Do MSPs Need Software Development Teams?
During Microsoft Worldwide Partner Conference 2012 (WPC12), I spoke with two managed services providers (MSPs) that are building software development teams. The teams focus on Dynamics CRM and database work, with an eye toward long-term cloud integration projects. Is software development a smart strategy for MSPs — or a fatal distraction away from bread-and-butter recurring revenues?
I’ve got a pretty strong opinion on this one: I think the most profitable, most strategic MSPs will have some in-house software development expertise.
But that doesn’t mean every MSP should have a software development arm. In some ways, a software focus is a return to the past for MSPs — requiring strong project management and somewhat unpredictable revenue spikes and lulls. Drop the ball on a project here and there, and you’ll mess up your profits, customer satisfaction levels and perhaps even your company focus.
Still, there’s huge upside for MSPs that have developers on-hand. A traditional MSP only has one real asset: Customers under contract (as long as those deals deliver healthy profit margins). But software is intellectual property.
- Write some code that bridges the gap between two cloud apps, and you’re generating incremental revenue while adding IP other MSPs can’t match.
- We’re hearing from MSPs building app extensions atop SharePoint and Dynamics CRM, with an eye toward Windows Azure opportunities.
I suspect fewer than 10 percent of MSPs have in-house software developers. But I bet those MSPs are best positioned for the ever-growing cloud wave.