For MSPs, Where To from Here?

Today's managed service provider (MSP) is faced with a challenge: The downright glut of refugee resellers that have migrated to the MSP ranks without doing the hard work is making it very difficult for those who have done the work to rise.

Some refer to it as a "race to the bottom" for MSPs as they try to deliver excellent service while competing with ridiculously low rates set by those who have no idea what they are doing.

It's really very simple: Great service providers beat out the rest because they know their costs. That's it! They know how much of the rent, phone, electric service and everything else to burden into their cost calculation so they can target a specific margin and arrive at a reasonable price. Without knowing how to burden their costs, companies can't afford to keep operating. So they cut corners, short-change customers and sully the name of MSPs everywhere.

It may be that some of the bottom-feeders will learn their lesson and rise to a reasonable level of professionalism. Others will go off and do something else. In the meantime, great MSPs find themselves challenged to find ways to distinguish and differentiate themselves.

My Mother Always Wanted Me To Become a Doctor
Those who have been reading my work over the past decade or so know that I'm a big advocate of developing IT to become a true professional practice like law, accountancy or medicine.

Over the next several months, this blog will serve to encourage MSPs to follow the example and the business model of medicine. That is, become specialists.

Cisco, Microsoft and others have re-imagined their partner programs to encourage specialization. Follow that lead. Seek to specialize and find your focus, your niche. Buy deeply into the reality that "you can't be all things to all people." You don't want to; it's too expensive and you end up being just like everybody else.

The Evolving MSP will offer many directions in which to differentiate -- specialties to adopt and make your own. These will include:

• The Cloud Services Provider (CSP)
• The Data Scientist Service Provider (DSSP)
• The Software-Defined Services Provider (SDSP)
• The Automation Services Provider (AuSP)
• The Artificial Intelligence Services Provider (AISP)
• The Internet of Things Service Provider (IoTSP)
• The Universal Communications Service Provider (UCSP)
• The Vertical Services Provider (VSP) -- many flavors!

As always, I seek to foster a productive, useful conversation. What are some specialties you've been considering? What do you think are the obstacles? Where do you think you'll need help from vendor-partners? What's your vision for your future? Let me know at [email protected].

Posted by Howard M. Cohen on January 04, 2021