I’m fortunate in having the opportunity to be currently working with over 20 MSPs. Lucky me as it’s not only what I love to do as most MSPs service the small business space I get the added benefit of helping small businesses succeed which is a passion of mine.

Recently Cadence completed a survey to over 300 MSPs as well as 350 Small Businesses. We specifically selected small businesses that are self-service. The intent of the survey was twofold. First was to understand from the MSP’s perspective what their biggest challenge are, and from the small business’s perspective what’s their perception of IT, trends, and their need for support. Both surveys were conducted confidentially and followed up with additional questions as appropriate. The surveys were designed to be both statistically valid as well as complimentary in being able to map gaps and opportunities across both MSPs and small businesses.

First of all it’s important to note that over 80% of qualified small businesses in the US are self-service. Qualified small businesses as defined by 10-100 employees, greater than $2M in revenue, in business for 2 years or more, and across defined industries. Self-service can include anything from internal IT to a focal point IT person utilizing on-demand labor for project support. What we have are over a million self-service small businesses making decisions about technology strategy, utilizing cloud-based solutions, application selection, mobility standards, etc. based on information they gather and opinions.

A couple of key results of the survey and assessment are…

1. MSP’s don’t compete with each other. They compete with the very business that represents their largest opportunity for growth – the small business end-user.
2. The single largest challenge that keeps MSPs up at night is their inability to effectively grow their business. This was the largest by a large margin. As one MSP put it “I don’t need help on recruiting, hiring and on-boarding if I can’t grow my business and create the need to hire”.
3. Most “Business Development” programs available to MSPs focus more on the success of the drivers for growth (leads, education,…) and not the results (new deals closed). Sales education, marketing programs, lists of leads, etc. just don’t work at the level required. As such referrals continue to represent the largest category of new customer business growth for MSPs.
4. Small Businesses that are self-service would rather not be.  Over 85% believe they don’t have alternatives that are compelling enough to consider outsourcing.
5. Small businesses believe that the gap between their requirements around IT and the capabilities of MSPs is getting bigger. This being driven by a number of things most notably cloud computing and mobility.
6. Small Businesses believe most MSPs, as small businesses themselves, are not large enough and thus, lacking scale to support the new dimensions of IT.
7. Small businesses are getting more confused and concerned over the rate of change in IT and their inability to align value back to their business goals.

The Opportunity…

1. AS MSPs really don’t compete with each other there is an opportunity for MSPs to strategically collaborate. With over an 80% opportunity base MSPs won’t run out of opportunities and won’t have to run into each other for a long time to come. Finding ways to bring more competencies to self-service small businesses is the primary objective.
2. MSP revenue growth should be focused on new customer acquisition as well as growing revenues within existing customers. New services in areas that will save small businesses money or enable them to grow their revenues or margins are the quickest way increasing client spend. It’s far less about selling technology and more about what the technology does.
3. If the self-service small business is the competition as well as the opportunity the most effective way to reach them is to educate them on why they cannot close the gap between their needs and the ability for them to service those needs. In situations where the competitor is the opportunity, education and a strategy around enlightening the small businesess that they just might have problems they don’t realize they have or problems they will have if they don’t take action is the approach to take. Of course the action MSPs want small businesses to take is to outsource the strategy and management of their IT to a trusted competent advisor.

Not long ago the primary decision a small business had to make around IT support was around whether their resources were better than a small business service provider’s.   It typically came down to that and little more. Their IT infrastructure was onsite. Servers, applications, and PCs were local. It was easy to put your arms around the environment. This has been changing and will continue to at a high rate. The new server room is a combination of local and virtual, applications and data are, in part, hosted, storage is in the cloud and the movement to mobility technology and less secure, Wi-Fi, 3G and 4G is upon us. Small businesses need a strategy around adoption, deployment, and support that require significant knowledge of current and future technology trends.

There is a huge opportunity for MSPs to grow their business now. The smart MSPs will rally around this, look for collaboration partners, while building a business development strategy steeped in small business education creating leads from self-service small businesses that believe they are better served and protected by finding a competent partner.

I recently had the opportunity to write “Visual Collaboration: The Next VAR Opportunity Arrives” as a  guest blogger for The Var Guy about visual collaboration as the next big opportunity for MSPs.  This  has stemmed from work I have been doing with InFocus around brilliant technology they are working on that will change the way businesses get work done.  The title and link to the post is

As more and more people want to collaborate using rich content driven technology, both new technology and current business drivers will continue to push this new technology to the forefront creating an entirely new category of incremental revenue.

Learning more from InFocus is a simple as click on this link MSPs Next Great Opportunity

Enjoy!

I have been helping Managed Service Providers (MSPs) for several years now. MSPs represent the best source for small business IT service out there. The model of combining automation, remote monitoring, and management tools while being the outsourced IT department for small businesses is powerful. As the definition of what a small business is today evolves to include many “large” companies with few employees IT needs will outpace the ability to support them.  MSPs must close the gap and provide much more than an alternative to self-service or internal IT labor. MSPs must change the game.

There are over 11,000 qualified MSPs in the US today although this number can be argued as there isn’t an accepted certification for MSPs. If you consider the tools and automation required to profess to be an MSP the 11,000 number seems safe. Every large and small city and most rural areas have local and personalized MSPs servicing their small business community. Even with a high degree of geographic coverage and decent penetration for large and small cities approximately 80% of small businesses today are self-service. The approximate 20% that aren’t are serviced by MSPs (18%) and franchises (2%). Even the largest MSP (All Covered)  focused on small business has less than 1% market share in the 22 markets it services.

Any significant market segment where the largest provider has less than 1% share and the total service market is less than 20% should be considered both fragmented and ripe for growth.

So who are the MSPs’ competitors? I’ve asked this question many times and typically get responses that cover local MSPs, larger VARs, multi-regional MSPs, and manufacturers like Dell where there is concern that the manufacturer might steal the customer away. In the end the largest competitor by far is also the largest opportunity – that is the self-service small business. With such a small combined share, MSPs don’t compete with each other and actually have an opportunity to collaborate  together. They can combine efforts in marketing and education especially in areas that can better inform small businesses why self-service makes less sense in a cloud-based, internet oriented, hosted service environment.

Business 101 says you need to know your competitors. For MSPs this gets a little complicated. Who we might think are MSP competitors – other MSPs, are actually not and, instead, should be complimentors. Self-service small businesses  are the competition and the job for MSPs is to convince them to outsource something they already do. Ironically small businesses are also the source for new business and growth. Tricky yet not an impossible situation. Some suggestions for MSPs:

• Educate the small business community on how the evolution of their IT needs outpace their ability to support these needs internally
• Collaborate with other MSPs to strengthen your collective brand. Ever see a full page Toyota ad  in the Sunday paper that is paid for by the 8 or so Toyota dealers in your city.
• Understand the definition of a small business as your target market is changing and quite possibly changing faster than your ability to keep up with it. Know your space.

Best of Luck!

Let’s set the Way Back time machine to 1982 in New York City at the IBM Branch office G-13 IBM Corporation. I was a newly minted IBM Office Products salesman assigned an enormous rookie sales quota after finishing IBM Sales school in Dallas Texas. At the time I was assigned to an IBM New Business sales office in Manhattan as low man on the totem pole so I inherited the smallest most non-productive sales territory in the office. At the time, the largest and most lucrative accounts for IBM Office Products, which included Copiers, Typewriters, DisplayWriter Word Processing Equipment (The IBM PC was still in development at the time), were the Brokerage Firms, Ad Agencies and Large Law Firms. The most senior and successful veteran IBM salespeople were assigned those accounts as they were rewarded for their year over year sales success. A rookie salesperson had to make their living on the scraps left on the table. I remember walking out of my Branch Manager’s office with my head hung down low in January clutching a copy of the quota and territory agreement I had just signed and agreed to.

What have I just done? My career is finished, done, down the drain…kaput! There’s no way I will be able to sell this much equipment let alone displace competing copiers and typewriters from Xerox and Exxon Office Equipment.

After getting over the initial shock, it turned out that, I had a walking geography new business sales territory with no large named accounts to speak of. There really wasn’t any repeat IBM business to be had as the territory was never a productive one in the history of the New York IBM Branch sales office. This was truly a supreme test of my sales skills because there really was not an install base of IBM equipment or repeat business to go after.The sales territory started west of Broadway and north of 57th street to the south side of 72nd street. It looked pretty dismal at first glance as most of the buildings are apartment buildings but I found out later that a lot of them were mixed use commercial zoned.hidden amongst those apartment buildings were smaller commercial office buildings.. A lot of the senior account and sales reps in my office covered a few accounts or even just one city block they were responsible for. They could derive a year’s worth of sales from a fraction of a zip code or even a number of floors in a prime real estate midtown office location. In my assigned upper west side sales territory, there were not many commercial accounts packed into that area but after a few days of hyperventilating and chilling out I decided to spend a few days scoping out the territory and figuring out a plans to how I was going to achieve this impossible quota assignment. I knew that conventional tactics and strategies would not be effective here as my time and resources were extremely limited. I really had to work against the clock and forced myself to think outside of the box and to be as creative as I had to be without breaking any IBM conduct rules or laws of New York City. I bought a AAA map of the Upper West side and got busy by matching the streets with the commercial office buildings and cross referenced the business address with the New York Manhattan set of the Yellow Pages. Armed with the current addresses, I was able to scope out Law Firms, Small Advertising agencies, Publishers and Consulting Firms and tried to ascertain where the most densely populated commercial buildings were located. These buildings happened to be clustered between 57th and 60th street which is the Columbus Circle Area.

I came up with a plan to knock on doors (Cold Call) each small business in each of these 15-20 story commercial buildings. I was able to close some good sales pretty quickly but the time it took to go from door to door and floor to floor was pretty exhausting and time consuming. One day, I took a coffee break at one of the commercial buildings and brought the guard/concierge a cup of coffee to chat him up. As it turns out, and after talking to him, I found out that he knew everything about the office moves going on in the office building. Who was moving in and who was moving out. BINGO, here is the gate-keeper for all of the Commercial Real Estate Agents, Telephone Installers, Plumbers, electricians, Building and Construction Contractors. Having access to this information could prove very valuable for a Rookie sales guy who wanted to sell his office equipment in the most efficient manner. Next thing you know, I am bringing this guy coffee and donuts every week, getting to know him and more importantly, which businesses are moving in and which businesses are moving out. I got access to the business cards and the sign in log book so I was able to get the jump on my competitors. I was able to call the office managers of the law and advertising firms that were in the process of moving in and out of that particular building. Office moves are a gold mine as they usually order new typewriters, copiers and word processing equipment.

By focusing and concentrating my efforts on seven specific identified office buildings within my territory, I was able to quickly build up an intelligence network of which companies and professional firms were moving in and out of my sales territory. I had my “contacts” phoning in leads to me almost every other day and quickly built up a healthy sales backlog and sustainable forecast. As a result, I was able to make my first IBM 100 percent club with room to spare by the end of October.

Lessons Learned:

When you’re under the gun and you have a huge sales quota assignment, it’s best to take a deep breath, step back and approach it logically and methodically. Its best to take a few days off and devote them entirely to research and planning. Write up a sales plan, with well defined goals, objectives, strategies and tactics.

Consult with other more experienced sales people from inside and outside your field. Creative time saving tips can be gleaned from any and all types of sales people, young and old,  from all walks of life.

Don’t assume that your assigned or targeted sales territory cannot sustain your sales targets until you actually research it thoroughly and I mean thoroughly. There are a lot of diamonds in the rough and you need to be on top of everything that goes on in your sales territory.

You need to read up on current economic trends, where your customers are and what the demographic make-up is. Work backward from the targeted annual sales number. Figure out what you need to sell to make your aggregate sales target for the year.

Know your competitors, not only their product but how they sell. You need to go where they are not customer-wise and you have get creative to gain and maintain a competitive edge.

Compete fairly. Do not trash your competition. Emphasize the benefits and advantages of your product and service and sell yourself as the point person that takes the ultimate responsibility for the performance and customer satisfaction of your product and services.

Learning how to be a good sales person is critical to becoming a great sales person. It takes a lot of patience, experience, mistakes and risk taking to succeed where others have failed. You need to convey confidence every step of the way in the sales process. Are you selling yourself? You bet. Most companies buy because of the relationship the sales person has established with the buyers or decision makers, not so much the superiority or benefits of the product or service. I learned this very early on in my sales career and this advice has served me extremely well over the years. Having the best product or service helps, but in the end, it’s the salesperson that demonstrates how effective they are in solving their customer’s problems that wins the sale and future add-on business.