MSPs, Circle a Big Target Around SMBs
Is history about to repeat itself?
Information technology used to be a source of competitive advantage for large companies. These early movers understood that technology could help them steal a march on their competitors. But that window of opportunity didn’t remain open very long.
Small and medium-sized businesses recognized the change, embracing IT as a necessary, even mandatory, key to success. They understood that any company that refused to get on the bandwagon was fated to get left behind. In time, IT became viewed as a commodity and became as much a part of the business landscape as electricity and running water.
History never repeats itself exactly, but as Mark Twain famously noted, it often does rhyme. So it is with cloud services.
Indeed, SMB adoption is now expanding beyond the confines of the large corporate world to the broader market to reap the advantages. For instance, a study from the Boston Consulting Group concluded that SMBs leveraging technology had higher job growth and higher revenue growth than “low-tech” SMBs. Similarly, research by Oxford Economics tied cloud computing to greater revenue growth in the SMB sector. At a minimum, SMBs stand to gain considerable cost savings,
Viewed another way, some describe the cloud as being the equivalent of “the great equalizer” for the US’s roughly 7 million SMBs, a group of companies that has historically gotten the short end of the technology stick.
Despite current gaps in cloud adoption rates between smaller and bigger businesses, the trend lines suggest that it’s only a matter of time before – as with IT – cloud adoption is just another aspect of conducting business in the digital era. In fact, an anticipated 78% of SMBs are expected to be entirely cloud operational by 2020. For those few holdouts, however, market researcher IDC warns that SMBs who fail to embrace the cloud “are now putting their entire business at risk.”
Opportunities and Challenges
MSPs can’t approach the SMB market as if it were a smaller version of the enterprise market, or a bigger version of the consumer market. SMBs essentially comprise a micro-market with various and different needs.
Since there’s no such thing as a one-size-fits-all approach, the challenge to MSPs will be to account for the individual characteristics that define each particular company, tailoring their solutions to the client’s specific business needs – whether it be a desire to lower costs or gain extra flexibility or something else. At that point, they can present the client with the most fitting technology choice.
MSPs have a big opportunity here as no single type of provider yet enjoys a dominant market position when it comes to supplying services to SMBs. What’s more, they can speak directly to their strengths, filling needs for customization and service.
But they also face challenges fighting the perception that SMBs would be better off adopting a self-service approach. A 2015 McKinsey report found that about half of SMBs already bought their cloud services directly from cloud providers directly. What’s more, 45% of SMBs surveyed said they started off their cloud consumption by using communication/collaboration services or content management solutions. Once managed service providers get their nose under the tent, so to speak, they have an entree to cross-sell SMBs on: follow-up cloud services.
This is where MSPs will need to step up and demonstrate deep business and technology understanding. Presenting themselves as a cross between a consultant and systems integrator, they can differentiate themselves as the one-stop shop that offers implementation, training, and support. It’s up to them to demonstrate the necessary technical expertise and offer the value-added integration capacity to manage across a range of platforms.
As always, the answer is all about adding value.
This content is underwritten by VMware — and is editorially independent. It is produced in accordance with conventional standards of business journalism.
Charles Cooper is an award-winning freelance author who writes about business and technology. During his 30-plus year career, he has worked as an executive editor at several leading tech publications including CNET, ZDNet, PC Week and Computer Shopper.