Let’s start with a definition: A Managed Service Provider (MSP) is usually a company that manages and takes liability for certain business operations of their clients as well as offering comprehensive IT support. MSPs offer a robust and secure IT environment by managing network performance, security, backups, emails, helpdesks, and more. Thanks to the thorough monitoring and maintaining of IT processes in the client’s company, IT Managed Service Providers are able to detect problems or faults early on and rectify them before they are able to disrupt the company’s services and cause problems for their customers.
Benefits of becoming a Managed Service Provider
Many IT providers already find their on-demand system to be effective – clients who have a problem call to get it fixed. Simple. Offering managed services, however, may be more profitable, more effective, and less stressful in the long run. By monitoring a client’s IT system and detecting anomalies before they’ve had time to worsen means they can be easily fixed or replaced which is beneficial and less stressful to both parties. Another significant advantage is that as an MSP, you shift your business from a project base to a much more reliable subscription base. What is a plannable and fixed income on your side is just as plannable an expense for your customers. Managed Service Providers may also seem more attractive to companies than regular IT providers since the company can use their in-house IT team for other, more business-relevant tasks, because they receive many of the associated services and support from their MSP. This leads to the last benefit: you get a much deeper knowledge of your customer, and their processes and requirements. This knowledge enables you to become a trusted and important advisor and makes it much more difficult to replace you with another provider.
Requirements for building a profitable business as a Managed Service Provider
Transitioning from being an IT provider to being an IT, cloud, or security managed service provider, requires time. Here are some tips a managed service provider should bear in mind when starting out.
Select your offer wisely
When first starting out as a Managed Services Provider, many IT providers simply check out what other providers are offering and offer the same in their range. Instead, their aim should be to stand out from the competition and ensure their services offer a unique value proposition. Their range should be based on the needs of their existing clients and what their own forte is.
Research the right software and hardware
An MSP can provide hardware, software, or both. It is important to research the software to be able to offer customers the best products possible that will benefit them in the long run. A mistake many MSPs make is to opt for the cheapest software, but this could result in limited features and not be very appealing to customers. Find out what hardware or software customers want so it is possible to offer them added value.
Choose a price range
Starting out, it is difficult to know how to determine prices. When it comes to software, if the starting price is too low, the MSP might not be taken seriously enough, but if it is too high, the MSP runs the risk of not having enough potential clients interested. It is important to find the right balance when pricing services based on the value offered to clients. For hardware, it follows the same principle – it is crucial to get the price just right to attract customers and be taken seriously as a managed service provider.
Find an IT vendor
MSPs offer IT solutions i.e. remote monitoring, antivirus software, cloud backup, etc. to their clients as well as hardware such as motherboards, hard drives, and RAM, for example. Former IT providers may not need this step if they are already experts at providing for customers, but when buying new solutions and products, Managed Service Providers need to research the market and find a suitable vendor to resell their solutions to clients.
ALSO is here to support them on their journey to successful managed service provider with its ALSO MSP Concept. We offer possible service packages, pricing examples, and sample contracts as well as an MSP workshop where we teach everything a successful Managed Service Provider should know. Regarding offering cloud solutions to clients, the ALSO Cloud Marketplace enables ALSO partners to bundle, integrate, and manage a large number of cloud applications and services and to tailor them to the needs of their customers.
How can a managed service business grow?
It has been estimated that the global managed services market will grow from around £160 billion in 2020 to £237 billion by 2025 so being a managed service provider is definitely a business which offers significant potential to grow. However, MSPs need to stay on top of the latest trends in order to offer more added value to clients and keep them interested. Here are ways to stick out from the competition and grow as an MSP:
- Develop high level of expertise: Specialising in specific areas is a good way for a managed service provider to become the ‘go to’ person for this particular subject.
- Build trust with customers: They are entrusting the MSP with the company’s IT infrastructure so it’s crucial that the MSP can be relied upon. Offer customers impartial advice, be transparent, and keep promises to gain trust. Be proactive with suggestions which will enable your customers to work more efficiently, automate processes etc.
- Develop a sales and marketing process: Many Managed Service Providers stumble at this hurdle because they aren’t so experienced in the business part of proceedings. For a successful business, it’s imperative to have a good sales process, to create revenue opportunities. Therefore, it might help to hire an expert in this field.
- Choose clients wisely: As the business becomes more and more successful, an MSP can afford to be picky when taking on clients or turning them down. It’s helpful to determine the ideal client that fits in with your area of expertise to make the relationship easier and more profitable.
