So You Want To Be an MSP? Here's What It Really Takes
It seems that every partner today wants to be an MSP. There are lots of opportunities in this space and the growth is predicted to continue. However, there seems to be confusion around what an MSP actually is. MSPs comes in different sizes, with different focus areas and specializations, and serving different industries. And many partners that are not really MSPs want to label themselves as such, when in reality they're closer to classic professional services companies (i.e., they sell hours in various forms) and often they're solo-entrepreneurs.
In my opinion, these are the characteristics you must meet to be considered an MSP:
- You're not dependent on certain individuals, and your customers have not been promised that a named person is the one that will serve them.
- You're not a one-man show; your company has more technical people than just yourself.
- You charge a monthly fee that, for the most part, doesn't change month by month. It's OK that a portion of the fee is based on the number of problems, issues or requests.
- The bulk of the engagement is delivered remotely and not on-site with the customer. This also means that you can serve customers outside your local geography.
- You have standardized offerings and delivery with some kind of SLA. It's OK that a portion is customer-specific but that is on top of the standardized offerings.
- You use a ticketing system for all your incidents, problems and service requests.
- You can easily onboard new customers at a faster pace than you need to hire more people.
These are the entry-level requirements for being an MSP. Even if you're not an MSP, you can take lots of pride in taking care of clients on-site, dealing with various issues and working on assignments as a single proprietor. You don't need to pretend to be an MSP if your business is something different. But if you embark on the journey of truly becoming an MSP, you'll find that it's a very rewarding journey.
My experience, apart from being an advisor to companies that want to do this transition, includes making the journey myself from a medium-sized professional services company to a successful MSP and hosting provider that I then sold. I know that everything is easier in theory than in reality, and that it takes longer than you expect to fully make a successful transition. You will need to change lots of things like culture, finances, expectations, marketing and production.
When you have decided to take your business into true MSP territory, you should reflect on how your product portfolio will look. There are some offerings that you should produce in-house and some that you should resell by partnering with someone else. Over time, this mix between in-house and not might change; it's wise to create a roadmap for this so that you can plan accordingly. The portfolio of offerings needs to make sense in the eyes of your customers. There are basic services that you will need to provide, as well as services that are more experimental and might become future winners.
The offerings to consider producing in-house are the ones for which you have the right knowledge and the right people to do it efficiently (with both cost and quality in mind). If there are offerings in which you would not be the most competitive alternative, consider finding a partner that can produce it for you and resell their services. It's important to look at this objectively; you only hurt yourself by keeping something in-house but at a higher cost and/or lower quality than if you instead went with a partner.
A very popular choice for MSPs today is to resell security-related services from an MSSP (managed security services provider). Security on a high level is hard to do yourself and breaches can have very significant impact, so partnering with an MSSP makes sense. Another area that is popular is to forge a partnership around cloud operations (CloudOps). Perhaps you are properly manned for one of the three hyperscalers' clouds (Azure, AWS, Google), but you're not equipped to handle the other two clouds. Or it might be that your people can bill much more as specialist consultants handling migrations, modernizations, AI projects or other exciting assignments. This is also a valid reason for reselling CloudOps, instantly turning it into a profit stream.
Striking the right balance between producing in-house and reselling services is important, and you should spend time to analyze what's best for you. Successful MSPs are not doing everything themselves; they know that they can grow much faster with the right partnerships. Partners with whom you have little mutual success can be replaced with more promising ones that make you more agile and better-positioned to handle the changing needs of your customers over time. The key is to reach a critical volume of customers for the services produced in-house before you become profitable, as the first customers will be just loss (please note that this is different for the services that you resell, where even the first customer will contribute to your company's financial success).
When it comes to finding customers for your MSP business, test the waters with your existing customers and try to convert these engagements so that they buy your MSP offerings. This will give you your very first references, and the opportunity to fine-tune your offerings before you accelerate your growth. You want to address a larger market than just selling to existing customers; go for volume instead of maximizing the price that each customer pays.
Trying to identify a certain industry will give you a verticalized market. Being known as a top MSP for a certain industry means that you have the right knowledge of that industry's challenges and opportunities. Your market messaging will speak about your great fit as an MSP that is catering to that industry's needs. Being narrow often provides an opportunity to be considered a specialist -- and being a specialist gives you benefits when recruiting customers, as well as a premium if you want to sell your company at some point or get a capital injection from an investor.
I know that's a lot of information to digest. Being an MSP is not the only path towards success, but it's a pretty nice path that many before you have taken, never looking back. It's the first steps that are the hardest. Good luck!
Posted by Per Werngren on July 02, 2025