MSP Growth – Compete with your Prospects

May 22, 2011


coopetition image | MSP Growth – Compete with your Prospects

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.

About Frank Picarello

Frank is a well-respected leader in providing technology services to small and medium-sized businesses. He is currently COO for TeamLogic IT, Chairperson for CompTIA's Small Business Owner's Group, and a member of CompTIA's Unified Communication Committee.

View all posts by Frank Picarello

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