In a quest for higher profit margins and enhanced customer service, MSPs must further automate their businesses. Alas, that type of advice often doesn't explain how to perform that automation.
My view? In many ways, the quest for more automation requires yet another MSP mindset shift. Earlier mindset shifts, as you may recall, involved adjusting from:
- CapEx product sales to OpEx monthly recurring revenues.
- Client-server to cloud services.
- Device-centric models to user experience priorities.
The earlier shifts mostly served the MSP market well. Indeed, the top quartile of MSPs now generate at least 18 percent EBITDA profit margins or so. Still, the news isn't all good. The bottom quartile of MSPs are still losing money, Service Leadership notes.
Next-Generation MSP Automation? The Answer is In the Data
So where do we go from here? The answer, as I've pointed out previously, may involve MSPs that gain end-to-end visibility over their customer systems and workloads. But here's the twist, and the next mindset evolution:
"It's time for MSPs to shift again -- this time from user-centric IT support models toward data-centric scaling models." -- ChannelE2E
The reason? Gather and analyze the right data, and you'll likely make informed business moves that potentially delight your customers and further scale your own business.
My thoughts parallel some recent moves at Liongard, the MSP software provider. Poke around, and you'll see Liongard positioning its software to provide MSPs with three operational advantages:
- First, truly smart MSPs always run in a known state. That means the MSPs can gather, inspect, transform, and unify all IT systems data into an actionable asset, Liongard asserts.
- Second, operationally mature MSPs always know when and how their IT worlds change. How? The answer involves having precise IT visibility that's tracked over time -- aligned with alerts that anticipate what's next to stay ahead of threats or jump ahead on opportunities, the software company says.
- Third, operationally mature MSPs can up-level their team performance through those end-to-end data collection and analysis exercises. Armed with the right data and the resulting insights, MSPs in theory can automate the mundane; troubleshoot issues more rapidly; and shift to a more proactive state of operations, Liongard asserts.
Enterprise Automation and Data Trends: Coming to the MSP Software Market
Those points and others surfaced during a July 2022 briefing call between ChannelE2E and Liongard CEO Joe Alapat. Throughout the conversation, I began to think about Liongard's work -- and how it compares to enterprise-oriented software giants.
I'm referring to data-centric names like Splunk and Snowflake; observability names like Datadog and Dynatrace; and workflow automation software companies like ServiceNow. At first glance, those companies compete in different market segments. But take a closer look, and their focus involves gathering and observing the right data to:
- Automate tasks;
- help enterprise customers make faster, more informed decisions; and
- extend automation beyond IT into functional departments such as finance, HR and SecOps.
Why MSPs Should Care: It used to take about a decade for enterprise-class software trends to march down into the SMB market. However, cloud and MSP services have shortened that journey -- allowing enterprise trends to hit the SMB market faster and faster.
The twist: Enterprise software companies don't have the right pricing and software consumption models for MSPs -- which leaves a market void that some software company (or companies) will have to fill...
Rise of a Deep Data Platform for MSPs?
So how might the data-centric mindset infiltrate the MSP and SMB markets? Here again, Liongard's Alapat shared some thoughts with me. If MSPs embrace a deep data platform, he says, they will gain a "living system of record" for their IT stacks. The data platform, he asserts, must be able to:
- Automatically inspect customer environments from the cloud to endpoints;
- transform complex config data into a centralized data asset;
- continuously audit configurations to detect changes; and
- connect and fuel MSP workflows.
Roll all that together, and MSPs will further automate their businesses, Alapat asserts. The graphic below further captures what Liongard is up to:
Liongard's Vision: Right or Wrong?
Generally speaking, I agree with Liongard's vision: The future for MSPs is in the data -- how you gather it (end-to-end), inspect it and leverage it for more automation. That automation, in turn, provides an opportunity for operationally mature MSPs to lift their profit margins even higher. Moreover, less-mature MSPs that jump on the data-centric bandwagon might actually lift themselves into a more operationally mature business standing.
Still, the MSP software market is like any other technology market. Plenty of companies have the right vision. But the path to success ultimately requires fanatical execution. We'll be watching closely to see how Liongard and its MSP partners execute on their data-centric journeys.