Evolving an IT Services Firm to 2032 Standards
The managed services community is an ever-evolving and increasingly competitive segment of the IT industry. As clients’ needs and compliance requirements change and technology progresses, MSPs must shift their attention and business models to best support those organizations and drive new revenue streams. The more customers rely on those services, the greater the future for the specialists who support those systems and solutions.
MSPs can lose sight of that connection. With an estimated 4,000 managed services firms in the United States, underappreciating that changing client and technology environment can be detrimental – if not a death sentence − for IT firms. With the ease of entry into this industry and a wealth of enablement tools, virtually anyone with expertise can set up an MSP business today.
While some of those newbies may not provide the same quality solutions and good support as experienced veterans, some potential clients won’t understand the differences. Many business owners and decision-makers, especially those running less-developed SMB organizations, have little knowledge of what it takes to develop and manage increasingly complex IT systems. That puts even more pressure on the more established MSPs to not just promote their experience and expertise but to demonstrate those capabilities with clients and prospects and share their roadmaps to the future.
Managed services firms that provide that insight and vision are more likely to succeed in the ever more competitive IT environment.
The Status Quo Must Go
Profitable MSPs have predictable business models with top-level systems and service offerings. By adopting industry best practices and policies and implementing cost-effective tools and automation, providers can typically scale their operations and exponentially grow their monthly recurring revenue streams. However, to continue that success in the future, MSPs will need to transform their entire organizations in ways they’ve never considered before.
For example, with the ongoing skilled labor shortage, many IT services firms are increasingly leveraging new technologies and optimizing key integrations to handle tasks formerly managed by people. Automation is a differentiator, and future-minded MSPs must continue to find new ways to support their clients’ growing needs without adding personnel.
Recognizing the scarcity of skilled professionals is just the first step in that process. The most recent jobs report shows the growth rate for hiring in the IT sector remains flat. At the same time, the openings continue to rise − which is no surprise considering the high value of business technology. Just as concerning are the results of a recent survey suggesting that 72% of U.S. IT workers are thinking of quitting their jobs, according to a recent survey.
That shortage in talent should concern every MSP. The most highly skilled IT professionals command top dollar, and few IT services firms can keep pace with the salaries and benefits offered by larger businesses with deeper pockets. Efficiency and automation are the only true answers to the tightening labor market. MSPs will need to collaborate more and have access to better tools, including the latest communications solutions, to boost productivity. Technology is the best way to bridge that talent gap.
Refine and Strengthen the Fundamentals
Building and running a successful managed services business is a full-time job. Owners must develop and execute long-term plans without being distracted by all the daily activities, interruptions and other problems. Focus and attention to detail are important elements if an MSP is to accomplish its strategic objectives. IT services firms must continually evaluate and refine their operations and business practices and properly fund short- and long-term plans to ensure those improvements happen.
Six areas require close attention when building a next-gen MSP, including:
- Client fulfillment
Understanding customer expectations is always job #1. A great managed service provider focuses on service and delivering a complete experience, including having a more personal touch. Although automation is vital to profitability and productivity, being more hands-on with clients makes your business more human. Successful MSPs build relationships with their clients, which fosters trust and a strong partnership. A great service provider also understands their client’s business values and goals and aligns with them.
- Key differentiators
What makes the business better than the competition? For example, MSPs must create a superior user experience, boost efficiency, deliver quality support, and offer cost-effective contracts. Companies want detailed reporting and metrics today, as well as fewer things for their own people to manage. Successful providers better understand their clients’ challenges and opportunities and leverage technology to provide the ultimate solutions.
Being a great MSP can be challenging, especially in today’s competitive landscape. Many IT service providers offer premium services to boost margins and provide clients with more effective ways to achieve their own business objectives. From mobile applications and cloud-based services to communications and security consulting, constantly augmenting and improving the portfolio helps MSPs maintain their relevance in a highly-competitive environment.
- The People
Managed services are all about expertise and support. Despite the shortage of highly qualified IT talent, successful MSPs nurture and develop their teams over time, investing in education, training and incentivizes to show they care.
One of the most important aspects of MSP business is understanding the value of the services they deliver. An effective pricing strategy looks at the specific expenses associated with each service and converts labor and tools costs into an average per seat. MSPs should continually analyze margins for particular clients and offerings and, only when needed, alter pricing strategies to prevent a decline in profitability.
Building a next-gen MSP is not a one-and-done process. Most providers tweak their businesses over time to address pain points for themselves and their clients, improve operations, and generate larger revenue and margins.
Time is a critical factor in the evolution of an IT services firm. With a five or ten-year strategy, and the option to adapt plans as needed, MSPs can be more deliberate with their actions and investments − from hiring and facility improvements to tool purchases and new practice development. With time and a well-detailed roadmap, making those decisions can be easier, less stressful, and more effective.
What does it take to build the MSP of 2032? Attention to detail, effective listening skills and a solid strategic plan are good starting points.