In-Depth

Why MSPs Must Make 2022 the Year of the Virtual CIO

Gary Pica, president and founder of MSP training firm TruMethods, shares his thoughts on how MSPs can better serve their customers in the new tech landscape.

• By Gladys Rama
• January 10, 2022

The concept of a "virtual CIO" is one of Gary Pica's favorite topics. As the president and founder of MSP training firm TruMethods, Pica has been preaching about the importance of MSPs enacting the virtual CIO (or vCIO) role for their customers for over a decade. Now, nearly two years into the COVID pandemic that disrupted businesses, accelerated cloud adoption and saw an unprecedented surge in ransomware, the vCIO is more critical than ever.

"Especially over the past 18 months, SMBs are going through their digital revolution," Pica told Redmond Channel Partner. "They're spending more on technology as a percentage of revenue every year and it's going to continue for the next five to eight years."

Enter the vCIO. As Pica envisions it, a vCIO is an MSP that does the same tasks as a traditional chief information officer does for an enterprise, but for an SMB that doesn't have that kind of manpower in-house. "If you're an SMB, most of them don't have IT departments," he explained. "They outsource to an MSP and they need that same role. They need someone that can understand their business and their technology, make the right recommendations, so that business leaders can feel like they're investing in technology rather than having it just be an expense item."

And with ransomware becoming more prevalent seemingly by the day, a vCIO can be crucial for an SMB to understand how and what they need to adapt to avoid disaster. "It's the vCIO's job to explain this changing security landscape to every one of their customers so they can make the right investments, because many times they don't know that their risk profile has changed," Pica said.

Now, with 2021 behind us, Pica recently shared more of his thoughts on how the past year will influence the direction MSPs will take in 2022. No surprise, the landscape he paints leaves a lot of room for an MSP-cum-vCIO to take the reigns:

RCP: How did customers' expectations of their MSP partners change in 2021? What kind of pressures or impacts should MSPs expect from these changes?
SMBs are increasing their technology dependence. They need technology to support their changing business models, and they expect their MSPs to provide them with the perspective and knowledge they need to make critical business decisions. SMBs are in the middle of their digital transformation, and MSPs need to guide them through the changes. This means that traditional services like support and professional services are being commoditized.

The very nature of the MSP-customer relationship must move from a technical to a business relationship. Not all MSPs will make this transformation.   

What are your Top 3 predictions for the channel in 2022?
One: The gap between top MSPs' and average MSPs' results will continue to widen. As more mature MSPs adapt to the changes in the landscape and their business model, they are growing revenue and profits more quickly. Those that have been slow to change are facing increasing headwinds.

Two: Cybersecurity continues to shape MSP and small and medium-sized business risk profiles. Although we are all aware of the increased cyber threats, I believe the quantity and sophistication of attacks will continue to escalate. This will put more pressure on IT companies to adapt faster.

Three: Acceleration in private equity (PE) roll-ups. Many new PE ventures have appeared in 2021. More are on the way, and they will begin to deploy capital in 2022. By the end of 2022 and into 2023, we will begin to see the effects of this trend. We will see winners and losers in the PE space. We will see independent MSPs that have developed their strategy thrive in the new world. Unfortunately, we will also see some MSPs that may not make the turn.

For MSPs that have found the past year (or two) to be a real struggle for their business, what advice would you give them for 2022?
MSPs that are struggling are those that have not adapted their business model to the changing landscape. MSPs' SMB customers have changing needs. They are more dependent on technology, have increased needs for cloud transformation, must manage hybrid workforces, and must deal with increased security threats.

To respond to these changes, MSPs must increase their attention on proactive security tools and processes. They must also enhance their vCIO process. All of these changes mean higher costs for MSPs.

Top MSPs have responded by communicating these changes to their customers and increasing their average seat price by 20 percent to 40 percent. Those that have struggled have not made this critical change and may fall further behind.