The world in which Managed Service Providers operate is changing, and changing very fast.
This change is driven by some accelerating global trends that have direct consequences for the PSA tools used by these businesses. This post discusses those consequences.
MSPs began in the early days of local computing. Once PCs, business software and local servers became available to businesses, an industry grew up around those businesses to support their computing needs, update software and repair hardware problems.
This operating model became known as break/fix and spawned tens of thousands of businesses worldwide. These businesses were characteristically small, local shops. They needed to be local to get round to the companies they supported and fix things quickly, in particular in the US where distances between towns are so large and local competition would create 2-3 providers in each location. So, the PSA tools they used became very good at standard rate, incident-based billing supported by parts price-feeds to ensure they got the best margin. Characteristically, this generated lots of small invoices in a single currency with simple service desk modelling and a simple counterparty model.
For 30 odd years little really changed until the internet, cloud computing, remote working and self-updating PCs came along. The change to the industry is immense, as are the needs of the software those businesses use.
Their customers would no longer buy all their equipment through their MSPs as global web-based shopping businesses gave everyone the same low prices. Now PCs update themselves, printers are easier to fix and cheaper to replace than repair. But the big change is in software. PBXs are going virtual, software and data storage has moved to the cloud, remote session software enables techs to fix issues without visiting the site, instant messaging replaces phone calls and site visits.
The landscape of the future could not be more different.
MSPs have had to up their game, becoming virtual CIOs, trusted advisors, project managers and delivering remote support. Being remote lessens their personal interactions and so client retention falls back to flexibility, differentiation by service offering, movement from incident-based billing to AYCE (All You Can Eat) agreements. Even outsourced helpdesks for overnight support has become a feature of the landscape.
Monitoring software has also kept pace, automatic fault resolution is a coming trend, no techs needed to fix things or run back-ups. So billing models move away from “time to fix” based to service and prepay contracts.
Now the tooling needs to be very flexible (supporting service and rate based differentiation), contract-driven (both sales and purchase), mobile and with strong project management. Also, as remote working emerges as a strong trend, the need to be local diminishes and this will inevitably lead to price pressures and consolidation, in particular as the generation that started these businesses comes to retirement age. So, MSPs will get larger, the offering will get cheaper and the larger they get, the more important multi-legal entities and multiple currencies become.
The software they need for the future is very different from the first generation offerings out there.
It needs to:
- Have very strong and configurable contract, prepayment and rate models as MSPs seek to differentiate their offering from larger, cheaper but more commoditised offerings
- Support good Project Management, and clear profitability reporting at the customer and contract level, so pricing can be optimised by customer with ease
- Support larger businesses and outsourcing models, with multiple time-zone management, multiple legal entities and multiple currencies
- Have close and powerful links to all RMM platforms, fully supporting their automation agenda with billing models that can deliver revenue without time bookings
This change is little short of a revolution and is making the earlier PSA software look increasingly legacy. So, when you look at the market, even if these trends are not yet obvious in your region, make sure you future-proof your choice.
About the Author: Harmony Business Systems Ltd (HBS) is the company behind HarmonyPSA, the most complete cloud PSA software on the market. Developed with functionality to cater for even the most complex needs of MSPs, VARs, ISVs and Professional Services organisations, HarmonyPSA truly is the next generation of PSA systems. HBS is an independent company based in the UK. Follow HarmonyPSA on Twitter