One of the things we talk about a lot when discussing the current state of the MSP market is the concept of the Red/Blue Ocean. In this analogy, the Blue Ocean represents a market where there are lots of opportunities to grow and do more business, while the Red Ocean represents a saturated market where opportunities are harder to find.
When I speak at events across the globe, I can find rooms full of MSPs who think the industry is still a Blue Ocean. Yet, when you ask how many of them are struggling to find new business, lots of them will raise their hands. If we were truly operating in a Blue Ocean, this wouldn’t be the case. The reality is that today’s MSP market is definitely a Red Ocean, where new opportunities and business are becoming increasingly hard to find in what we might think of as conventional manners.
Yes, there are a host of end user issues that are playing into MSPs' hands, including:
- Unparalleled reliance on IT support
- The need to support hybrid infrastructures
- Growing cyberthreats
- IT being the number one expense for businesses after HR
- The new reality of the hybrid workforce
But there are equally a number of challenges for the MSPs that make capitalizing on these much harder. These include:
- Customers expecting there to be no downtime
- A growing need to monitor everything in one view
- The fact it is becoming harder to find the right technicians
- MSPs having to secure both their customers’ and their own networks in the face of a rapidly evolving threat landscape
- Commoditization in the space, which is forcing profit margins down—allowing the growing number of MSPs in the space to unwittingly drive a race to the bottom
- The growing complexity of securing and managing networks
While the right tools and training can help with this, they won’t on their own create a Blue Ocean. To do that, MSPs need to rethink their methodology and change the way they market themselves. Here are three things to think about if you want to thrive in a Red Ocean.
Tip 1: Prepare for a changing role for your RMM
Part of this is about understanding and planning for the evolution of automation and how that can drive efficiencies in the organization. However, there’s a deeper and more fundamental shift coming in the market over the next few years, and MSPs need to be prepared.
The RMM is going to become a data correlation agent. It will become a component to grab data and tell a whole load of other things what to do. This will effectively turn them into mass orchestration platforms that will likely sit behind SIEM platforms or SOCs.
MSPs currently don’t go to their RMM and look at the data to see where potential opportunities are to upsell their customers. But as the RMM’s role changes, this is exactly what they will enable them to do. Using data as a pipeline, they can go into their RMMs and look at what a customer isn’t doing with them, combine this with an understanding of their customer’s business requirements, and then use this as a sales opportunity to fill that white space.
For example, if they have physical devices on site (from servers to firewalls) approaching end of life, this is an opportunity for the MSP to move them to the cloud and manage them. This helps the MSP increase their margins, profitability, and scalability.
Tip 2: Create a Silo Effect to differentiate your business
There is an issue today with the term Managed Service Provider—lots of businesses call themselves managed services providers in lots of different sectors, not just in IT. So, in many ways, it’s a redundant term. Yet we see everyone leading with the same thing; they’re all saying they’re the best MSP. We even see on the forums people asking what other MSPs charge in their area so that they can charge the same. This doesn’t make any sense.
To create a Blue Ocean, IT services businesses need to create a Silo Effect that allows them to build differentiation in the market. This means looking at the possible entry points into a prospect’s business—whether it’s IT Services, Professional Services, Security, Training, Cloud, or Backup and DR—and then targeting messages specifically to create a business opportunity for themselves in those areas; positioning themselves as specialists in that area.
For example, DR is not a Red Ocean, as data will never be a Red Ocean. This gives you a route in from where you can develop your managed services outwards. Today, for many big MSPs, managed services is on a sub-menu and they lead with specialisms like cloud provider or security provider to create their Blue Ocean of opportunities.
Tip 3: Partner to fill the gaps
The industry used to be focused on the idea of building different programs to go to market with. In today’s market, that’s no longer the case; the focus now is on specialization—understanding the SMB challenges and then building out services from an a La carte menu to support that need. There is no MSP that can do it all in the current market. But that should not be a hindrance, you can still go out and find a company that does SOC or SIEM and white label that to create your own security program.
By following these three points and changing the narrative in this way, MSPs can start to create a Blue Ocean for themselves.
Guest blog courtesy of N-able and authored by David Weeks, VP of partner experience at N-able.
