Tough Times? MSPs Say “Bring Them On”
- “Markets Plummet”
- “Enough Already!”
- and my personal favorite, “Ouch!”
Here are some media headlines I’ve come across recently:
- “Markets Plummet”
- “Enough Already!”
- and my personal favorite, “Ouch!”
Given all the bad economic news, you would think that managed service providers are cowering in a corner these days. While there is certainly lots of economic pain to go around, I’ve had discussions over the last few weeks with MSPs who are paradoxically optimistic about the future of their business in this difficult economic climate. So what’s behind all this optimism? Here are a few of my gleaned insights from those in the trenches:
1. Expense Reduction is good for MSPs: When a company lays off employees in an effort to reduce expenses, its IT staff is not immune. Since almost all companies are dependent upon IT to run their business, they must adjust and look for more cost effective methods of meeting their IT needs. MSPs are the obvious choice as they are able to provide a tailored, low cost service to meet an SMB’s IT needs.
2. Certainty in the face of Uncertainty: What’s the perfect cure for a churning stomach and sleepless nights? Managed Services is like a glass of warm milk and cookies before bed to soothe the most nervous SMB. A Managed Service contract allows a business owner to accurately predict their IT costs in any given month and stop worrying about unexpected IT costs.
3. Quicker, Cheaper, Better: well not exactly the Olympic motto, Managed Services allows MSPs to provide a higher level of service, at a reduced cost. Businesses that were reluctant to sign a long term managed services contract when times were good, are more apt to sign a contract that reduces expenses when times are bad.
4. Thank Goodness for Long Term Contracts: Since Managed Services are sold over as a multi-year contract, MSPs do not need to worry how short term market conditions will affect their monthly revenue. Existing customers who are being managed well are unlikely to cancel a long term contract as a knee jerk response to the current economic climate.
While MSPs are not 100% immune to the ups and downs of the market, the inherit benefits of the Managed Services model bodes well for weathering our current economic storm – prompting one MSP to say “tough times, bring them on”! Now if only there was a Managed Services model to address the rest of the economy’s problems…
You can learn more about the advantages of the Managed Services model and many other Managed Services related topics on our website at www.msppartners.com.
Jim Hamilton is executive director of MSP Partners. MSPmentor is updated multiple times daily. Don’t miss a single post. Subscribe to our Enewsletter, RSS and Twitter feeds.
Although I personally agree with what you wrote in your article, I feel you may have overlooked the small IT VAR. These 1 or 2-man shops tend to struggle in the current economic situation. The MSP, no matter what size, should be flourishing in this economy because of layoffs in the IT industry, companies reducing costs and overhead and better service at a lower overall cost.
Often the small VAR doesn’t realize that they can support the mid-size business. For example, I have a partner in Tempe, AZ who has for the most part stopped selling to the business with less than 50 employees. They have started aggressively marketing to businesses of 50 – 500 employees. I am sure we all see that these mid-size businesses are being hit the hardest in today’s economy. In many cases, IT and HR are the first to be cut back because they are a huge cost and do not generate much, if any, profits.
I am glad that you mentioned expense reduction. A number of our partners once had their own servers to host their RMM tool. For a number of reasons, including cutting back on expenses, they have chosen to stop hosting their own server and move to the hosted model with SecureMyCompany. Not only have they seen an overall cost savings, they have also been able to focus more on their client’s needs. Therefore, they are more profitable while their customer service levels are increased. At the end of the day, they are proving to their client that they are providing a value.
Stuart Selbst
Vice President, Business/Channel Development
SecureMyCompany, Inc
http://www.securemycompany.com
Great post Jim…in chatting with our partners of late, early adopters of a managed service strategy in particular do seem to be in a place to sustain during the economic uncertainty. j. 🙂
Jeannine: Building on your point, I believe the early MSP adopters are “breaking away” from the pack. They are going from “good to great.” Yes, they will take a bit of a hit due to the economy. But the MSP business model will stand the test of time.