Being a Managed Services Provider (MSP) has presented you with challenges in the past— and by meeting those challenges you’ve reaped the rewards of success. In 2014, challenges and rewards remain; but as the Internet and business environment evolve, so do those challenges. Let’s take a look at 5 challenges that are faced by most MSPs this year:
1. Cloud Computing Finally Becoming Mainstream
The concept of cloud computing has finally become mainstream. If your customers haven’t yet asked for it, they will — and many of them will ask without knowing what it is or why they want it. That opens a big opportunity for you to provide new services, sometimes at a lower cost point, and to keep your margins up. Amazon and others are doing the missionary work for you, by getting decision makers to want cloud computing in their businesses and hosting environments. But Amazon is basically a self-service operation, leaving a great big gap for you to be the local, knowledgeable full-service value-added vendor.
If you don’t yet have a cloud based offering, get one. And make sure that your sales and support teams are knowledgeable about cloud computing, so they can help your customers and prospects make the right decision by implementing your cloud offering in their businesses.
2. Incursion by the Omnipresent Communications Companies
As recently as a few years ago, being an MSP meant setting up shop in a part of the industry that you can make your own, either by geography or by industry. But that’s no longer the case. Not only are you seeing competition; but it’s coming from the biggest players in the field — cable companies, telecom giants, and well-funded specialty players and their markets become saturated.
This has caused a lot of smaller players to consolidate or close their doors; but you’ve been able to make your mark because you’ve protected your turf. It’s never been more important than now to protect your turf against the big guys. The best ways are to continually enhance your services offering to differentiate from the competition, and to do it in a way that doesn’t unduly increase your break-even point.
3. The Continued Battle Against Spam and Malware
Years ago, the pundits predicted that spam would be a short term problem; but they were wrong. It has become the battle of 21st century — putting at risk your customers, their finances & identities, and your MSP business. The antagonists, originally the hackers down the street, are now organized crime — and the malicious results might be felt immediately or years into the future. Having a solution to fight spam and malware, including phishing and social engineering is top priority for anybody operating a data center or even just connecting casually to the Internet.
4. Shrinking Margins
MSP margins, which directly affect your take home pay, are being squeezed by the economy, competition, and the need to keep up with technology. They all cost money or keep your prices down. So you need to carefully plan your technology to give you the edge in the market and to provide reasonable returns.
5. Minding Your Business
You might have entered the MSP business because you’re a techie extraordinaire. In a fledgling industry, you were probably able to make money pretty easily. But now that the Internet is maturing, it’s a lot harder — and your technical skills are not enough to make it happen. You’re running a business. It’s important for you to bring on a team that has the skills to run that business effectively, from sales & marketing to finance & business planning. You need to keep your eye on the issues that differentiate between success and failure; and you need to execute well — or risk going down in dust like your competitors. You need the right team, a reasonable plan, plenty of focus, and energy to get it done.
The Coming Year
You probably recognize some of these challenges from previous years and have adequate plans to meet them. Remember that you need to keep your eyes open to how the challenges change, so you can meet them most effectively, thereby minimizing your ongoing risk and maximizing your income.