LIKE MANY INDUSTRIES, the managed services landscape has shifted considerably in 2020. As companies around the world have been forced to adopt remote operations with lightning speed while facing a new level of economic uncertainty, they’ve turned in large part to managed service providers for assistance.
These conditions have reinforced the need for MSPs—and the critical IT services they deliver—to help businesses adapt to new challenges. A survey of nearly 350 senior-level decision makers at MSP partner organizations, commissioned by BitTitan, reveals five key drivers of MSP success:
- Follow the Money
According to the findings, the most profitable services include IT services outsourcing, software as a service, and networking. However, respondents note that their most strategic investments also include cybersecurity and information security as well as business continuity and disaster recovery. With so many employees now working remotely, all of these areas have increased in importance, making them a good bet for future growth. - Security Is Top of Mind
Security is always a key concern for customers. Successful MSPs are seeking ways to increase their security offering and weave security into everything they sell. Smaller MSP partners, with fewer than 10 employees, typically focus on selling network security and endpoint security in the form of standard, branded security products. However, respondents say they are looking to move upstream with more complex, higher-margin products. Larger partners are more likely to view security operations, threat hunting, application security, fraud protection, and other complex services as important to customers. - Invest in Marketing and Sales
Marketing and sales are a consistent challenge. Because MSP owners often have technical backgrounds, sales and marketing may not come naturally or be an investment priority. As a result, most of the MSPs surveyed struggle to find and nurture leads. For this reason, investing in marketing and sales departments is critical, as is taking advantage of sales support from vendors to strengthen partners’ own expertise and investment. - Adapt to a Cloud Services Model
MSPs face internal challenges when adapting their business to sell cloud-based services. Effective design and pricing of offerings is a top hurdle for both large and small MSPs, survey data shows, as is developing and executing successful marketing campaigns. Other challenges revolve around adjusting business models and retooling practices. Making this transition is paramount, given that MSPs expect to have more employees dedicated to delivering services via the cloud in two years, shifting away from on-premises and project-based services. Therefore, successful MSPs are investing in new skills and processes such as cloud-delivery platforms and training and education around cloud business practices. - Vendor Selection Is Critical
Vendors play a large role in their partners’ success, and profitability drivers influence how small and large MSPs make choices. According to the survey, small MSPs focus on program support, while large MSPs prioritize training and sales support.
At the top of the list for MSPs of all sizes is vendor fit, which allows partners to leverage and build on team skills and strengths, achieve operational efficiency, and focus on vertical targets. MSPs also look for vendors that help them compete for customers, have market-leading products that enable them to differentiate, and have a well-established brand that will help drive leads.
Pricing and policies are important too. There are significant margin differences for partners who simply resell a vendor-branded service versus those who have integrated to operate, host, and deliver that service. MSPs with their own development teams can customize offers around a vendor’s core technology, and often offer higher-margin services.
By focusing on the critical services that will help customers not only stay in business amid today’s uncertainty but thrive, MSPs can position themselves to thrive as well.
GRADY GAUSMAN is a product marketing and analyst relations manager at BitTitan, where he works closely with sales, marketing, and product management teams. He specializes in the areas of SaaS, cloud technologies, product strategy and go-to-market initiatives.
