Cisco Systems Inc. for nearly three hours on Monday met with established and aspiring MSPs. The twist? The company never once mentioned a Cisco product or service.
Instead, the education-driven session at Cisco Partner Summit 2018 focused on the nuts and bolts of building an MSP business that generates profitable recurring revenues. Marc Inderhees, senior sales business development manager for the Cisco Global Partner Organization, led the session.
Inderhees is one of the quiet leaders who has helped Cisco to build and develop its relationship with ConnectWise -- which develops business management and automation tools for MSPs and technology solutions providers. Much in the way that an enterprise may run on Oracle or SAP software, many smaller MSPs run their businesses on ConnectWise's applications. MSPs can increasingly leverage that ConnectWise software to manage Cisco's SaaS-based services and associated customer subscriptions.
Still, the Monday gathering wasn't about tools and technologies. Instead, it zeroed in on Cisco's efforts to help partners transform their business model, while driving profits along the way.
Experts Share MSP Recurring Revenue Business Models, Guidance
Among the key speakers and themes:
1. The Most Successful MSPs Typically Do "These" Things: Service Leadership Senior Client Advisor Steve Lewis explained how top-performing MSPs are typically four times more successful (i.e., profitable) than the average solution provider. Operationally mature MSPs, he noted:
- Insist that customers adopt a standardized technology stack from the MSP, and the MSP doesn't deviate from a carefully vetted shortlist of vendors and preferred solutions.
- Have standardized service catalogs for selling, onboard, managing and retaining customers. They avoid the temptation to sell anything and everything a customer inquires about.
Service Leadership benchmarks the performance of service providers worldwide -- allowing the company to pinpoint exactly how top-performing companies run their organizations.
Lewis has extensive experience in the market. He previously was CEO of All Covered, which pursued an aggressive M&A strategy to become one of the largest MSPs supporting SMB customers.
2. MSP Pricing Models -- Basic Security vs. True Cybersecurity: ConnectWise CEO Arnie Bellini described the difference between traditional managed services with basic security, compared to more advanced managed services featuring complete cybersecurity services.
Building on a keynote from last week's ConnectWise IT Nation Connect 2018 conference in Orlando, Bellini explained MSPs pricing models that range from $125 to $175 and $250 (or more) per user per month.
He also called on all MSPs to realize they're in the security market -- because customers are going to hold their primary IT partners responsible for breaches, attacks and associated setbacks, he asserted.
3. Repositioning Security as a Risk Conversation: Sienna Group Founder and Principal John Ford, a former CISO, described a need for MSPs to shift the security conversation toward standard language, terms and services that customers actually understand.
Much in the way that Starbucks trained all of its customers in specific terms (Tall, Grande, Venti), the partner ecosystem needs a common language to discuss risk management with customers, he says. Ford believes that common language involves a Cybersecurity Framework pieced together by NIST.
The framework helps partners and customers to prioritize their cybersecurity efforts on five core areas:
- Identify
- Protect
- Detect
- Response
- Recover
ConnectWise, by the way, also believes in that framework.
Cisco Re-Engages SMB Partners
Under current CEO Chuck Robbins, Cisco has spent the past year or so re-engaging SMB-focused channel partners. The company had largely abandoned -- or at least deemphasized -- such partners under former CEO John Chambers.
Cisco VP Nirav Sheth has largely led the SMB-centric partner push over the past year. Senior VP Oliver Tuszik, who succeeded former channel chief Wendy Bahr in September, also is keenly aware of the SMB partner opportunity.
During a Q&A session on Tuesday at Partner Summit, Tuszik called on media to share feedback on the company's channel vision and alignment with partners. Although he believes Cisco has the strongest partner program in the industry, he concedes that there's always room for fine-tuning and new moves. He was particularly receptive when ChannelE2E mentioned a perceived need to better serve SMB partners.
Disclosure: I joined a panel Q&A during Cisco's MSP-centric gathering on Monday, offering my views on MSP M&A, recurring revenues and valuations.
