The Evolving MSP

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When MSP Needs To Mean, 'My Strategic Partner'

My blog often talks about potential future evolutions available to MSPs in which the first letter changes from "M" to "C" as in cloud, or to "D" as in data. I've long predicted that each of our quality MSPs will eventually focus and specialize to continue growing their success. This time, however, I'd like to examine a change in the relationship that top MSPs enjoy with their clients that doesn't change the acronym in any way.

For many years, chief information officers (CIOs) struggled to shift their positioning within their organizations. Many were pigeon-holed into their role being part of the IT department.

Slowly, some aggressive CIOs pushed their way firmly into the C-suite, becoming integral parts of their organizations' senior executive teams along with the CEO, COO, CFO and so on. This was a major growth moment for CIOs, signaling acceptance of their role as strategic participants in the planning and management of the overall organization.

Departure from Product Procurement
Many MSPs began their existence as "resellers" of computer equipment. If they offered services, they were initially services attached directly to products -- installation, integration, implementation, configuration and more. Customers knew they needed these services, so sales resistance was minimal.

As available margins have evaporated, and the opportunity to sell higher-priced equipment has been eliminated by the overwhelming acceptance of cloud computing, reselling stopped being the primary driver of the business. Resellers made the mass migration to MSP.

As they enjoyed success, these MSPs moved further away from selling products at all. They saw that the credit they'd need to extend to customers would all but eat their meager margins. What was left would be swallowed by the operations required to purchase, receive and process the products. The smarter MSPs found other resellers to partner with for product procurement and let them carry the credit and overhead. Eventually, they stopped even seeking "finder's fees" for such partnering.

Mr. Fix-It
Examining the service portfolios of MSPs across the spectrum, one finds that many saw themselves primarily as operators and maintenance providers. They monitored their customers' networks and actioned any alerts or anomalies that arose. Smaller midmarket customers were able to enjoy the services of their own "IT department" operating their network at a fraction of the cost of staffing their own department. And the increased flexibility meant they could grow their networks as their needs grew -- a real customer win.

These managed service providers who were simply managing the services of the network experienced a serious case of arrested development. Over time, their growth stalled. They began to look around, confused why they weren't growing as they had when they first made their transition to MSP.

Those who joined channel communities such as CompTIA, IAMCP or the newer NS-ITSP found themselves talking to other service providers who had made the next transition. Only by seeing it could they recognize what they had failed to do: Evolve into strategic partners.

Just as most companies don't have extensive computer skills, many companies similarly lack strategic skills. They want to grow and prosper just like their competitors, but don't know how to. That phenomenon is spelled "o-p-p-o-r-t-u-n-i-t-y."

Leading MSPs began speaking with their clients not only about the latest and greatest technological developments, but also about the strategic challenges facing the enterprise. What in their organization needed to work better than it currently did? Where did they need to reduce costs without compromising operations? Could they streamline their workforce through automation?

Change the Conversation
This is an MSP evolution that requires no new tech knowledge.

Your clients want you to help them apply technologies to solve their challenges, improve their processes, streamline their operations, increase their sales and their profits, get more productivity out of every employee, and reduce their costs. All of these are business realities, not technology issues. There are no "speeds-and-feeds" here.

Your next best self is to become the business operations and management professional who specializes in constructing highly effective applications of technology to build better businesses. As Mack Hanan told us, "Show your customer that you're only interested in helping them increase their profits, and they'll gladly help you increase yours."

Posted by Howard M. Cohen on January 18, 2023


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