When selecting an IT services partner, you would usually go through some form of evaluation process to identify the one that is most closely aligned to your own business ambitions, and to ensure that you are both heading off down a mutually profitable route.
But were you aware that potential partners may be carrying out a similar assessment of your business to make sure you have the right profile for them? Because some MSPs are more suited to partnering than others – and some partners’ business models more relevant to a specific type of MSP.
Ed Bodiam, Director of FTS Managed Services, joined forces with me recently to discuss the qualities we look for in an MSP to increase the likelihood of a successful partnership – and to explain why this is so important to our respective businesses. FTS is a services aggregator for NOC, Service Desk and BDR/business continuity. Inbay is both an FTS services partner and an established NOC and Service Desk partner to MSPs directly.
Christopher Imonikhe from Inbay’s London office asks the questions.
CI: You have similar backgrounds; you have owned, built and run MSPs from the ground up. Can I start by asking you each to describe the ideal MSP profile for your current business?
EB: In my case, we don’t just focus on current IT MSPs. We are looking for any company, whether in the IT space or not, that wants to achieve real growth by supplying managed IT services to their customers. I was getting frustrated with trying to grow our MSP business and, having met a business colleague in the US with similar ambitions, we came up with a different business model to achieve growth. To prove the model, we set up a company that sold services into our MSP. We wanted to deliver a higher level of service and customer focus than we could achieve with our current engineer pool so we became an aggregator of selected services (such as NOC back-end and Service Desk) from global players who were already providing these services into large FTSE 100 companies.
Our model relies on growth from all parties so it becomes a focussed ecosystem where all the partners in the supply chain are focused on the same goal. This doesn’t mean that we just sign up as many MSPs as we can; rather the opposite. We actively select MSPs who are committed to scalable growth. This is essential to our business. If our MSPs don’t grow and bring in new business, then we don’t grow either. We put all our knowledge and expertise at their disposal to help them to grow – and this takes focus. We work very closely with our partners to achieve these goals and we can’t do that with hundreds of customers at a time.
The ideal for us would be to work with a small number of excellent entities globally, although we recognise that this type of growth is not for every MSP. Provided there is a desire for scalable growth, however, we are happy to work with them. We can also help with turnaround situations as there are no inherent up-front costs with us.
KW: Inbay delivers NOC and Service Desk directly to a broad spectrum of MSPs. We can accommodate a wider spread of ambitions, but our business model also depends on MSPs growing. If they don’t grow, they won’t have a business for long. All the MSPs I talk to say they want to grow. The difficulty is in establishing what they mean by that.
EB: You’re right. Do they mean scaling up for volume growth – or do they just want to take on a couple of new clients every few months? Are they being honest with themselves about what their growth ambitions are? Everyone says they want growth. Everyone says they’re great at customer service. Everyone says that they’re the best IT company out there. We need them to be committed to delivering in all three areas, or at least to have the ambition to do that, for our partnership to work.
CI: How you identify an MSP with the ‘correct’ profile?
KW: I am looking mainly for willingness to partner and an understanding of what that really means. We can help MSPs to scale up their business without increasing their in-house resources. But this often requires them to look again at the way they deliver their services – from the ground up. When we have that conversation, they may decide partnering is not for them yet – although it may be in six or twelve months’ time. There are times when alarm bells start ringing, particularly when there is a lack of understanding around the potential change that may be required or the willingness to accept this change. When a prospective partner tells me he is looking to recreate exactly what he has now because that’s the way they’ve always done it, for example, we would flag up concerns. The way they’ve always done things may have worked well in the past and got them to where they are now, but will it be right for the growth they are looking to achieve?
EB: I agree with Kristian and there is a process I use – a mental check list I go through in my first conversations with an MSP to see if what they want to achieve matches up to the value we can add. A good match is when all the main boxes are ticked!
It usually comes down to the personality of the business owner – or the people who are driving the business.
CI: What happens during that conversation if the MSP turns out not to have the right growth profile?
EB: When we have the discussion about what it means to run a business with the kind of accelerated growth we are looking for, the drop off rate is quite surprising. We find that only around 10% of the MSPs we speak to are a market for us. I paint a realistic and sometimes scary picture. I talk about the place it could be – but explain what needs to be done to get them there. If that picture excites them we are in a good place to start with. If not, we explain that we are not the correct partner for them.
That doesn’t mean that the remaining 90% should give up on the idea of partnering for IT services though; it could be a very good business move for them and we always recommend them to one of our partners.
KW: We would be open and upfront about any concerns and look to discuss these in full before moving forward. Often, it’s just a case of gaining a better understanding of objectives and how these can best be achieved. We find most of the MSPs that approach us are willing to engage in this dialogue and embrace any change required, once they fully understand what is entailed and the benefits it will bring. If they are not open to new ways of doing things, they might not derive full value from the partnership.
EB: Openness is critical. Our MSPs have some great ideas and we can help to put these into practice. We have worked with MSPs who have scaled successfully and we can apply that knowledge to new clients. We have a good idea of what works and what doesn’t work. We don’t presume to provide a template of how an MSP should build their business; our approach is to say – this has been tried and it could work for you too, here is how to achieve it.
KW: A commitment to partnering throughout the MSP is also crucial. Everyone must buy into the decision from senior management right through to technicians at the coal face. Everyone needs to understand why it’s important and what’s in it for them.
As a partner, I know you can’t force MSPs to change things. And although you might have buy-in at management level, this may not have been properly communicated down the chain. Technical resources can become very protective of their domain when a new partner is engaged for service delivery. Having said that, it’s right that they question and engage with the new way of doing things, as that helps both parties to understand each other and move forward.
EB: Absolutely. The service providers we work with need to be able to handle a certain amount of change management for our MSPs. Some infrastructure changes will be needed too. There are two aspects to this: firstly, the actual process changes; and secondly, the winning of hearts and minds. It’s very important that leaders have a clear vision of where they’re going and a determination to bring people along. FTS has the resource and experience to help them through that process.
CI: What of the drivers pushing MSPs towards partnering for NOC and Service Desk?
KW: Our MSPs understand that the predictable monthly cost that comes with partnering will enable them to scale cost effectively. Many are driven by the need to build revenue by adding advanced managed services layers, such as security and data analytics services, to meet new customer demand. They realise they need to avoid mapping skilled technicians to customers for basic managed services so they can redeploy them to these more advanced services -and boost employee retention in the process.
Increasingly we are also being approached by MSPs to deliver out-of-hours and 24/7 NOC and Service Desk. They are being pushed by their clients to provide a more proactive out-of-hours service, but are finding this problematical and costly to resource in-house; not least having to deal with the burnt-out and disgruntled techs on-call who are currently providing these services.
And some seek the reassurance they get from partnering that their business is on a more stable footing: the partner provides access to skilled and experienced technicians so there is less risk to the business if any of their own key people leave.
EB: We are also increasingly encountering MSPs who don’t want to have to take on a huge engineering pool to deliver high quality services to their customers and to support volume growth. Some have reached a tipping point where the constant recruiting of engineers with a broad skill set of product knowledge and the ability to focus on the customer has become a real burden.
CI: In your case Ed, the ‘perfect match’ has a third element: your service providers. How do you select them?
EB: Our aim is to provide a partner who has been thoroughly checked out, at an attractive price-point.
We want our service providers to understand what we are doing and to have similar characteristics to our clients. They must be prepared to listen, open to change, willing to help and capable of delivering the high-quality service our MSPs expect.
Because we are a service aggregator, we get to build programmes from different providers and match these as closely as possible to our MSPs’ needs. We save MSPs the time and effort of having to go out into the marketplace to evaluate potential partners. We have already done that – and to a high standard. And we manage these partners, so they don’t need to.
CI: And your advice for MSPs?
KW: Talk to your prospective partner. Make sure they know what you want to achieve and make sure too that you understand what you will need to do to benefit. As with any partnership it’s important that it works for both parties; that it’s mutually profitable. If not, you risk a match made in hell, not heaven!
EB: Look hard internally first. Change is a good thing! Try to look honestly at the “baby” you have built and nurtured over the years and see if you need to do things differently going forwards. Any change needs to give your business the best chance of growing to maturity in a way that makes you proud. Then find partners that share that same sense of pride in what you, and they, have built.
Something to be aware of is to be as unique as possible in a crowded market place. A blended set of services, aggregated from the best providers and all fully managed, can allow you to keep an individual personality for your business.