What Does a Mature MSP Actually Look Like?

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We talk a lot about MSP maturity, but I wanted to take the opportunity in this blog to really consider what that maturity actually looks like. For starters, I believe there are three key areas of excellence that currently define maturity in an MSP business:

  1. Business direction. By this, I don’t mean businesses that are thinking two weeks or a month out; I mean those planning 12, 24, even 36 months ahead. It’s about looking at what you think the market’s going to want/demand, and then trying to stay ahead of that.
  2. Efficiency. Driving efficiency in your business is one of the easiest ways you can quickly become more profitable.
  3. Growth. Growth isn’t always about getting more customers. It can also be about maximizing the revenues you get from existing customers or introducing new product lines.
Author: David Weeks, senior director, partner experience, N-able
Author: David Weeks, senior director, partner experience, N-able

In all these areas, mature MSPs are constantly tweaking the dial and making ongoing investments. Sometimes little changes can have a big impact on a business—not just from a financial perspective, but also from the point of view of customer perception and experience.

But does maturity equal size?

The answer is no. You can have a smaller MSP that is extremely efficient and mature. There are emerging MSPs coming into the market that are leapfrogging large, legacy MSPs because they’re cloud-only or focused specifically on security, or other niche markets and revenue streams. These MSPs are challenging the status quo and ultimately changing the MSP narrative. And so, size does not necessarily equal maturity. Instead, maturity is about having the right outlook for your business.

Differentiating your business in the market

This conveniently brings me to one of the main points that differentiates mature MSPs from the rest of the market. All the above areas take business acumen. It’s critical to have someone leading that knows how to grow a business. Many old-school MSPs were born out of an internal IT person either leaving their company, or being made redundant, and then getting the contract back at their old company and calling themselves a managed service provider.

The majority of these people are not businesspeople, they’re IT people who have decided to start their own business. While some learn to thrive in a business environment, others don’t. So when it comes to scaling your business, there may come a point where you need to look at whether you’re actually the right person to lead the organization. Do you have the business credentials to take your business where you want it to go? Or should you look at bringing someone in to help it grow while you focus on the technical stuff? This doesn’t mean you have to give up ownership, but it means you may need to bring in the appropriate people.

I recently saw a great example of this with an MSP I know in Canada. The owner posted on LinkedIn that he was bringing in a new CEO for his managed services practice. And, he said, the reason he was doing this was because he felt that with an engineering background, he was not the right person to take his business to the next level. As difficult as that was for him to admit, he didn’t have the skill sets.

That’s a smart business owner. He will grow his business, and probably make it even more successful and profitable. So there’s a time when you have to ask, who do I bring in as the right talent to help me get to where I need to be? That is a key element for mature MSPs. They’re always asking questions like, are we the right ones to do this? Can we do it ourselves? Or do we need to bring in a third party to support us?

What increasing investment means

This is indicative of the way the MSP market has changed. If you go back just five or six years in this space, the concept of managed services was still maturing. But with increasing amounts of recurring revenue being made by modern MSPs, the industry has become a hotbed for investors. With the growth of M&A activity in the sector the focus on business management has increased. When private equity firms buy into a company, they want to see strong business leadership. While they’re unlikely to get rid of the owner, they may want to bring in a level of business experience and understanding that an organization is perhaps lacking.

The most critical part of maturity is probably the ability to not just look at your business, but also in the mirror. We all audit our businesses, but how often do we audit ourselves for the capability to lead it? It’s not a failure if you realize you’re not the right individual; ultimately, that’s a successful decision. It’s important to remember that this doesn’t mean giving up your business, but enhancing it by bringing in the right people.

This guest blog is courtesy of N-able. David Weeks is senior director of partner experience at N-able. Follow David on Twitter @WhatWeeksSays or connect via LinkedIn. Read more N-able guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program.