3 Things MSPs Need to Know About Co-Managed IT Services

Hand holding drawing virtual lightbulb with brain on bokeh background for creative and smart thinking idea concep
Author: David Weeks, senior director, partner experience, N-able
Author: David Weeks, VP of partner experience, N-able

If you’ve been shying away from exploring co-managed IT services opportunities, it might be time to think again. Co-managed is here to stay and is likely going to be a big play for MSPs looking to move upmarket, especially considering the increasing pricing pressures we’re seeing in the market.

Sadly, one of the challenges that many MSPs face is that too often, they look at co-managed as an all-or-nothing scenario, and they think they’re not big enough to support an internal IT operation. True, maybe you don't have the capacity to take on full help desk services for a 500-user organization, but that doesn't mean that there isn't still an opportunity for growth with co-managed IT. MSPs can actually have a very lucrative co-managed arrangement with just one line item of service for an internal IT team.

Here are three key things to think about when you’re appraising co-managed IT:

1. Patching can open the door for co-managed

The most obvious entry point for co-managed is patch management. A lot of internal IT departments have legacy patching applications. These often don’t work as well or have the granular levels of control that today’s MSP patch management solutions can offer. This makes patching a great way for MSPs to get a foot in the door with internal IT.

But equally, it could be something in their infrastructure that you're monitoring, managing, and reporting on. Think about the services you’re offering to your SMB/SME customers that have the most impact on that business. These will be the exact same business benefits you'll be offering internal IT for larger organizations in the mid-enterprise sector, just at a larger scale.

2. Understand the power of your tech stack

MSPs have tool sets today that offer vastly improved capabilities compared to where we were 10 years ago. Understanding the power of your tool set and what it gives you the ability to do is critical to changing your mindset around co-managed. Stop thinking, “I'm too small to deal with these people.” If your tool’s doing 80% of the work, you don't need a huge number of employees to be able to support a large organization.

In the current climate, we know that with pricing pressure, there are going to be staff reductions, but before that, there's going to be technology expenditure reductions. This means internal IT will be under increased pressure to deliver the same targets and protection levels but with fewer resources. This opens the door for MSPs to come in and bring more scalability than a single person. Typically, in a co-managed IT support engagement, an MSP can be more cost-effective than a single employee because they're already doing a lot of those tasks in a multi-tenant fashion so they have economies of scale. Plus, they bring their advanced tech stack and greater powers for automation and orchestration.

3. Know your worth as an MSP

Sometimes it can be hard for smaller MSPs to fully understand their worth and how that projects upstream. During COVID, the stock of MSPs went through the roof—and rightly so. Had it not been for the MSP community, I don’t know how large swathes of businesses would have pulled through. But how many MSPs can actually say they have continued to capitalize on that value? As we go into an economic slowdown, it’s time for MSPs to reconnect with their sense of worth.

Prospering in a downturn is a lot about how you position yourself going into it. Yes, cost-cutting exercises are everywhere as companies look for efficiencies. That's a given. But that doesn't mean people are slowing down spending on the critical areas that drive their revenue.

We know IT is a huge revenue driver. We also know that it's typically a big line item for payroll. As an MSP, you can bring the ability to stabilize spending around IT so that companies know what that expenditure is going to be on a month-to-month basis. That stability can be a significant boost to larger organizations in a tough economic climate.

For a successful co-managed arrangement, MSPs need to focus less on what they can offer as a new service. Instead, they need to focus on the business strategy behind the service and how that can help drive more productivity and increase revenues in the organizations they support. At the end of the day, it's about changing the mindset from tech-first to business-first.

David Weeks is VP of partner experience at N-able. Read more N-able guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program