By Peter Luff, ScienceLogic
The beginning of 2020 has proven tumultuous across industries. Despite grappling with a global pandemic and having to determine the best ways to safely continue to conduct business, the IT industry remains relatively strong. However, these global challenges force companies to scrutinize their earnings and how they are evolving — or failing to evolve — with the ongoing development of technology and tools to better serve their customers, no matter the circumstances.
For MSPs, this year may be a vital tipping point. MSPs are under increasing pressure from low-cost competitors: value-added resellers are moving rapidly to introduce managed service offerings, while global systems integrators are beginning to target smaller enterprise customers outside the Fortune 1000 — with the economies of scale to squeeze MSP margins. Meanwhile, cloud hyperscalers are moving more enterprise infrastructure to the cloud, leaving less on-premise infrastructure for MSPs to manage and, by extension, depreciating MSPs’ value to customers.
For MSPs to remain competitive, they must offer a more compelling value beyond low-cost device management. MSPs who simply provide relatively generic “managed IT” services will find it increasingly difficult to stay relevant and price competitive. A sales or marketing strategy based on managing devices more cheaply than the competition will erode prices and growth, positioning the MSP in a perpetual battle for existence instead of innovating ahead of the competition and marketplace.
Success hinges on achieving differentiation and lasting competitive advantage. To elevate their message and get in front of clients’ CEOs with service offerings that deliver compelling business outcomes, MSPs face three key challenges:
- Building a differentiated service offering and messaging it effectively.
- Supporting a mix of modern and traditional infrastructures.
- Quantifying the business impact of outages to deliver business value - rather than focusing on incremental cost reduction.
Building A Differentiated Service Offering
Many MSPs focus simply on cost reduction and manage whatever the customer wants them to manage. While this can be described as customer-focused, it often requires a “custom-always” approach to service delivery, with which it is difficult to standardize operating processes and to optimize operating costs. It also results in longer quote-to-cash cycle times. As a result, profit is often sacrificed and customer satisfaction is hard to achieve since goals are often unclear.
MSPs need to focus on defining a service catalog that offers specific sets of service deliverables based on repeatable operational processes. Customization is still possible but needs to be the exception rather than the rule. With many years’ experience working with MSPs to optimize their service offerings, ScienceLogic can help MSPs define their offerings to maximize the profit opportunity – whether for broad-based monitoring services, or ‘point’ managed services for specific technologies, such as managed public cloud, managed storage, or managed network services.
In either approach, differentiation can be achieved, and compelling service features can be incorporated, given that the underlying service delivery technologies are modern and integrated, featuring full-stack technology coverage and built-in automation. ScienceLogic’s AIOps-based monitoring and automation platform is a clear leader in enabling MSPs to deliver profitable, advanced managed services.
Supporting A Mix Of Modern And Traditional Infrastructures
The IT landscape has changed enormously since AWS first introduced its cloud-based compute capability. Now IT organizations are faced with a litany of highly dynamic compute components, all virtualized, including containers, multiple clouds, and microservices. Over that same time, many MSPs continue to operate on legacy monitoring systems that can no longer cope with these environments that their customers have now taken mainstream. Troubleshooting decisions can no longer be taken by humans – machine speed is needed. MSPs who fail to refresh their monitoring systems to include an AIOps-centric approach will be unable to keep up with this dynamic customer IT environment.
Understanding The Business Impact Of Key Service Outages
The mindset that MSPs can provide customers with more for less — that they can manage everything cheaply while also doing so securely and effectively — does not provide MSPs with a strong “business outcomes” message, beyond incremental cost reduction. Such a strategy can cost MSPs differentiation in the market and pigeonhole their services, diminishing their value to customers overwhelmed by proliferating technology, data, and demand.
Instead, MSPs should look to differentiate from competitors and boost their value in the eyes of customers by offering them a business service-level vantage point. A service-centric view of the customer’s business and service offerings that positively impact the customer’s business — not just his technology — can provide the differentiation MSPs need.
By offering to manage IT at a higher level — which means managing the key business services that the customer’s business relies on — MSPs can differentiate their value over low-cost competitors. Instead of selling services based on a “price per managed device,” MSPs can now move the discussion to one centered on business outcomes — such as ensuring the customer’s eCommerce platform is always on, or reducing the impact of application downtime on customer service, or ensuring less downtime for key business services such as email, telephony, or accounting. This creates a new dynamic between the MSP and the customer. It positions the MSP as a trusted, expert advisor instead of a price-sensitive vendor relationship.
With this trusted advisor relationship, MSPs can not only showcase real business value to their customers and maintain a true business partnership, but they can benefit by elevating their services to a much higher price point than traditional low-cost, device-centric services.
Achieving a business-centric mindset requires work, but the ability to deliver comprehensive, business service insights makes an MSP invaluable to a client. Initiating business-services conversations and embracing technologies will establish strategic credibility and keep MSPs out of the “commodity” category. A conversation about business services is a conversation that puts the MSP in front of an enterprise CEO, rather than an IT team. And that gets the MSP closer to the goal: being the trusted advisor that embraces emerging technologies and provides holistic insights that equip, inform, and enhance the enterprise.
About The Author
Peter Luff is Senior Director, Global Solutions at ScienceLogic.