Where Managed Services Is Now And What The Future Holds

By Khaled Farhang, eGuard Tech Services and member of The ASCII Group Since 2008

It’s no great secret that the managed services industry is evolving at breakneck speed. What was once somewhat of a sidekick to the VAR community has firmly taken center stage in the channel. And MSP life has changed considerably over the last decade.

Recurring revenue is now the norm for channel players, with VARs existing these days only in name. This means two things: firstly, there is unlimited business out there for MSPs, as recurring revenue, by definition, means revenue that has the potential to go on and on and on; but secondly, the competition for MSPs is growing exponentially as not only VARs move into their space in order to tap into the recurring revenue market, but also a whole host of other firms, such as CSPs, ISVs, stand-alone consultants, professional services firms, digital marketing agencies, CPAs and more.

These firms are encroaching further and further into the MSP space, and are, ultimately, taking business from traditional MSPs. This offers traditional service providers a number of choices for their future - hunker down and get good at what you do - as in really, really, really good - or think about diversifying and offering some of the services that your growing number of competitors offer. For example, is there scope to introduce some digital marketing services to your business? Could you develop in-house talent and expertise on accounting software? Are there opportunities to expand your cloud offering and build a dedicated cloud practice within your firm?

MSPs today should be asking themselves these and more questions. There is an irreversible shift occurring in managed services and this shift reflects the changing nature of IT consumption and IT spend, as well as customer expectations and requirements. We all know that customers want business outcomes these days and not just solutions. The much-touted “trusted advisor” status all channel partners are repeatedly told they need to achieve is steadily being replaced by the need to be a consultant of one kind or another.

Why? Because customers need more than technology answers. As we all know, in today’s organization - whether it’s an enterprise or SMB (and anything in between), technology is often being purchased by people who know what they want to consume but have no IT context whatsoever. This means that MSPs must already be able to relate to marketing teams, finance offices, mailroom supervisors, HR directors, and myriad other line-of-business functions. Dealing with a CTO, CIO, CISO or IT department more broadly is fast becoming a luxury a lot of MSPs no longer enjoy.

The Future

For MSPs the future offers a number of things, both positive and negative. On the plus side, the opportunities will be endless as managed services continues to become an all-but-essential part of running a business. The state of security, for example, means that the need for organizations to engage a security service provider will be vital to ensuring the successful day-to-day running of their business. MSPs specializing in security also will find more and more opportunity in upselling and cross-selling, as technology becomes more specialized and hackers more skilled.

For those players not in the security space, the future still holds plenty of opportunity. As remote working becomes the norm rather than an employee perk, MSPs specializing in mobility will be able to carve themselves out a niche in dealing with remote workforces, satellite offices, traveling executives and so on. In our practice we have seen an influx of remote users that we now support, not only in the U.S., but overseas as well.

Likewise, MSPs whose areas of expertise cover networking will find that the changing face of the workforce will allow them to offer services dedicated to keeping staff connected from near or far, day or night.

But the future holds way more than this for MSPs, if they are prepared to embrace it. The movement of professional services firms into the channel should be of particular note for managed services players. If you are not able - or prepared - to specialize in a specific technology (or indeed, vertical), then you should be thinking about how you can incorporate professional services into your offering.

With customers seeking outcomes rather than solutions, the need for service providers to understand their customers’ businesses has never been greater. And this is only set to grow. As is often said, technology is no longer the answer to customers’ infrastructure questions, it is simply a tool that can be utilized as a means of delivering the outcome your customer is looking for. In other words, MSPs will need to be able to consult with their clients not only on what technologies the client should be implementing, but how those technologies will fit across the business and how the business can position itself to maximize the benefit of their technology investment. This will require soft skills, business skills, communication skills and a variety of other non-technology layers that MSPs may not necessarily have in-house at the moment.

Ultimately, MSPs face three paths down which they can go to secure their future: deep expertise in a particular technology set, deep expertise in a specific, specialized vertical, or deep expertise in business outcomes and evolution. This is the future for MSPs, and with the channel being encroached upon from all angles, those MSPs who haven’t already chosen their path and long since embarked upon their journey down it, must decide where they are headed and work to ensure they can deliver the outcomes their customers will demand of them or simply get elsewhere.

About The Author

By Khaled Farhang, Founder & CEO, eGuard Tech Services and member of The ASCII Group Since 2008.

About The ASCII Group, Inc.

The ASCII Group is a vibrant reseller community of independent MSPs, VARs, and other solutions providers. Formed in 1984, ASCII has more than 70 programs that provide turnkey cost-cutting strategies, innovative business building programs, and extensive peer interaction. ASCII members enjoy benefits such as marketing support; educational information; group purchasing power; increased leverage in the marketplace; and multiple networking opportunities. These programs enable ASCII members to increase revenue, lower operating costs, and grow service opportunities. ASCII is the oldest and largest group of independent information technology (IT) solutions providers, integrators and value added resellers (VARs) in the world. Learn more at www.ascii.com.