the red tape themselves.
“One of the advantages of outsourcing is you’re paying someone else to have that compliance expertise. I don’t worry about keeping our servers secure because our MSP has the pertinent certifications and expertise.”*
CFO, Consumer Company
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.”[6]
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[7].
Malware and hacking are top threats causing concern, with almost half of all respondents to the CompTIA ‘Trends in IT Security’ study[8] 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)[9]. 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.
“Right now we manage our own networks. But we expect to double in size over the next year, and we’ll need to outsource the infrastructure management at some point during that growth.”*
VP of Sales, Tech Company
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.
“We’ve not got the time to troubleshoot our own network. Nor do we want the responsibility to fix something when there’s a problem. That’s where our MSP rescues us.”*
CEO, Digital Media Company
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.
[1] Market and Markets, Managed Services Market – Market Forecast and Analysis
[2] Market and Markets, Managed Services Market – Market Forecast and Analysis
[3] Source: Forbes: Gartner Predicts Infrastructure Services Will Accelerate Cloud Computing Growth
[4] Source: CompTIA, 4th Annual Trends in Managed Services Study, May 2015
* Quotes are from qualitative, one-on-one interviews with end-user executives (eg. CIOs and CEOs), who had outsourced some or all IT services to MSPs. Interviews were conducted during March-April 2015 as part of CompTIA’s 4th Annual Trends in Managed Services Study, published May 2015.
[5] Source: CompTIA, 4th Annual Trends in Managed Services Study, May 2015
* Quotes are from qualitative, one-on-one interviews with end-user executives (eg. CIOs and CEOs), who had outsourced some or all IT services to MSPs. Interviews were conducted during March-April 2015 as part of CompTIA’s 4th Annual Trends in Managed Services Study, published May 2015.
[6] CompTIA ‘Trends in IT Security’ study, March 2015
[7] ‘Cybercrime and hacking are even bigger worries for small business owners’, The Guardian 21 Jan 2015, as quoted in Tubblog, 23 March 2015.
[8] CompTIA ‘Trends in IT Security’ study, March 2015
* Quotes are from qualitative, one-on-one interviews with end-user executives (eg. CIOs and CEOs), who had outsourced some or all IT services to MSPs. Interviews were conducted during March-April 2015 as part of CompTIA’s 4th Annual Trends in Managed Services Study, published May 2015.
[9] Source: CompTIA, 4th Annual Trends in Managed Services Study, May 2015
* Quotes are from qualitative, one-on-one interviews with end-user executives (eg. CIOs and CEOs), who had outsourced some or all IT services to MSPs. Interviews were conducted during March-April 2015 as part of CompTIA’s 4th Annual Trends in Managed Services Study, published May 2015.
