The MSP Revolution – How To Make The Most Out Of XaaS
By Chris Smith, CloudBlue
As business customers increasingly demand solutions, not just products, the goal should be to make your customers’ lives as easy as possible. And in the age of the cloud, virtual doors have been kicked wide open to take advantage of the anything-as-a-service (XaaS) model.
Automation enables managed service providers (MSPs) to enter the self-service B2B cloud business. An automated front-end marketplace allows customers to "buy and go" while keeping costs low for MSPs. These marketplaces also can target small to midsize business (SMB) customers with product packages. Such packages work best with a pre-integrated portfolio of offerings – services and products – at a competitive price that customers just have to order and install.
Nowadays, it seems as though everyone is a services company as the supply chain continues to rapidly transform and industry lines blur. MSPs have benefited enormously from this evolution. Those that double down on digital transformation position themselves to not only survive but thrive in this uncertain market.
In this article, we refer to MSPs as companies that remotely manage a customer’s IT infrastructure and/or end user systems, typically on a proactive basis and using a subscription-based revenue stream.
It’s A Journey
Back in the day, companies bought hardware from a tech supplier, software from a vendor or systems integrator, and their help desk was supplied by a specialized third- party. The complexity of dealing with multiple vendors is no longer viable.
Business customers need complete solutions bundled and delivered as a service, payable in fixed monthly installments, and ideally, through a single vendor. MSPs are in a prime position to fill this need.
Organizations that previously only sold hardware, such as Xerox, have evolved to offer services on top of their original equipment. Another example is LENOVO, which created three strategic groups for its independent software vendor (ISV) initiatives in 2019.
It’s estimated that the MSP industry will be worth more than $290 billion by 2023. Additionally, there is a continuing demand for cloud solutions. Deloitte, for example, expects global revenue growth in cloud services from 2021 to 2025 to remain at or above the level of 2019. This means that the growth rates will be more than 30 percent per year.
Navigating Growing Pains
As more companies commit to digital transformation, MSPs are there to help. However, with the stiff competition out there, growth as a provider has its own challenges.
Most IT vendors active in the XaaS market are now adding consulting, implementation, and management to their portfolios. This makes it more difficult and costly for MSPs to attract new customers. Providers need to think about how they can sell more services per customer to create growth.
When adding new customers, MSPs must often staff up. In addition, both service delivery and billing become more complex, and overall costs increase. This means providers need to reinvent their traditional operations and develop a scalable business model.
Key Steps For MSP Growth
Our research shows that the more committed a company is to providing services rather than selling hardware and infrastructure, the higher its margins. How can MSPs capitalize on this need, tap into new customer segments and increase efficiency? We’ve identified a number of ways.
MSPs need to broaden their catalog. For example, companies that manage their remote workstations through MSPs may also consider cybersecurity and productivity offerings. However, more offerings require the right technical infrastructure. MSPs can benefit from automation platforms with pre-programmed templates that enable seamless procurement and fulfillment operations automation. This allows a “one-click” shopping experience with vendors and creates huge cross-selling and bundling opportunities.
Most companies turn to a cloud procurement platform for XaaS delivery automation because it helps increase the efficiency of operations. All systems can use a single platform. MSPs can quickly grow their catalog and start transactions immediately and also allow organizations to reach new customers.
There is back-end value that MSPs can provide when it comes to IT management. This means that their customers do not have to make IT purchases or perform installations and maintenance. But to enable frictionless management, MSPs need a comprehensive yet simple procurement tool on the back end.
With a single platform, back office personnel benefits from a single view and automated processes for each contract. The more complex the automation is on this platform, the lower the total cost of ownership and the more efficient the ordering and fulfillment processes become.
Centralized management of private and public cloud infrastructures must become a focus for MSPs. Large enterprises have already moved their mission-critical applications to public clouds such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform while outsourcing non-core applications to private providers.
Multi-cloud orchestration allows MSPs to pursue a hybrid cloud strategy. With orchestration, redirecting data to each cloud can be automated without the need for engineers, translators or end users to connect manually.
Fostering Customer Stickiness
This is a tipping point for MSPs as they transform the IT landscape. Managed service providers can leverage deep customer ties to identify and proactively solve their challenges.
For providers with centralized visibility of their customers’ usage, not only can they bill them accordingly, but they can anticipate their future needs and upsell other solutions. From software-as-a-service (SaaS) to cybersecurity to cloud infrastructure – the top MSPs will be those who own their relationship with the customer and can offer intelligent bundles to meet their needs.
MSPs can remove complexity from their customers by delivering complete business solutions that combine hardware, services, and software.
Modern MSPs In A Digital-First World
Everyone from big tech manufacturers to ISVs is either transforming into MSPs or joining forces with them. As different industry segments partner up to offer solutions, providers need flexibility and agility. The ability to quickly partner with new vendors, maintain an ever-changing product catalog, and track usage and billing for complex bundles, is essential.
The new market leaders will be those who eliminate hassles and proactively offer creative solutions. By prioritizing automated back-end operations, modern MSPs will be able to scale their businesses in terms of solutions, customers, and new customer segments. The most forward-looking and ultimately successful MSPs will be those that fully embrace automation platforms.
About The Author
Chris Smith is an Enterprise Sales Executive at CloudBlue.