Diversify, Specialize, Add Services: How Will You Grow Your Business in 2017?
With Q4 fully underway, most MSPs are looking at their numbers and reflecting on the hits and misses that got them where they are, and the strategies they can use to end the year on a high note. But how many are thinking ahead to 2017? Now is the time to start putting in place the plans, people, tools and processes that will make business growth a reality for your MSP practice in the year to come.
As I see it, there are multiple paths to growth – and plenty of opportunity for MSPs to get bigger, more profitable, or whatever they want to be in 2017. From diversifying, to specializing and adding services – or some combination of these strategies – the point is, decide now how you want to advance your business. And remember, in an industry that’s always evolving, remaining stagnant isn’t an option.
Diversify or Specialize?
The question is valid but the simple truth is that diversifying and specializing aren’t mutually exclusive. In some cases it’s possible for an MSP to do both. For example, if you already specialize in a select few verticals, it might make sense to diversify with the addition of a new complementary vertical in 2017. Or, pick a niche area—a very specific or defined offering—such as application management or managed security services.
Experts will tell you, serving multiple markets isn’t the perfect path for everyone. You need adequate resources and expertise to address the varying needs of customers from one market to the next. Most MSPs are small companies, frequently with less than $1 million in annual revenue, and don’t have the means to pursue multiple, diverse verticals.
Specializing in a specific market, however, doesn’t mean you can’t keep adding services. If the legal services or accounting industries are your sweet spot, you’ll need to be able to deliver vertical-specific applications and services. But there’s also room for horizontal offerings that are common to multiple markets. For example, all types of customers need a business continuity strategy so they can resume operations should a major data outage occur. They also need security solutions, storage, infrastructure monitoring, patch management and periodic updates and upgrades.
For some IT service providers, specialization has more to do with size—not type of customer. Clients with only a few employees in a single location have more modest needs than those with dozens of workers spread across several locations. Typically, there’s less pressure on MSPs to automate tasks for single-location customers (although the industry is moving toward automation for clients of all sizes). Smaller, single-location environments also have less IT complexity, and less of a need for audits and asset discovery.
Ultimately, the question of whether to diversify or specialize comes down to careful planning and knowing your strengths. You might be able to do both to some extent, but whichever path you choose should always follow a well-defined strategy.
Add New Services
As you broaden your offerings while focusing on one or two specific markets or niche market opportunities, you will find plenty of options for building out your services portfolio. The idea, of course, is to keep focused on the specific needs of the vertical markets you serve. In the security market, for example, nuances related to compliance vary from one vertical market to another, even if ultimately the end game is the same – to prevent data leakage and network security breaches.
Also, as commoditization pressures MSPs to compete on price, it’s important to do your homework and have a good sense of the most profitable offerings to add to remain competitive. You might consider adding at least one new service each year. Figuring out which service(s) to add next requires a good understanding of emerging trends. CompTIA’s 2015 “Trends in Managed Services” report revealed a high level of interest among end user organizations in services such as application monitoring, mobile device management (MDM), helpdesk, cloud infrastructure and virtual desktops.
In the report, the primary drivers for end users to secure managed services were IT efficiency and reliability improvements, followed by bolstering security, and freeing up staff to work on strategic projects. Last but not least, the organizations surveyed were looking for cost savings when it comes to IT services.
In addition to guidance from CompTIA and other organizations, it’s also wise to talk to your own customers about what they perceive as their future needs. Unless your new services address their needs, you might end up with offerings that miss the mark. Even worse, a competitor with the right combination of offerings can sweep in and take away the business.
So as we move closer to the end of the year, don’t just think about your numbers. Be forward thinking and consider your game plan for 2017. It might mean new hires, new tools and resources, new technology partners or more. Do your homework now so that all the pieces can be in place when the new year arrives.