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Kaseya's Mike Puglia discusses why differentiation is critically important

(Image credit: Image source: Shutterstock/everything possible)

As IT becomes more fast-moving, complex and mission critical, outsourcing to a managed service provider (MSP) begins to look an increasingly sensible move. Individual IT departments just don’t have the skills or the capacity to cope with the changes happening or the planning needed to ensure scalability and to cope with the peaks in IT traffic. Because they are only involved in creating solutions for their own individual company, it’s difficult for them to develop any idea of best practice. 

Consequently, managed services is already a huge and competitive market – and it is expected to grow further over the next five years. Research suggests the global market will expand from $152 billion in 2017 to $257.84 billion by 2022, at a compound annual growth rate (CAGR) of 11.1%. 

Fuelled by the huge advances in technology of recent years, including the cloud, big data, mobile and the subsequent need for increased security and data protection, MSPs have been described as “the driving force for IT industry growth.”    

The expansion of the cloud alone has been enough to propel demand. IDC predicts that when the 2017 figures are known, public cloud services spending will reach $128 billion, an increase by around 25.4% over the previous year. Migration from private to public cloud and the rising popularity of the hybrid cloud have also helped boost MSP’s revenue from companies wanting to invest in their services but ultimately save money.   

The list of high-profile global companies hit by malware attacks has also brought renewed interest from companies anxious about security. Of course reviewing security and installing protective software also entails the entire IT infrastructure – and it’s therefore more logical to employ an MSP with a broad remit than just a security specialist. 

The changing role of IT within business – from being merely a business facilitator to becoming central to business strategy – has brought a change of focus for MSPs too. The need for digital transformation, a mobile workforce and the rise of data volumes have all helped beat the path to the MSP’s door. No longer are MSPs mainly product-centric, but now act as trusted advisors and consultants that focus on providing a total solution rather than a standalone product.    

However, a market with such huge potential is something of a double-edged sword. More and more companies swarm round the promise of sustainable profits like bees around a honeypot. Systems integrators and other IT professionals are now being joined by independent software providers, keen to expand their portfolios to include services. Even telcos, keen to translate their scale and knowledge beyond voice and data services are also entering the market 

At the same time, the growing maturity of software solutions helped by increasing acquisitions and consolidation of brands has narrowed the product choice. This has made it more difficult for MSPs to differentiate themselves by the products they offer or their related expertise.    

As a result, every business is looking to develop a compelling unique selling proposition and wants to stand out in a crowded sector. Also, research by Kaseya has shown that within the MSP market, growth is not uniform, with some businesses raising their revenues by considerably greater percentages than their rivals. 

So what are the successful MSPs doing that the others are not? The same research shows that the high flyers have often moved away from offering just the bread and butter such as back-up and disaster recovery, for example. High growth MSPs frequently offer a choice of different backs ups such as cloud-to-cloud, onsite-to-onsite, cloud-to onsite and onsite-to-cloud.     

However, it’s not just in this area that they have diversified. They offer more options around security too. When MSPs were asked about the most important challenge for their clients last year (2017), the majority said ‘meeting security risks.’   

The same is true when it comes to network and infrastructure monitoring. High-growth MSPs are scoring plenty of hits with network operating centres (NOCs), another emerging service category. It’s interesting that 47% of high-growth MSPs report that they offer NOC services around the clock, compared with just 27% with lower growth.    

In a nutshell, it seems that higher growth MSPs get it right because they give the market what it wants, including 24/7 service. However, devising a strategy around this can mean spending an immense amount of time gathering business intelligence to provide direction. 

Staying ahead 

There’s little doubt the MSP sector is active, thriving and in some cases, highly profitable. This in turn is attracting innovation around the MSP role, with the emergence of tools to help these businesses become even more supportive to their customers. 

The latest of these, a true industry first, is Kaseya’s MSP Insights, a business intelligence and benchmarking tool that can cut through all the manual information gathering. Built on proprietary technical and business data, the online portal allows MSPs to quickly and easily benchmark their business metrics against other MSPs in their region, analyse new and emerging MSP service offerings and evaluate bundling and pricing strategies.   

The portal enables users to keep an eye on emerging trends. When a business is successful and busy looking after clients, it challenging to dedicate time to looking at the future and planning. It then runs the risk of getting left behind in its thinking and unable to recommend new ideas to clients. 

Competitive analysis, though extremely important, can be costly, time intensive and often involves taking a senior employee ‘off charge.’  Using this portal, MSPs can now quickly benchmark their business services and strategies against the wider MSP community. Users can easily access the critical information they need and focus on what is most important – running and expanding their own business. 

So far the tool has been well-received. For example, Mick Shah, senior vice-president of MSP Dataprise told us: “The ability to look under the covers at what our competitors are offering customers speaks volumes to our sales team. It allows us to stay in front of market trends and see what new technologies our customers require. This empowers us to continually update the types of technology and services we offer, which directly leads to new business and overall company growth.” 

It’s clear that the difference between a fast-growing MSP business and the not so successful is that the former continually has its ear to the ground, looking for ways to hone, improve and expand its services. The challenge here is that it can take considerable time and effort to gather this information, especially when it comes to a competitor’s data.   

Using MSP Insights though, this data can be used, discussed and analysed in an instant.     

Mike Puglia, Chief Product Officer at Kaseya (opens in new tab) 

Image Credit: Everything Possible / Shutterstock

Mike Puglia is the Chief Product Officer at Kaseya.