Top Lessons from High-Growth MSPs
Like many of you, I’ve been with the MSP market from the beginning–as VARs and ISVs first transitioned into break/fix shops and then into first-generation MSPs. We’re now facing another important inflection point in the MSP market evolution, driven by several critical developments:
- While growth is still positive for most MSPs, the field is getting more crowded and competitive.
- Clients (even small clients) are leveraging cloud technologies (especially SaaS solutions) and supporting a distributed workforce.
- Technology is a critical component for continued business success and end user satisfaction (again, even for small clients). In short, the distinction between business and technical excellence is rapidly diminishing.
Recent research contained in Kaseya’s 2016 MSP Pricing Survey uncovers high-growth (or Second Generation) MSPs who have experienced more than 20% annual growth during the last three years in spite of–or perhaps because of–these market drivers. From a strategic point of view, they achieve their growth by:
- Charging the full perceived value of their services (rather than trying to win business on price)
- Investing in technology that differentiates them from MSP competitors; they don’t grow by adding me-too services late to the game
- Developing and delivering services to address success requirements of their customers–and further embed them as a trusted adviser to those clients
- Wringing excess costs and inefficiencies out of their business
- Creating an agile organization (from business systems, IT training and internal processes) that allows them to respond quickly to changing market conditions
More specifically, our research found that second-generation MSPs:
- Offer Security Services including Patching & Updates (90%), Audit & Discovery (67%), Desktop Security (74%)
- Offer Identity and Access Management services, which are growing at a double-digit CAGR over the past three years (33%)
- Offer cloud-based services such as monitoring, hosting, backup/recovery and desktop/server management (50%)
- Charge more on average for monthly server support and maintenance
- Provide hosting services for customer-owned equipment (85% more likely)
- Offer cloud services such as IaaS, PaaS, SaaS (50%),
- And expect increased revenues in 2016 (66%)
MSPs that continue to compete solely on price and deliver now-commoditized service offerings won’t thrive as the marketplace becomes more competitive and more demanding. Now is the time to invest in the technology, people and processes to propel your MSP into the ranks of a second-generation MSP.
If you’re interested in seeing how Kaseya can help you achieve higher growth, please read more about the Kaseya “Times Twenty” initiative. This initiative focuses on enabling MSPs to put their capital to work in designing and deploying IT service offerings that will generate a 20-times return on their investment.
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.
