Are Managed Service Providers Becoming Irrelevant?

I'm going to need some feedback here from the MSPs because this speaks to the heart of your profession and future. A recent editorial from Channel Insider discusses the potential shift by vendors in going more direct and less through the channel. Now, initially, this could be a discussion devoid of any mention of the term managed services. However, since managed services are such an important element in the channel today, I think it deserves some discussion.

Are vendors going to do away with their channels? Some of them would love to do just that but my guess is they can't. Here's why.

The vendors, being good business people, are always looking for the most direct path to the customer. Channels can be very efficient (if done correctly) and they can scale (again, if done correctly). A direct approach, while the shortest distance between the vendor and the customer, does not always work. The vendor can see the customer, they know where they are, and they know what they want (most of the time). So why not go direct? It's a simple matter of trust.

Vendors represent their own solutions and products. Customers know this. MSPs, the good ones, serve the interests of their clients firs and foremost. That is their job. This is their purpose! If I am a client and I know I want brand X then I'll go directly to brand X company and buy from them. If I don't know what I want and need an independent opinion, I go to my MSP and get it. So much value in such a simple relationship. This is why, in my opinion, the vendors will never do away with their channels. When it comes to managed service providers, they have a deep level of trust that is difficult to break and even harder to replicate (particularly for vendors).

MSPs are living in uncertain times; economy, direct vendor plays, etc. However, the biggest reasons business customers are seeking out MSPs, trust and certainty, are the very reasons why vendors cannot simulate this relationship with the customer directly.

MSPs, stand your ground and do your duty!

New Managed Services Study

A recent research study by Untangle provides some very nice data points around the managed services profession. One data point in particular caught my eye as an important lesson for all MSPs and that is automation.

According to the report once a MSP reaches approximately 500 managed devices they will need to achieve service delivery automation efficiencies in order to continue their growth. This is one of the key differentiators between a real MSP and a break/fix VAR doing remote monitoring. The real scalability of a MSP is in the efficiencies of scale achieved only when basic management tasks can be automated. When these tasks are automated this frees the MSP to do other more high value functions that make them more relevant in the eyes of their clients.

This is such an important concept and yet one that can be easily dismissed as trivial by many companies. Whether it is 500 devices or some other number it is crucial for MSPs to realize when they are reaching this point and know how to get beyond it. I have seen too many MSPs hit this so called "wall" and the inability to scale beyond it can have devastating results.

To end on a positive note though, there are some pretty easy stpes you can take that will help. First, having access to the right metrics will greatly help you understand where that wall is and how quickly you are racing towards it. Second, having the right technical people and being able to manage them effectively will also be a great help. And lastly, none of this scalability will occur without the right tools. Your technical people must be equipped with the right tools in order to become efficient and automated.

Kudos to Untangle for making this report available!

What makes the Managed Services Leasing Program Unique?

This week the MSPAlliance launched its Managed Services Leasing Program for members. Some people may not immediately understand the role or value leasing plays in managed services so I'd like to take this opportunity to explain this program in greater detail.

Lender Neutrality - While there are other leasing programs out there we felt that having a leasing program that was not tied to any particular lender was important. This gives the members comfort knowing they will be getting the best deal possible.

MSP Stability - Many leasing programs are incredibly risky because the leasing companies/brokers do not know the applicants very well. Because the MSPAlliance screens its members this leasing program can be much more flexible in getting deals closed due to the high caliber of the applicants.

Accredited MSPs - Companies who have taken the Managed Services Accreditation Program exam are much more likely to be stable MSPs, and therefore, much less likely to default on a leasing deal. In the unlikely event that an accredited MSP cannot fulfill its obligations then other accredited MSPs can easily step in and take over. This makes lenders much happier and safe.

Ease of use - this leasing program is very easy. Becuase the MSPAlliance members are already known, this makes the approval process much more streamlined.

I hope this little overview helped. If you are a MSPAlliance member and would like to start using this leasing program for your future deals you can visit www.mspalliance.com/leasing for more information.

Trusted Advisor Mission Statement?

Have you taken a look at the “Consumer Bill of Rights” lately? I read this when I joined the Alliance years ago and while I thought it made a strong statement I really did not spend too much time thinking about it. I had a conversation with an MSP at the last conference that led me to print out the statement and spend some time thinking about its content.

As I read it through a couple times a realized that it really defined what I think our ultimate goal is as a Managed Services Provider. That is to become the “Trusted Advisor” to our customers. This is what truly differentiates us from our competitors and other business models. We are not there to sell them a product, rather at the foundation we are there to provide security and stability to their network. As that stability is reached, rather than work ourselves out of a job as many people in the T&M business model fear, we work to become the customers most valued partner, their Trusted Advisor.

This is an area that I believe many MSPs struggle with, so if you are looking at your solutions and your customer base and thinking how can I better serve them, how can I grow past just providing support, I suggest you take a hard look at the “Consumer Bill of Rights” and perhaps make it your “Trusted Advisor Mission Statement”. You could learn a lot from those 9 consumer rights.