Small- and medium-sized companies are increasingly following their enterprise-class peers in leveraging cloud services to improve business performance. Their internal IT groups view the cloud as a strategic enabler, allowing them to offload routine, repetitive tasks; scale at will; and focus efforts on innovative IT projects to improve customer and end-user experience.
Kaseya’s recent IT Operations Survey underscores this transition--with cloud services being the most popular services either currently in use or being considered by small and medium-sized business (SMBs) over the next 12 months. Companies of all sizes--from less than 50 employees to up to 5,000--are leveraging cloud services.
So, the opportunity is clear. The question is how to make the most of these market changes for your MSP. Based on the conversations I have with MSPs every day who are scaling up their cloud services, here are the five steps that MSPs sometimes skip--to their great sorrow.
1. Do Your Research: Rate Your MSP
I know what you’re thinking. “Research.” Wouldn’t have thought of that myself. Brilliant.
But, by research, I mean more than researching what types of cloud services your existing customers or major prospects are considering. Of course, this step is essential, but it’s only part of the research equation.
You have to also rigorously evaluate how prepared your existing IT organization is to fully support any cloud service offering--from migration (or adoption) through monitoring, management, configuration, security, compliance, backup, support and upgrades.
Let’s assume you’re considering offering Microsoft Office 365 services. While signing up and porting a few users seems simple, many Office 365 customers are surprised that the administrator skills needed for Office 365 are almost exactly the same as those required for on-premises Microsoft Office. The cost savings they forecasted are being eaten up in higher admin costs.
In addition, you need to consider the total time needed to monitor and manage these services. Again, using Office 365 as the example, properly de-provisioning one account--and backing up emails--can take an hour or more using the management tools delivered with Office 365.
Of course, this gap analysis doesn’t mean you can’t or shouldn’t offer any particular service. However, unless you’ve adequately thought through the entire lifecycle of support, you can’t fully select the best go-to-market plan (including technology and pricing model) that will ensure a profitable service offering in the long run.
2. Do Your Research: How Will You Deliver a Complete Service From Adoption to Backup
So now you have a service in mind with a fully fleshed out service requirement roadmap and a gap analysis of your MSP’s ability to offer this service today. The next step is not pricing!
Now is the time to research technology and technology partners. For most cloud services, your existing solution set will probably not fit the bill. A SaaS model can free the MSP from the responsibility of some troubleshooting issues, since the cloud provider usually has the primary responsibility here. But clearly you have to offer something besides pure application performance monitoring in a cloud services world to earn your fee. And, as we saw above, troubleshooting performance issues is just one small part of providing a comprehensive cloud service.
Continuing with the example above, the switch to Office 365 can seem like a small transition, especially to the clients who are--at the end of the day--just using Outlook in a SaaS environment rather than in an Exchange environment. But we’ve already discussed how this point of view obscures the real costs of managing, monitoring and securing Office 365 accounts--including email, SharePoint and Skype.
So, you need to research what solutions will allow you to provide additional layers of services in the most cost-efficient manner and that minimize staff training requirements. With Office 365, look for a solution where you can control Office 365; provision access to Mailboxes, OneDrive and SharePoint Online; edit permissions; access; create mailbox configurations; monitor usage of Exchange Online and SharePoint; and generate reports for OneDrive, SharePoint, Skype for Business, and more--quickly, easily and without requiring extensive or specialized training.
Then, look into ways to secure access to these accounts--perhaps using MFA and SSO. Finally, research how accounts and data can be appropriately backed up to ensure compliance and disaster recovery.
You want to set up your MSP to be agile and quickly respond to changing market needs. However, you need to be deliberate in rolling out cloud services especially at the beginning. You, your team, your clients--you are all still learning how cloud services, in all their permutations, alter the normal rules of engagement you have established from years of offering remote and on-premises monitoring and management.
3. Now Think about Pricing
Most MSPs will decide that they want to add cloud service offerings as a brand new revenue generating program. But another approach I’ve seen MSPs take is to add some services as economically as possible and include them as part of overall monthly management programs. The goal in this approach is to increase customer loyalty and retention.
What you decide to do should be based on your strategy for your individual MSP as well as your competitive playing field.
It’s also based on how quickly and easily your existing IT team can deliver the new service. Of course, this factor is determined by the technology solutions you find--which is why Steps 1 and 2 are so critical to do first.
While you’re at this stage, remember to consider any changes that need to be made to your billing, project management and ticket routing systems. Don’t overlook the back-end steps that will create logistical hiccups on your road to increased profitability.
4. Walk Before You Run
This tip does not translate into starting small. If you decide the best cloud service your MSP should offer is full-service private cloud hosting, go for it! But you should decide the best first step--and then take just that step.
For the love of all that is good and holy, don’t take a scattershot approach--starting this service and then pivoting to another. This is the MSP equivalent of throwing everything against the wall and seeing which service sticks. Just as misguided is offering the service that your loudest customer is clamoring for.
This is why Steps 1, 2 and 3 are so vital. Without a complete understanding of how a new service impacts your entire organization, an investigation into systems and solutions that empower your staff to provide world-class cloud services, and a clear-sighted understanding of the revenue or cost impact of these new services on your organization, you could much more easily jump into an unsuccessful (and profit negative) services engagement.
5. Plan for the Road Ahead
However, just because you should proceed deliberately with your plan, doesn’t mean that you don’t consider future needs as you consider your options.
While you may know exactly the capabilities your MSP needs today--both in terms of managing your business and offering services to your clients--the landscape is changing too quickly for you to only consider your current requirements. You need to make sure that you don’t regret today’s IT decisions tomorrow.
Bhaskar Ghosh, group chief executive for Technology Services at Accenture, terms this making sure that your technology is “future-ready.” He further notes that “[t]his is all driven by automation and innovation.”
MSPs need to partner with vendors who are committed to continually investing in R&D to ensure that their platforms are providing the software that MSPs can leverage to build managed service offerings --all to meet the ever-evolving demands of SMBs around the world.
New technologies, especially the cloud and cloud services and applications, have revolutionized how IT is "done." Technological requirements and services that were once the needs of only large enterprises are now are becoming mainstream requirements for SMBs.
These changing market demands, combined with new completion and MSP business models, are squeezing operating margins and reducing the overall profitability of the business.
For more insight on what all MSPs need to do to thrive in this new environment, download the whitepaper “Your Roadmap in an MSP 2.0 World.”
Joining Kaseya in 2012, Miguel Lopez brings over 20 years of experience to his role as SVP, Managed Service Providers (MSPs). In this position, he consults daily with MSPs to help them solve their clients’ business problems with technology solutions. Prior to joining Kaseya, Miguel served as the director of consulting services for All Covered, a nationwide technology services company that is a division of Konica Minolta Business Solutions USA Inc. In 2008, All Covered acquired NetCor Technologies, a leading MSP that Miguel founded and managed since 1997. NetCor specialized in serving highly regulated industries such as healthcare, CPAs, law firms and retail companies.
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