Here’s another blog entry that’s been spinning around my head for several weeks. It goes something like this: There’s no longer a first-mover advantage in the managed services market. The original theme — proactive, remote monitoring for a predictable monthly fee — is old news. So what’s next?
First I need to give proper credit: I had a really long “first mover” discussion with N-able’s Rob Bissett during the company’s partner summit in October. At that same event, N-able CEO Gavin Garbutt announced the company’s freemium endpoint security strategy. The goal: Empower MSPs with a new tool that drives small business engagements.
Whether I’m speaking with Bissett or other sources across the managed services market, a common theme seems to be emerging. First mover advantage is over. The market is getting a bit more crowded and competitive. In private, some MSPs tell me they are less inclined to share key business best practices — pricing, sales, marketing, etc. — because of growing competitive pressures.
Clear Picture
Am I worried? Not really. In many ways I think the MSP market is similar to the cable industry.
Rewind to the 1970s and 1980s, and cable service was all about having a reliable “clear picture” and access to subscription services like HBO. By the 1990s, those services were largely a commodity. But new services — broadband Internet — surfaced. And more recently, cable companies have introduced VoIP and movies on demand.
My key point: The managed services industry is quite a bit like the cable industry. Early MSP services — remote monitoring and proactive management — have gone mainstream. But there’s good news: You’ve already got a pipe into your customers’ environments. Now you need to pump new services through that pipe.
But what? Some folks are promoting a single window pane for managing on premise and cloud services. Other experts say MSPs need to go back to basics: Differentiate through aggressive branding and marketing.
I can’t offer a “single” piece of advice for “all” readers. I do think MSPs need to sort out (A) their application strategies (on premise or cloud) and (B) their vertical market strategies. I knew: That’s pretty generic advice. Perhaps I’m hoping readers will weigh in with more advice.
Regardless of your next move, be mindful of your marketing messages and elevator pitch. The “proactive” talk is old news. First mover advantage is over.
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Tags: endpoint security | Freemium | Managed Service Provider | Managed Services | MSP | N-able Gavin Garbutt | N-able Partner Summit | N-able Rob Bissett
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Hi Joe,
I enjoy reading your blog posts. Was reading your advice and wanted to probe a little more around having MSPs choose between on-premise or cloud solutions. Isn’t it better to have them offer the solutions based on their customer requirements – e.g. a blend of both on-premise and cloud as needed?
Regards,
Amrita
Hi Amrita,
Thanks for reading MSPmentor and sorry for this vague answer… but I can’t really give you advice on the on-premise vs. cloud debate.
I increasingly see blended solutions in the market — particularly in the areas of storage and security.
But picking a solution is like choosing a car and all the options that come with it: You’ve got to sit behind the wheel, go for a test drive and decide for yourself.
-jp
Hey Joe:
Great Article. I was hoping that this concept would generate some discussion in the market when I wrote that presentation. Essentially, providing RMM and “fixed fee” doesn’t make you cutting edge anymore — that has essentially become the cost of entry into the managed services market. To be leading edge, I personally believe that Service providers need to build a portfolio of services that they can then use to tailor solutions for their customers on a customer by customer basis. These may include any (or all) available technology: Cloud services / Cloud computing, virtualized systems (on or off premise), traditional hosting or SaaS solutions, good old fashioned on premise iron, software, integration, consulting, HaaS, and (of course), all of the above delivered using managed services principals (SLA’s, contract based, remotely managed, and business value focused). This allows the service provider to truly replace incumbent IT groups, and provide business focused value add to their customers. This also positions them well to support everyone from a single user to the mid enterprise which can greatly expand a service providers available addressable market.
Keep up the good work, and we will see you in 2010!
Rob
Thank you for the great article Joe.
The one thing I hear no one talking about is the real value that MSPs deliver to their customers. This comes from being a trusted advisor for their business, similar to an accountant or lawyer. What most MSPs aren’t able to do is articulate that value to their customers and package it in such a way that enables them to charge more than the trunk slammer down the street.
Regardless of the technologies that are used to deliver your IT services (which are important) it has to come back to the relationship you have with your customer. If you have a technical relationship, you are a commodity. If you are a trusted advisor then you are not.
The top MSPs in this industry know how to package and price their relationship along with their services to drive their business.
Bob Penland
CTO
TruMethods (http://www.trumethods.com)
Joe/Rob – Great post, you absolutely nailed it. We’re finding that the marketplace is wiser, perhaps even a little more skeptical, and are certainly protecting their $$ with fervor in this climate.
Right now, we’re actively engaged in re-inventing our Managed Services offering to be bigger, better, faster, easier and include more, all to combat the dwindling returns of our first-movers advantage sited herein.
I’d also offer to Bob that although revealing value during the sales cycle is paramount to winning the deal, there is more insidious threat to us AFTER we sign the deal. The paradigm of a Managed Services practices is that unless we constantly show an INCREASE in value, the MSP client perception of value actually decreases. As we improve things, and make the run better, longer and with fewer problems, clients begin questing ‘what are we really paying for?”
We find it more challenging to justify service delivery in a long standing account, than doing the same with a client who is fresh off the heels our sales efforts.
Getting ourselves in front of the client consistently with new/fresh information, ideas, recommendations and options the client can use to improve their business is where the real opportunity to demonstrate leadership. This is how MSP’s fulfill their roles as true trusted advisors; By not settling and maintaining the status quo. Rethinking “what’s next” and how to integrate that into your service offerings will only serve to elevate you in the minds of your clients and prospects.
Niv Dolgin
Director, ITS
SADA Systems, Inc.
http://www.sadasystems.com
Niv: Hats off to Rob (not me). He’s the one who really drove home the “first mover” theme to me. I like your final paragraph/thought about “getting ourselves in front of the client consistently…”
We use the same approach in our media business. There’s no faster way to strengthen/reinforce/expand a business relationship than face-to-face discussions.
-jp
Agreed… we were really the first MSP in town and have the seen the competition picking over the years. Now, a regional Telephone/ISP co-op in town is starting to offr their MSP services.
In the past, I never really worried about the competition, but now… these guys have unlimited funds, they include ad’s for their services in their telephone bills, and since they provide internet for a lot of our customers, we’re now in direct competition.
We’re working on our strategy to combat them and we have lots of advantages and experience, but now, it’s a commodity and we have to be able to compare “apples to apples” which cuts into our margin and our offerings.
Craig: Thanks for offering a real-world example. A bunch of thoughts come to mind (for you and other readers…)
Some key ways to differentiate from the telcos…
1. How’s your annual employee turnover? Can customers reach the same trusted voice each month if they call your company with a question? Can the regional telphone ISP match your personal service?
2. How’s your brand? Is everyone in your company using the same terms to describe your business? Does your web site, your electronic communications, your voicemail, your biz cards — everything — reinfoce your company’s brand/value prop?
3. What one new managed service are you introducing in 1H 2010, and how are you promoting/testing that service right now? Repeat the process for 2H 2010. You’ve got a pipe into your customers. Keep adding new services pumped through that pipe.
4. Are you seemingly “everywhere”? Branded cars? Attending local business conferences? Quoted in newspapers about business and tech issues? Helping out at a school or local organization?
5. What are you giving away? I admit, I’m a convert to the “freemium” trend. Google it. It works.
6. Readers, what else?
Thanks everyone.
-jp
To add to Joe’s list,
1. Don’t overlook a personal touch. I hate calling the TelCo as part of vendor management – they probably feel the same way. Our people know each client by first name, will the TelCo’s do the same? We’ll bend over backwards to make a client happy, you can’t quantify (or execute) on that through and SLA.
2. Get better clients.
Sounds silly, but bad revenue can actually be worse than no revenue. Clients that don’t value you, and just sap your time and resources, should have less value to you. Start evaluating profitability on a per-client basis, select those that make you the most money, and use them to model/profile your ideal client after. Then target your marketing messaging around finding more like them.
There isn’t a silver bullet, but a series of small changes amount to big difference.
Niv Dolgin
Director, ITS
SADA Systems, Inc.
http://www.sadasystems.com
Hi Joe,
Great article and discussion by all.
I really enjoy this topic for the simple fact that this problem represents the true value of our industry. I think our industry, more than many others, is in a constant state of growth and expansion. The temperature of technology is one that is always rising with new offerings and opportunities and the products we deal with obviously affect all of us by requiring a nimble and ever changing offering and value to our customers.
I like the idea of added technology services to the customer, but was really intrigued by a speech presented by Alex Rogers of CharTec at the ConnectWise summit this last month.
Alex touched on business services that MSP’s often overlook. Burglar alarm services, fire sprinklers, elevated flooring, etc. The process to offer such services could be readily available through local partnerships, expanding the reach of the MSP even further.
Now, why I don’t believe that you should include burglar alarms, and fire sprinklers, etc., the question begs to be asked: What are we not doing that will lend true value to our customers?
I have every confidence that someone in this industry will come up with the answer soon, and another wave will build.
Sean McDonald
http://www.labtechsoft.com
I agree with this premise as well. Not to mention, it doesn’t matter if you are first if your services/performance/overall experience is lousy. In that case, first is just first. The first good one is the one with a potential advantage and sometimes thats the 2nd or 3rd or 5th that learns from the earlier mistakes of its predecessors.
Joe, do you think MSPs might get more like telecom companies w/regard to pipe? (like how AT&T owns the last mile on the network?)
Thanks for the reply. I didn’t know there would be a test, but I appreciate the thought provoking questions.
I’ve got a meeting scheduled with my partner next week to go over these items and see what we need to do to get the others moving forward.
This business started with managing servers, PCs, network devices and maybe printers. Now we are moving to SaaS and Cloud apps, Unified Communications and more. These technologies set the stage for new sales, new managed services offerings, and at another level new opportunities to restrucure the MSP business model to incorporate other service providers into a collaborative delivery model.
$X per server and $Y per desktop is unlikely to represent the future of managed services for MSPs providing high touch services to their local base of customers.
It is up to the platform providers to build out the new service capabilities required to support the innovation that all MSPs need to be thinking about as the basic services become commoditized.
Peter Sandiford
http://www.levelplatforms.com