The commoditization of IT continues to be a challenge for many Managed Service Providers (MSPs) as they battle against relentless pricing competition that gradually erodes profit margins.
And yet, the demand for managed services is at an all-time high, and this should inspire confidence. The managed services market is projected to be worth US$257.84 billion by 2022, up from US$152.45 in 2017. The problem is that an ever-increasing number of new, fresh faced MSPs are stepping onto the scene to saturate the market and keep the competition stiff.
The most successful service providers hoarding the customer spotlight have either, already built a recognizable brand, or they have a strong focus on differentiating their offering.
Below are three of the main trends MSPs are following to stay ahead of the curve.
The Lean MSP
No, MSPs have not changed their diets, but they have changed their business infrastructure, ditching some of the most labor intensive and error-prone manual processes in favor of automation. A single platform can administer the full MSP customer life-cycle with minimal intervention from staff, massively cutting overheads and giving teams more time and resources to dedicate to higher value activities.
This new category of lean MSP is able to offer a greater number of services to more customers, more reliably, allowing the business to operate at scale and reap significantly higher profits.
The Strategic Advisory Partner
MSPs are becoming much less about technical support and more about long-term strategic consulting. An MSP’s value proposition gets an upgrade when they are able to provide concrete evidence of how they have, not only been able to keep a business running, secured and backed up, but how they have helped their client make more money.
An MSP must therefore be much more than a line-item cost center. Today’s generation of service providers are identifying business needs, offering guidance and are taking responsibility for business outcomes. There is also a trend toward more verticalized or niche offerings, where in-depth technological know-how is combined with rich industry understanding. Popular verticals include the financial services, healthcare and education sectors where security and compliance expertise are in high demand.
The Fair MSP
MSPs have moved away from device-based pricing to offer ‘per-user’ or flexible ‘pay for what you consume’ pricing, alongside contracts that are increasingly fine-tuned to business objectives. This offers the customer the prospect of much better returns and a significantly fairer deal.
Many organizations to date have been paralyzed by receiving the same service they got two or three years previous, which is immensely impractical in a business landscape that requires constant innovation and change.
By offering CIOs access to a self-service portal, they can also have complete visibility and control over their IT estate. They can freely and flexibly buy, use and manage the resources they require to meet current business expectations and demands. ‘Pay for what you consume pricing’ enables the CIO to flex subscriptions up and down, add new technologies and capabilities, or take them away as and when required.
In Summary: Differentiation is Key
To compete in the current market, MSPs must differentiate their services. Automating the customer life-cycle frees up MSPs’ time and resources to do this.
A growing number of MSPs are choosing to build their expertise across a particular sector to become recognized and trusted leaders. MSPs are also beating traditional providers by offering customers the option to self-serve and only pay for what they consume. By giving customers this flexibility MSPs can significantly boost their customer satisfaction and retention rates. Customers particularly delight in knowing that none of the technology they buy goes to waste.
You might also be interested in reading: Why Empower Your Customers to Self-serve?
Alternatively you can read our Cloud Billing eBook
