Not All MSPs Will Smile in 2010

A new wave of optimism is building across the managed services market. Executives from Nimsoft, N-able and other software providers are making upbeat statements about 2010. I certainly agree with the core thesis — many MSPs are going to benefit from an improving economy. But I will repeat a familiar theme around MSPmentor: The rising economic tide won’t lift all MSP boats. Here’s why.

First, the upbeat perspectives.

• In a prepared statement, N-able says it closed 2009 out “with a bang” and is preparing for “explosive growth” in 2010.
• Meanwhile, Nimsoft CEO Gary Read says he has “this belief that 2010 is going to be a really, really good year.”
• As a whole, the SaaS industry (a close cousin to the managed services industry) saw strong performance in 2009. Our own SaaS 20 Stock Index rose more than 65 percent in 2009.
• Back on Main Street U.S.A., most major stock indexes rose sharply during the first day of trading in 2010. As TheStreet.com pointed out, “Stocks started off the new year broadly higher Monday as the major U.S. stock averages touched 52-week highs behind a spate of deals, soaring commodities and strong manufacturing data.”

Sounds great. Now, the reality check:

• In the North American managed services market first mover advantage is over. The industry is getting pretty flooded with MSPs and VARs that offer remote monitoring.
• Even Best Buy, the big retailer, now pitches Geek Squad Virtual Agents — a consumer term to describe proactive remote managed services.
• Oh, and the challenging economy continues to haunt many people. Bankruptcy filings in the U.S. climbed 22 percent in December 2009 vs. December 2008.

How Good MSPs Become Great MSPs

Still, there are numerous market bright spots. Google has pointed out that the next-generation of managed services will involve application-level services (I tend to agree). And just about everyone is telling MSPs to focus on better cash flow management (Nimsoft’s Phil LaForge offers some timely EBITDA tips here.)

In some ways it feels like Groundhog Day: Today’s MSPs face many of the same challenges as yesterday’s resellers — marketing, branding, a unique selling proposition, sales strategies, etc. It’s as if we should all exit the tech industry for a few months and take a few MBA courses in business management. If only we had the time.

Back to Basics (Again)

Generally speaking I’m upbeat about 2010. Good MSPs will become great MSPs — extending their lead over resellers and aspiring MSPs that spend too much time on technology and too little time on business strategy.

I wonder: Have you…

• Sat down with your business accountant to review 2010 expectations and cash strategies?
• Developed a marketing strategy that allows you to track performance?
• Drawn up some PR ideas to help promote your company each and every month in 2010?
• Identified at least two or three new IT opportunities your company needs to master this year?
• Fired your worst customers — and your worst vendors?
• Mingled with entrepreneurs outside of the high-tech market?

That last bullet point is an important one. Go visit a local residential or commercial real estate broker. Ask them what marketing and sales tactics they used to survive 2009. Generally speaking, anybody who survived last year’s real estate implosion has to be a pro.

There’s a lot of brainpower within the managed services industry. But sometimes, the best business advice can come from someone who knows absolutely nothing about your vertical market.

I think it’s going to be a great year. But like every year before it, 2010 will have its share of winners and losers.