MSP Opportunity's

The SMB Priority of IT Modernization

With all the IT challenges they’re facing, it’s not surprising that many SMBs are reaching out to external experts for help. Many SMBs, recognizing that MSPs can be critical partners in helping them overcome their IT challenges, are planning to increase investment in Managed IT Solutions.

The widespread and growing need for process digitization, cloud migration, analytics, and better security are all creating strong demand from SMBs for external expertise in IT. SMBs’ investments in managed IT solutions that will help them achieve their business goals and improve ecosystem collaboration and engagement will grow at 2-3 times the rate of investments in all other IT solutions.

As budgets for managed IT services expand over time, the challenge for MSPs will be targeting SMBs that are ready and able to move quickly into the managed model and prepared to shift most of their IT budget in that direction. MSPs can therefor find opportunities to grow accounts and revenue wilts SMBs will be looking to MSPs to help them strategize and prioritize their digital transformation and other IT modernization projects.?

Many SMB type of organizations will therefor lean on MSPs to help them address critical knowledge gaps in compliance, security, and analytics, and to implement vertical-focused solutions. Micro-businesses that lack internal IT employees will to hire MSPs as their complete IT department. Meanwhile, SMBs with internal IT will likely look to MSPs to co-manage IT and provide strategic guidance and support. Here are some of the main reasons these businesses need support from MSPs now more than ever:

Growing IT complexity: As SMBs pursue digital transformation, they must undertake complex integrations across legacy systems, the cloud, and multiple business processes.

Proliferation of endpoints: According to our survey, SMBs expect 25-30% growth, on average, in the number of endpoints installed over the next three years.

Lack of IT resources: Nearly half of SMBs have no internal IT staff, and most of these businesses have no more than one generalist on hand.

Work-from-anywhere: A trend and the intermingling of home and office IT infrastructure require SMBs to focus more attention on security and provide remote support readiness.

Cybersecurity confusion: Many SMBs need help navigating cybersecurity technology options. Most of them have difficulty understanding cybersecurity and knowing what solutions to implement and how.

Compliance overload: Most SMBs just don’t understand how to navigate compliance regulations related to IT, which change frequently.

Meeting The Expectations

MSPs are under severe pressure to meet the changing expectations of SMB businesses. They want to work with high-quality service providers that can offer a broad range of capabilities and execute them well. The main drivers for capabilities that business decision-makers cited as “critical” for an IT service provider and revolve around, applying adheres to the IT industry best practices on which a comprehensive suite of cybersecurity solutions is applied and is well managed by certified staff who are experts in a wide range of technologies and solutions.

SMBs expect IT service providers to apply leading business practices because their own business has become so highly IT-enabled. And as for cybersecurity expertise, that’s quickly becoming table stakes for MSPs looking to earn the business of SMB customers. SMBs also want to collaborate with partners who can help them manage change and ensure every IT implementation supports business success and customer success.

Being able to build, implement, fix or even optimize IT solutions is no longer enough for MSPs to be successful. They must bring much more to the table and understand market nuances if they want to keep, expand, and add new accounts in the SMB space. compliance and business process know-how is essential for MSPs to move upmarket into larger-sized customer accounts. And businesses with 50 or more employees place higher importance on an IT service provider’s ability to be strategic and business process-oriented

The hurdles MSPs face in to create increasing revenue and profits is the time it requires to accelerate to establish a high performing, recurring revenue portfolio. The customers often evolve faster which than creates a lack of visibility into customer trends and needs vs their development cycles and sales funnels. Also, the lack of differentiation on service offerings on conveying business value is perceived as a mayor challenge. Improving staff productivity and efficiency as is retainment of staff is experienced as a significant challenge.

The Cyber Security MSP Portfolio

As IT usage grows in scope and complexity, small- and medium-sized businesses (SMBs) are turning to managed services providers (MSPs) to help architect, secure, monitor, remediate, and refresh their mission-critical technology solutions so that they can deliver optimal customer experiences. To compete for market share, many MSPs are expanding their portfolios to include cybersecurity, compliance, and cloud services. However, they’re also struggling to secure talent with in-demand skill sets. That has many MSPs looking to strategies like automation and outsourcing to ensure they can deliver new services.

Portfolio expansion is essential for MSPs to create “customer stickiness,” which includes serving current customers optimally while also taking advantage of opportunities in a growing market. Cybersecurity services that many MSPs include to focus on enabling collaboration and securing the ever-growing range of endpoints and IoT-enabled equipment. Services they are looking to develop either plan to add or expand are:?Cloud applications protection and security, ?Email security, Data loss prevention, Managed endpoint security and Network threat monitoring and vulnerability assessments.

The Operational Success Factors:

1. Have a five-year, value-creation plan. What company size, revenue mix and profit do you intend to create?
2. Have a narrowly defined target customer profile. This is a prerequisite to a cost-effectively narrow standard technology stack, which, in turn, enables scale, profit, a great customer experience, and strong differentiation in the marketplace.
3. Sell your fullest suite of managed services to at least 80% of your managed services customers. This approach results in the lowest sales, marketing, and general and administrative cost of managed services revenue, among other benefits.
4. Focus solely to decision-makers who are open to a win-win managed services arrangement.
5. These buyers are most likely to buy your fullest suite of managed services offerings, and they will let you lead on standards and pay a win-win price.
6. Separate hunter salespeople from farmer salespeople and avoid “hybrid” hunter-farmers.

Ensuring MSP growth:

Step 1. Consider whether the solutions you offer now will meet the needs of your customers over the next 12 to 36 months.

Step 2. Create a time-bound road map of offerings you intend to bring to customers over the next 36 months; ideally, cybersecurity should be in the mix.

Step 3. Examine whether your current tools and capabilities (and talent) will support your road map. Address any critical gaps now.

Step 4. Identify shortcomings in your customer engagement and operational practices. How could you improve your approach to differentiating your business and delighting your customers?

Step 5. Start conversations with your software providers and peer MSPs to determine how best to bridge gaps using software refreshes, outsourcing, and best practices.

Primary Drivers for SMB Cybersecurity Investment

SMBs are key targets for cybercriminals because they can be steppingstones to compromising larger enterprises they supply goods and services to. SMBs also need to protect information of their own that attackers would find highly valuable, such as intellectual property and financial data.

Malware downloaded from malicious emails or websites is the most common type of security incident that SMBs are experiencing. Many SMBs are seeing a wide variety of other attacks, as well, including: Unauthorized access and hacking incidents, Theft of customer data, including credit card information, Ransomware attacks, Theft of critical business data and electronic files by external parties and insiders, Attacks against industrial controls and equipment, including (IoT) devices

Security events typically result in system downtime for SMBs. Damage to PCs, servers and other hardware, which can be costly to repair, is another top impact. However, other fallout from a security incident can be much costlier and even cripple a business, such as the loss of customer trust. Regulatory fines and penalties related to data breaches can also hurt an SMBs bottom line. In fact, compliance with regulatory and legal requirements is driving many SMBs to increase their cybersecurity investments in the near term.?

Safeguarding company data, communications and intellectual property; Guaranteeing customers’ privacy and financial data; Compliance with regulatory and legal requirements; Growth of mobile users and connectivity to the corporate network; Protecting physical assets and infrastructure (e.g., offices, warehouses); Digitization of company business processes.

Conclusion:

All the insights shows that managed IT services providers that follow industry best practices already generate about 22% more revenue per employee compared to peers who don’t adhere to these practices. They also see about 50% higher average recurring revenue (ARR) per account. If you want your MSP business to achieve operational success in this new era, now is the time to critically assess your current offerings, practices, technology, and skillsets to ensure your business is ready to seize the moment.