In the final blog post on MSP 2.0 trends, we discuss how the market is splitting into MSPs that are growing rapidly and ones that are stagnating, highlighting the success factors driving the former.
Research indicates some clear differentiating factors between these two increasingly distinct types of MSPs.
So, what does it take to become successful and take your MSP business to the next level in today’s complex world?
Well, the important growth drivers that seem to be emerging are (with the PSA needs for each highlighted in italics):
- Offering a full-service model with complete coverage of your customers’ technical landscape, made up of multiple differentiated offerings. And within that wide-ranging list of services, offer greater choice on how it is applied (a la carte service models). Customers are becoming more knowledgeable and refusing to fit into standard one-size-fits-all service and price structures. They want differentiated service, in particular where it touches security, plus they want graduated cloud-adoption offerings that allow them to build confidence over time.
- Clear fully configurable service product modelling with quotes that describe the offering fully but without jargon.
- The flexibility to design, adopt and financially manage new service offerings easily and accurately, plus the ability to analyse profitability by contract to further refine pricing.
- Simple contract change management that eases increasing adoption without requiring high-touch finance actions.
- Increasing coverage hours, using outsourcing to enable network operations to move to 24x7. The increase in mobile and home-working means office hours are less and less relevant these days. Monitoring and resolution services need to be available anytime, not limited to working hours only.
- Multi-culture, multi-time-zone and even multi-legal entity support to enable tickets to be passed round the world and to outsourced providers without confusing or corrupting SLAs.
- Working for larger organisations and being able to work alongside those organisations’ IT departments by offering specialised services in conjunction with their internal delivery model, not always as an outsourced replacement for it.
- Ticket action sharing with customers, workflows that incorporate customer actions.
- Having the confidence to price based on value proposition, not applying mark-up or competition-based pricing models. In other words having the process and delivery ability to sell at a quality margin. Yes, the growing MSPs are able to charge more because they are better - they are not growing on price discounts.
- Cohesive integration between process workflows and contract-level profitability analysis, ticket to tick interactions and ticket to project task linking.
- Fully integrated CRM actions that drive growth through both upselling and new customer acquisition.
- Getting the data right here is key. The CRM platform needs clean, up-to-date and above all comprehensive information about existing customers combined with:
- Fully integrated (through to sale) campaign management capability that demonstrates value without external manual analysis
And as these MSPs grow, economies of scale drive a beneficial cycle, allowing them to both improve their offerings and use buyer power to return higher margins.
Many MSPs not adopting this model are seeing their business stagnate or decline. With M&A activity increasing in this sector also fuelled by MSP generation 1 (baby boomers) retiring, these trends will increasingly deliver clear winners/acquirers and losers/acquired.
Not all MSPs are the same any more.
Read the previous posts in this series:
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 or LinkedIn