The managed services provider (MSP) market is growing. Revenues are
estimated to exceed $193 billion in 2019. As this market continues to grow, it’s imperative for MSPs to learn how to differentiate their offering and separate themselves from the pack.
Our tips are based on research pulled from multiple sources including analysts, trade associations, and Datto’s first-hand experience with our own highly diverse MSP community. By adopting these strategies, MSP leaders can make the most of current macro market growth and out-perform the many competitors attracted to this growing market.
1. Define and Document Repeatable Processes: Technical competency, while necessary for MSP success, is not enough. To be profitable, MSPs must also be able to deliver economically valuable technical services at scale. This repeatability can present a challenge to MSP leaders, who are often hands-on technical practitioners themselves, and who have thus developed their own processes and methods that are effective, yet can be idiosyncratic. These leaders then tend to expect their staff to mimic such competency and creativity on behalf of their customers, with the unrealistic expectation that this nuanced combination will make the business a success.
2. Choose and Maintain a Technical Offering Focus: Many MSP leaders are confident that any business could benefit from their skills and knowledge. And they may be right. Servers, after all, are servers. And it’s a rare SaaS implementation that poses any especially difficult technical challenge to a skilled MSP. However, trying to be all things to all people, rather than focusing on making its offerings the best of the best, is a recipe for disaster. For example, an MSP often chooses which verticals to cater to based on geographical considerations (an MSP in Washington D.C. will most likely have a government client or two). A better strategy would be for the MSP to strive to offer the strongest network maintenance to the various industries surrounding them.
3. Build Recurring Revenue: MSP leaders who spent a good part of their careers working as a VAR and/or in the systems integration business, are likely more accustomed to generating revenue in large doses. The flipside to that, is that revenue is more sporadic, which may contribute to painful cash-flow challenges. Despite feeling more like a trickle than a fire hose, a recurring-revenue model offers greater stability, and over the long haul, may yield higher revenue.
4. Pick the Right Partners: Channel players have always had to choose their partners wisely. But the criteria MSPs apply to their technology partners can differ significantly from that of VARs and SIs. Resellers are typically focused on attributes such as technical specs, brand power, and discount structure because they have to close purchase deals with customers who know what kind of hardware and software they are getting. MSPs are in a much different position. They are focused on delivering services and optimizing customer satisfaction over time. Customers have less visibility into how MSPs deliver value, while MSPs have to be more concerned with the quality and efficiency of an ongoing engagement.
If you’re looking for even more tips to grow your business in a market of constant change, check out the eBook: 7 Best Practices of Successful MSPs, where we provide even more information to help MSPs successfully utilize a mission, maintain a technical offering focus, build a better talent pipeline, and more!