It’s a great time to be a service provider. The potential market for services has doubled since 2011, and the sector’s compound annual growth rate (CAGR) of 12 percent is nearly double the average of other high-growth industries. Your services are in demand, and most likely you are doing everything you can to deliver.
Of course, a rising tide lifts all boats, so you are competing against OTHER service providers that are doing the same. In fact, we’re in the midst of a decade of MSP explosion, skyrocketing from 84,000 MSPs in 2011 to a predicted 160,000 by 2020. To survive and thrive in this rapidly evolving ecosystem, all MSPs must re-evaluate their assumptions and their standard operating procedures.
To help explain what it will take for an MSP to both maintain its customer base and margins, and grow them in this highly competitive environment, we’ve categorized the ingredients of a successful solution into three buckets: Comprehensive, Collaborative and Contextual.
Comprehensive — More than just the Basics
Remote monitoring and management (RMM) has been the name of the game for MSPs since Day One; clients were overwhelmed trying to manage all of their endpoints and turning to a trusted expert. Outsourcing this activity freed up IT departments and dovetailed nicely with the rapid growth of laptops, tablets, and phones in the enterprise and SMB environment.
RMM isn’t going anywhere. No one is anticipating the number of devices will decrease any time soon – the number of devices per person increased 30 percent since last year – and it’s still a 60 percent year-over-year growth industry. But two factors are shifting RMM from the only game in town to simply a featured item on a menu of services MSPs are being asked to provide.
- Competition is driving down the price-per-endpoint-managed for the first time in industry history. While there’s still a healthy margin to be had, this is indicative that competing on price will continue creating downward pressure on the RMM market that is only partially mitigated by ongoing growth.
- MSPs are facing the opportunity and challenge of providing a far more varied set of solutions. Backup and disaster recovery, security, and compliance management are rapidly becoming table stakes for MSPs that want to keep their current clients and capture new ones. These services have far larger growth potential and margins for the near term, but they also represent prime opportunities for competitors to gain entry into current RMM customers if the MSP can’t offer comprehensive and reasonably priced solutions.
With these key paradigm shifts, MSPs are faced with developing, selling, and managing a diverse portfolio that pushes their capabilities, capacity, and expertise in new ways. And it shows no signs of slowing down.
Collaborative — The Importance of Crowdsourcing
To deliver a wider portfolio of services, MSPs are also tasked with interfacing with solutions from many more vendors than they were working with before. The limited set of apps and services required for RMM are a drop in the bucket compared to what it will take to add compliance, security, and backup and disaster recovery to your arsenal.
And depending on customer preferences, MSPs will be required to interface with multiple products that are already in place or that their clients prefer. This creates a chaotic hodge-podge of dashboards, alerts, and management consoles that significantly increases the degree of difficulty.
To create a scalable and sustainable management environment, MSPs need a collaborative ecosystem where best-of-breed solutions from multiple vendors can not only coexist but also be easily maintained and managed by MSP staff facing steep learning curves.
Contextual — Understanding where Everything Fits with Dynamic Documentation
MSPs themselves are growing as the market matures. In 2011, MSPs managed an average of 1.5 services for each client, but by 2022 they’ll be responsible for 4.4. To meet the demands of more clients and more offerings, MSP headcount is also rising, increasing from 4.7 in 2011 to 18.6 in 2022.
With four times as many people managing three times as many services for however many more clients, the familiarity any particular staff member has for any combination of service and customer is going to plummet. Staff will be dropped into situations where they have less history and institutional knowledge than ever before.
To close those gaps and still deliver excellent service, staff will need to know a lot more about the customer’s specific situation, the services they’re using and the event they’re being tasked with managing at that moment as well as whether it’s a legitimate alert or a false alarm. The only way to make that feasible is with tools and interfaces that can combine information from a number of different systems and present it in a usable, informative, and efficient format that allows for quick decision making and action.
Good Problems to Have
Again, it’s a good time to be an MSP. Actually, it’s a GREAT time to be an MSP. But with maturity and growth comes a new set of challenges that make MSPs flex different muscles and test different weak points that were previously little used and less important.
If you believe you are up to the challenge and ready to take full advantage of the opportunities that lie before you, now is the time to invest in the right solution and training while standardizing and further professionalizing your operations to deal with a larger caseload and more diverse environments. Offering your clients everything they want and need, seamless integration of multiple solutions and instant context to assess and problem-solve issues as they arise are essential, but that doesn’t happen without the right planning and tools to get the job done.
Choosing a solution that encompasses these three pillars above is key to setting your MSP up for success. Contract Kaseya to learn more.
Miguel Lopez is senior VP and general manager of Kaseya. Read more Kaseya blogs here.
