For decades, the channel has served as end customers’ outsourced IT department, handling basic IT infrastructure needs like networking, storage and software updates. But to thrive in today’s channel, partners have to go beyond being a “trusted IT adviser.” Today’s customers are demanding more, and savvy partners know they need to evolve in order to meet those demands.

That trusted-adviser role has grown into something much bigger and more complex than ever before. Managed service providers (MSP) are being asked to weigh in on business decisions, not just IT decisions. Every company in 2018 is a tech company, and every business strategy hinges on having the right tech solutions in place for organizations to build upon. MSPs aren’t just the IT manager quietly keeping the computers running anymore. They’re serving as their customers’ chief information officer, sitting with the big dogs and helping to shape their clients’ businesses.

AvePoint’s Scott Sacket

But are partners ready to take on the role of virtual CIO (vCIO)? Not quite yet, says Scott Sacket, senior vice president of business development at AvePoint. Service providers are still figuring out how to fill those big shoes. The learning curve is steep, and tech is advancing so quickly that MSPs have to get up to speed fast.

At the upcoming Channel Partners Conference and Expo in Las Vegas, April 17-20, Sacket will sit on a panel of experts to discuss how the role of partners has evolved, where MSPs are struggling and what opportunities the vCIO trend is opening up to the channel. “The Ultimate Service Provider: How to Become a Better Virtual CIO” will cover what it looks like when MSPs, instead of merely managing customers’ systems, data and applications, actually take responsibility for them.

Channel Partners/Channel Futures sat down with Sacket to get a sneak peek at what the panel might have in store for attendees.

The conversation has been edited for length and clarity.

Channel Partners/Channel Futures: What’s happening in the market right now that’s making partners step up their game to fill the CIO role?

Scott Sacket: The interesting part of this topic is diving into the trends in the market. We as a vendor see it from a different perspective maybe than the partner, who acts as the boots on the ground. We’re getting conversations from MSPs or end customers who say they’re interested in applications they’ve never been able to take advantage of before — the Office 365s and Azures of the world. Those apps were always considered enterprise-centric because you had to invest heavily in infrastructure and hardware.

Now SMBs have affordable access to these applications, but they’re asking, “How do we even manage this?” From the end-customer perspective, they’re looking for that trusted adviser, but it’s a new kind of trusted adviser — not just consulting. It’s, “How do we outsource this to an MSP that lets us take the best possible advantage of this technology that we never had before?”

From an MSP perspective, they now have a chance to create recurring revenue. Before, it was just an outsourced IT support or break-fix type of partner. It’s really evolved into a brand-new business model for both sides. Customers can take advantage of technology that previously wasn’t accessible, and for the MSP, it’s an opportunity to …

… change their entire offering into more of this managed solution.

CP/CF: We typically think of the CIO as owning every tech decision a company makes. Can partners step into that role and fully manage all the moving pieces customers need?

SS: I don’t think so. We actually as an organization suffer from the same things the channel is going to suffer from. You can either go a mile wide or a mile deep. There’s really no way a small-to-midsize MSP can be all things to all people. It’s just not possible. It’s the same reason the small business is outsourcing most of this, right? The MSP should really focus on what they’re good at.

When we work with MSPs, many times it’s folks who are either vertical-focused … or they’re very subject matter-focused. They care a lot about governance on collaboration applications, for example, or data protection and data sovereignty. I highly doubt many MSPs or partners out there could know everything about everything. The MSP that cares about governance in applications around Office 365, they’re probably not the right MSP to talk to about your CRM piece. But you still have needs for CRM. There’s no question you might need a Dynamics or Salesforce MSP.

So I don’t think that these MSPs should be thinking a mile wide. They should be doubling down on expertise, saying, “We’re going to be the best at X. We’re going to double down not just on our expertise, but on our collateral and our positioning, and this will differentiate us from everyone else who are being a jack-of-all-trades and master of none.” That’s what partners were for 25 years, and it was a very different world back then.

CP/CF: So if one MSP can’t serve all of their customer’s needs, how can they make sure another solutions provider doesn’t come in and take their slice of the pie?

SS: First off, you could be verticalized like we just talked about. You could have a specialization in a suite of applications that are very specific for those verticals. Maybe you care only about accounting firms or financial institutions, and you have a suite of solutions that you know will cover 95 percent of the use cases your customers care about today as an SMB financial institution. You don’t just care about backup or Office 365, but you know just enough about each one of these to get you to the right place for that vertical.

The other way is to partner with other folks. “If your needs are X, we can partner with you. But if they’re not, we have a network of partners we can tap for that as well.” You have to understand your target market. The truth of the matter is no partner – big, small or medium – could fulfill everyone’s needs. You’re better off being really great at a few things and really understanding and targeting your customers than being really mediocre at many things.

You may lose some business, but you may also uncover a tremendous amount of opportunity by refocusing and doubling down on your efforts on something you’re really good at. Because the likelihood is that you’ll end up losing that business anyway as those customers evolve and start asking of you things you can’t do. Some MSPs just don’t know anything about certain areas of technology. You don’t want to pretend you do and say you’re offering a security package and wind up in a situation where you’re breaching your contract or not living up to your responsibilities.

CP/CF: What’s the difference in the level of expertise an MSP had to bring to the table 10 years ago versus what they have to know today to really act as a vCIO?

SS: [Customers thinking they know best what their tech problems are is] really a problem. If they lack the background and knowledge about what they’re looking for and they start trying to find solutions themselves, they’ll …

… go down the wrong road and wind up costing themselves money and time. But again, partners can’t know everything about everything, so they need vendors’ help.

We as a midsize software company have that 15,000 customers and thousands of partners around the world. It gives us enough use cases, case studies, knowledge as to ultimately what people are looking for, and we can significantly shorten their search. We’re not going to start leading you down roads that don’t make sense, and that’s how we try to enable our partners.

We give them very specific scenarios as to how this solution will ultimately help their customers. In that way, it enables them to be that virtual CIO. All the trends and conversations about cloud that are going on around the globe — take GDPR or some sort of conversation around data sovereignty. People want to know if they have data in the cloud and is that dangerous, but how about actually where that data is stored when it’s backed up? That’s a very common misconception. What types of things are you putting in the cloud? Not all data belongs there, and partners have to tell their customers that. They have to be able to advise them about things they haven’t thought about. These are the types of things we try to provide for the MSPs and customers that ultimately enable them to make quicker and more intelligent decisions in the long run.

CP/CF: We’re seeing a big channel push into the SMB market right now, both from partners and vendors. What’s driving that, and how can MSPs leverage it?

SS: There’s a lot of change happening. The numbers I’ve heard are something like only 10 percent of SMBs so far have even moved to the cloud. The actual hype around it is still just getting started. So for obvious reasons, we see a tremendous acceleration of folks starting to move more.

The second thing we’re seeing is as people are getting into the cloud, we see more and more focus on what we call “dark data.” What am I putting up here? Is it dangerous? Is it a problem? As the smaller companies become more and more educated on what this whole thing means, why it’s good and bad, we’re seeing more sophisticated conversations around governance, compliance, data discovery — really being smart in how you’re deploying the cloud. It’s kind of a second phase of adoption that’s becoming very trendy and very interesting in those conversations. It’s not just migration, which is the first step. There’s a second phase of that adoption curve that’s becoming very trendy.

It’s the same conversations we had [about] on-prem years ago when collaboration started becoming really relevant. Now it’s not just about where’s my data, but how do I make sure I have access to it and the bad guys don’t, and what sort of message and technology do I need to ensure I get the maximum value out of this investment and I’m also protected.

That’s where partners are critical to this. [AvePoint] can’t be everywhere. Microsoft can’t be everywhere. Partners are the tip of the spear. They’re the ones with the relationships in the field. They’re the ones with services to offer. The more educated they are, the more opportunity there is for them to not just get their customers there, but really create this recurring revenue business and relationship to make sure they’re getting the value-add of the cloud but also protecting themselves.