December 20, 2014

The Money Ahead of the Curve

msp investment opportunitiesPreviously considered a danger zone for the channel community, cutting edge technologies are quickly becoming a source of revenue for many business-savvy MSPs. That doesn’t mean the risks of investing in unproven services have been eliminated, but by tapping into clear growth trends, the likelihood of success will be greatly elevated.  The MSP opportunities that use the fewest resources are more apt to thrive, with the lower cost of entry offering a quicker route to profitability.

The “bread and butter technologies” MSPs rely on aren’t going away, but the speed of innovation continues to increase which, in turn, is driving commoditization and lower margins. Repeatable and automated processes continue to lower the cost of entry for new providers, allowing new companies to ramp up quickly to become formidable competitors. If these market activities aren’t monitored frequently and addressed through the addition of new creative services and programs, providers can find themselves in financial trouble rather quickly. Even if a new competitor doesn’t offer the exact same support plan or portfolio, if they can significantly undercut prices, clients may be lured away. If customers don’t see a major difference between the two organizations that deliver similar services, the lowest cost provider will typically win the deal.

So while it’s easier than ever for companies to call themselves MSPs, existing providers need to dig deeper into their clients’ needs and offer the types of innovation that will truly differentiate their business. And they need to do it on a continual basis to keep ahead of the competition. Before new competitors enter the market, MSPs need to evaluate the technologies and systems that could most benefit their existing and future clientele.

Not surprisingly, the current industry trends highlight many of the areas where businesses are struggling. Even larger companies with a dedicated IT team need help implementing some of the latest technology solutions, which presents a fantastic opportunity for capable channel providers. The old adage “where there’s mystery, there’s margin” hits on the true value of professionals who can successfully implement and support emerging technologies.

Emerging technologies are driving IT growth, as CompTIA CEO Todd Thibodeaux suggested during his keynote address at the association’s Annual Member Meeting (AMM) in Chicago last week. “We’re projecting a worldwide IT industry growth rate of 4.5 percent in 2012, with upside potential of 7.6 percent. We’ve found that IT industry executives expect services to lead the way, building on momentum in growth categories such as the cloud.”

Thibodeaux highlighted emerging technology opportunities for MSPs during his keynote, including:

  • Mobility— MDM and BYOD will drive channel solutions and revenue for years to come (including application development). Partnerships are key to pooling resources and support.
  • Cloud solutions—continue to thrive, from mobile solutions to hybrid offerings, and the channel will play an ever increasing role in its adoption and support.
  • Security—this specialty permeates virtually every channel-delivered technology/service. While the margins on antivirus and web filtering solutions are diminishing, other SMB-oriented technologies are emerging, including: next-generation firewalls, reputational analysis, cloud-based security, and identity management

And with today’s collaborative communities and outsource partnerships, offering and supporting those solutions is much easier. Innovation may be the differentiator, but MSPs still have to balance the needs of new business practices without losing focus on their existing portfolio of solutions. The support that clients depend on today won’t go away, but through improved business and process efficiencies, providers can shift resources to the more profitable parts of their operations.

That’s where outsource partners can help. MSPs interested in starting a new business practice around one (or more) of the latest technologies don’t have to go it alone. They can leverage the skills and capabilities of other organizations to help deliver and support new services, or to take over the routine activities associated with existing services.

For example, by outsourcing help desk and NOC services (such as GMS Live Expert), an MSP can shift personnel to more lucrative activities. When those partners have a skilled team that can support emerging technologies, a provider can utilize those resources to build a formidable practice without taking on higher payroll costs up front. Outsource partners will typically fashion a custom support plan that fits their partners’ individual practice needs, allowing MSPs to leverage their own resources for maximum efficiency and profitability.

Are you interested in making more revenue from the front of the curve, but concerned with the unknown variables? Check out the latest solutions that would most benefit your clients and explore the partnership opportunities. It’s not as mysterious as you’d think—but your clients don’t need to know that!

Brian Sherman About Brian Sherman

Brian Sherman is founder of Tech Success Communications, a firm specializing in editorial content and consulting for the IT channel.With ten years of IT channel experience, including previous roles as chief editor of Business Solutions magazine and industry alliances director with Autotask, he provides insight on a variety of industry trends and opportunities. Contact Brian via email.