Global and economic events, customer trends, converging technologies and investor sentiment are all important factors that compete for attention and create an inflexion point in the managed services provider (MSP) marketplace. Covid has left MSPs with the opportunity to cater for customers with a far more flexible workforce, with many working remotely, so ICT services need to reflect this. As a result, it’s no surprise that cybersecurity has become a higher priority for everyone.
However, it is the state of the economy, once again, that has become the primary cause for concern. With that comes worries about access to credit and capital for MSP owners. Under the current economic climate, MSPs are looking for ways to allow them flexibility to better control and reduce costs, while still being able to plan for growth. This has never been an easy task but, increasing resource capacity without incurring a large cost penalty has become a market imperative for all successful MSPs.
Importance of the MSP industry
MSPs provide, run, or resell much of the ICT infrastructure and services that most organisations depend upon to operate efficiently, allowing them to be highly connected and available to their customers. The importance of MSPs, therefore, puts them at the centre of industry and demonstrates their place in helping the global economy to run effectively. They are especially critical for small to medium sized organisations, who may otherwise struggle to access important IT skills or the very latest technologies at affordable rates.
| Precedence Research calculated the global managed services market at $280 Billion in 2021, with a CAGR of 12.6%, and estimates it will reach over $750 Billion by 2030. The market for “Cloud” Managed Services specifically, was valued by Polaris Market Research at $86 Billion in 2021. |
Owners and investors of MSPs are busy preparing for double digit growth but know to support this trajectory their operations must adapt to support their ambition. The latest methods in service management must be adopted to help transform archaic manual processes, multi-layered and repetitive IT systems with limited integrations and a lack of data integrity and consistency.
A growth strategy, whether organic, acquisitive or a mixture of the two, cannot be sustained without the right people, processes and service management technology to underpin it. Most MSPs have a highly skilled workforce but may have outgrown old processes and technologies that no longer serve them or their customers appropriately.
Adding new customers while trying to scale existing ways of working, is likely to put staff and legacy systems under great stress, that will significantly increase costs, errors and lead to poor outcomes. What MSPs are now learning to do is add resource capacity without adding layers of cost by adopting service automation, consolidating legacy systems and integrating with important third party systems both internally and with suppliers.
Only in this way, is it possible to strip out unnecessary complexity and duplications which are responsible for an unsustainable cost to serve. The focus can then shift from fire fighting to adding value to customers with more services and engagements that deliver customer success, reduce churn, increase margins and will ultimately drive higher EBITDA.
If you’re determined to increase your MSPs resource capacity through industry leading service management techniques, the first step is to start the conversation with your C-level colleagues and make sure they agree and are onboard. Everyone on the leadership team needs to know the importance of such a decision and what it means to the business at large, as well as how this will impact every department.
Next, widen the conversation to the executive board and investor/owner community of the business, as this is a strategic decision that will likely require their blessing and ultimate sign-off. Make sure the CEO is willing to support the initiative and be the executive sponsor at board level, even if, for practical reasons, he may delegate the day-to-day project leadership to a member of his executive team.
Although improving your service management may require new underlying technology to support your changes, it is NOT an IT problem. You cannot simply delegate this to an IT or software development team to fix it - the service provider sector is littered with examples of those that have done so and tragically failed.
Once you have the nod from the board the next step is to invite external service management specialists, who understand the MSP industry. You will discuss how they can support you on your journey to becoming a Smart MSP, with operations that are cost and performance optimised, secure and resilient.
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