You’ve recently entered the managed services provider (MSP) space — welcome! It’s an exciting time, but you may be wondering, “What’s in store for us now?” It’s safe to say that COVID-19 changed the business landscape forever— McKinsey found that 57 percent of surveyed executives are investing in technology for competitive advantage or refocusing their entire business around digital technologies. This presents a huge opportunity for new MSPs to rapidly grow their business, if they follow the right path. The road to success is paved with roadblocks and wrong turns, so having a solid understanding of the industry landscape—and your place in it—helps you make the right choices for your business goals. A SWOT (Strength, Weakness, Opportunity, and Threat) analysis provides an overview of your company (or industry) and your competitors so you can decide on pricing, service offerings and target customers that fit your current growth goals and help you succeed at scale in the future.
We’ve taken the first step for you and put together a SWOT analysis for new MSPs, complete with suggestions and ideas for success. It includes a breakdown of your roadmap, complete with the obstacles you may encounter and the best routes to take to succeed and scale.
Strengths: A Fastlane for MSP Growth
In recent years, multiple factors have come together to create the opportunity for exponential growth in the MSP space. Even before COVID-19 created a massive shift to remote work, businesses have been overburdened with managing multiple applications, cybersecurity threats, and a lack of skilled workers. On average, today’s SMBs use more than 100 applications to manage their businesses, and enterprise organizations routinely use more than 1,000. All of this complexity has made MSPs indispensable for most businesses, creating a vast market opportunity—by 2026, the global MSP market is expected to reach $274.2 billion with a compound annual growth rate of 11.2 percent. It’s up to you to capitalize on customer needs to demonstrate your expertise and close new business.
Your strengths as a new MSP:
- You’re Future Ready: You’re already positioned for remote capability versus an internal IT department, which typically focuses on on-premises tech. As fewer on-site IT experts are needed in the hybrid work model, a multi-faceted MSP becomes a natural fit for many small- and medium-sized businesses.
- Your Services are Essential: Nearly every business in the modern world depends on technology more and more each year—a positive, for sure, but something that requires more and more expertise in heading off cyber threats and breaches.
- You’re Versatile: As an MSP servicing large numbers of customers (versus an internal IT team with one customer), you have the freedom to choose your tool stack—a key factor in scalability.
Weaknesses: Overcoming Roadblocks
While the industry remains healthy, you’ll want to be cautious about some of the very real issues facing MSPs today. Knowing what’s ahead of you and being ready to proactively navigate the situations will help you cross these barriers unscathed.
Take note of these common roadblocks facing MSPs:
- Awareness: Many businesses that have never worked with an MSP don’t know precisely what MSPs do. And even those who know they need one often struggle to see the value an MSP brings, or why one MSP might be head and shoulders above another. Because “no news is good news” in MSP land, it will be on you to continually find ways to communicate the value you bring to your customers when things are going well. As for differentiating your MSP, investing in sales, marketing and compliance certifications helps create a strong brand identity.
- Processes: Overwhelmed with a plethora of system options and tools, MSPs often let internal processes and procedures go undocumented or unaddressed, leading to costly inefficiencies and errors. Standardization and following industry best practices will aid your MSP in maturing faster.
- Technology: For this reason, some of the best start-up MSPs have already planned their adoption of technology ahead of time – remote control and remote access are imperative, tracking issues are key (ticketing), the ability to track your customer’s set up and systems are integral. At some point more sophisticated automation tools will become more important – scaling your business, one that relies on people is always walking a fine line on profitability – technology will help you get there.
- Responsibility (Legal):
- Even though your Service Level Agreements (SLAs) may say differently, many businesses assume their MSP is responsible and liable for any and all security-related issues that may come up. Enhancing your security posture and proactively monitoring systems play important roles in mitigating security risks.
- Leveraging good legal support to define what your SLA is (or isn’t) and outlaying the responsibilities on both you and the customer are key.
- See how automatic alerts help you stay ahead of security issues.
Threats: Navigating Rough Terrain
As you traverse the MSP space, never take your eyes off the things that can totally derail your operations. These threats shouldn’t discourage you, but they should ground you in the realities taking place in the industry.
Danger zones for MSPs include:
- Security: Cyber threats, hackers and ransomware at every level demand an air-tight security approach on your part. More and more bad actors are targeting MSPs as an entryway into their customers’ private data. Performing due diligence when selecting third-party vendors could be the difference between a costly breach and a secure environment.
- Government: Changes to government regulations and compliance standards require dedication on your MSP’s part to remain up to date, for your security and your customers’. Where you store your end customer data, how you process payments and industry-specific requirements can all sneak up on you if you don’t keep these things in focus.
- Competition: Whether it’s vendors going after your end customers, or SaaS and Cloud platforms providing self-service IT capabilities, you’re always up against some form of competition. Adopting strategies to become more agile will help you adapt and pivot to new challenges faster, as well as make visible progress on your projects.
Opportunities: Express Lanes to MSP Growth
Despite some roadblocks and rough terrain, numerous opportunities abound in 2021 and beyond. Take advantage of opportunities in the market, analyze your competitors to find gaps in your services and build offerings that specifically address the needs of your target customers.
Some of your most promising avenues for MSP growth include:
- Digital adoption spells revenue opportunities for MSPs, such as helping with new hire onboarding in hybrid workplaces, coordinating hardware shipments, managing vendors, and more. It also means you’re not tied to your geographical market—you can provide managed services to companies across the globe.
- Managed Services is in its infancy in many countries, providing MSPs early to the conversation the chance to become industry leaders.
- Working with Channel Partners can extend your reach and strengthen your reputation in the industry.
- Beyond disaster recovery, not many MSPs currently provide data backup and data protection, though there’s a high demand in verticals like finance, healthcare and legal.
- A single IT person can never compete with an MSP’s team of IT pros, making co-management a strong value proposition for companies going forward.
- As homes continue to double as offices, MSPs can expand to become trusted advisors for households as well.
- Advanced automation makes life easier than ever for MSPs when it comes to documentation, onboarding, system management and reporting. Taking advantage of automation that removes the drudgery of manual tasks allows your MSP to focus on big-picture areas, like sales and marketing, customer support, increasing your services and eventually, perhaps, a merger or acquisition.
Now that you have a clearer vision of the path ahead for new MSPs, it’s time to get moving. Take the first step and schedule a demo with Liongard to learn how we automate processes, ease your workload, and help you take your MSP growth from 0 to 10x.
Your Next Moves
Keep in mind...
- Unified Visibility: Liongard has over 55 inspectors and powerful integrations to provide full visibility across your tech stack.
- Show Your Value with Reports: Liongard Reports turn mountains of data into actionable insights that help you show results and make data-driven recommendations to your customers.
- Stay Security-Focused: New security threats can cause even the most sophisticated MSPs to reevaluate their security stack and processes. Learn how Liongard helps you stay ahead of the security curve.
- See how automatic alerts help you stay ahead of security issues.
- We’ve Got Your Back: Learn How Liongard Proactively Stays Compliant in the Evolving Global IT Community.