Top 15 Managed Services Business Transformation ChannelCon Takeaways

If you traveled to this year’s ChannelCon event to learn where managed services are headed, you were definitely in the right place. Day 3 of the conference featured an excellent, eye-opening panel discussion on Business Transformation in Managed Services.

The basic premise of the session was that as managed services approaches maturity, it’s a great time to reflect on the state of awareness and how solution providers have transformed their business models to be managed services providers (MSPs).

The panel was moderated by Carolyn April, director of Industry Analysis for CompTIA and included five managed services thought leaders -- two MSP business owners and three executives from managed services vendors that sell to MSPs: 

• Chris Wiser – Founder and CEO of TechSquad IT 

• John Tippett – COO of EDTS, LLC 

• Jeannine Edwards – Director of Community, ConnectWise

• Amy Luby – VP of Global Sales and Marketing, Mailprotector

• Len DiCostanzo -- Senior VP of Community and Business Development, Autotask Corporation 

Like many of the panel discussions at ChannelCon, after the moderator introduced the panel, some background slides helped to set the tone. Taking all of this into account, here are what I see as the 15 biggest takeaways from this session:

1. Operational efficiency is the major obstacle. Clients for managed services are typically buying more reliable IT at a lower cost, relative to other market alternatives. Because cost-savings is such a big part of the value proposition, MSPs that price competitively have to operate as efficiently as possible. (Note: If this sounds a lot like the hardware war that Dell fought and won in the 1990s, you’re on the right track.)

2. 39% of MSPs rate themselves as skilled experts on managed services. Another 52% say they’re “competent and getting better.” (For a 10+ year old segment, these figures seem pretty low.)

3. Only 25% of small MSPs (<$5M in annual revenue) and only 30% of medium-sized MSPs ($5M-$50M in annual revenue) feel they are skilled managed services experts. In other words, only the very largest MSPs rate their firms as “skilled experts” – meaning the majority of MSPs aren’t “skilled experts” by their own admission.

4. Commoditization is a big challenge. The average prospective client is now looking at three MSPs.

5. If an MSP can manage an IT process, it needs to be in the contract. The goal is to get total IT control and get as “sticky” as possible. This will by definition mean managing peers and third party vendors.

6. To protect your MSP firm from channel disruption, go vertical. Figure out which vertical markets that your company successfully supports. Look at the pain points. Then develop a marketing message that’s specific to each vertical.

7. You can’t manage what you’re not measuring. Know which clients are profitable and which are not to protect your company’s future.

8. Meet with clients at least once a quarter. Ask for feedback. Talk about what’s next. Find out what else your MSP business needs to offer to meet their overall IT needs.

9. Differentiate to separate your managed services offerings from your competitors. Without this differentiation, your company will constantly be engaged in brutal price wars.

10. SLAs, services delivery, and PSA reporting should all be used to create raving fans. These fans in turn become a very valuable extension of your marketing and sales efforts.

11. A 15 minute response doesn’t mean that the issue has to be solved in 15 minutes. The SLA just requires that someone from the MSP acknowledge that the issue is being worked on within 15 minutes.

12. Offering clients the opportunity to change a priority level empowers clients. This leads to greater loyalty and retention.

13. Developing a services catalog requires standardization. But standardizing doesn’t mean that you should lead with pitching a particular vendor.

14. When a potential client doesn’t want the turnkey solution that your firm offers, it’s not a good fit. Learn to recognize this early and run the other way.

15. Consider adding a pricing tier above the tier that you really want to sell. This makes it much easier to sell the second highest tier.

So those are the top 15 takeaways from the Business Transformation in Managed Services session at ChannelCon.

What’s been most critical for your company as it’s transformed itself into a managed services provider? Please share your thoughts in the Comments section below.

And for some additional client acquisition inspiration (rated as the third biggest managed services adoption challenge, right behind operational efficiently and selecting the right software), be sure to download our free white paper on the Top 10 IT Marketing Strategies for Consistently Attracting New Business Clients to Your Small IT Business.