You may be among those OTRs looking to managed IT services for new growth in your business – and the opportunity is certainly there: the annual growth of the SMB managed IT services market is predicted to exceed 20% over the next five years. And the vast majority of managed service provider (MSP) respondents to the 2016 Kaseya MSP Pricing Survey also report strong growth: some 23% respondents state that their three-year average annual monthly recurring revenue (MRR) growth is over 20%, with an additional 30% reporting an average annual MMR growth for that same period of 11%-20%.
Of course this growth has not gone unnoticed. This is a competitive market after all – with many established MSPs.
But as an OTR, you are perhaps better-placed than you think to move into the managed IT services space:
- You have existing relationships with SMB clients, who may already be looking to partner for new IT services from a single, trusted supplier. These could be your first managed IT services customers.
- You have already proved to clients that you can add value through services. Many SMBs buy office technology products from resellers rather than directly from the OEMs because of the ‘bundled-in’ expertise and post-sales support they gain.
- You may already have one foot on the managed IT services ladder. If you are offering managed print services, you have valuable experience in delivering long-term services for a recurring fee. While managed IT services are a different ball-park, your clients have been exposed to and should be comfortable with the ‘managed IT’ business model – and the different type of billing involved.
- You have excellent sales skills. As an OTR, you will have a well-trained sales force, staffed by account representatives who understand the importance of developing long-term customer relationships – as well as being able to identify and bring on board new business.
Despite these strengths, you may still be worried about making the transition to managed IT services – particularly as regards the cost of entry; the skills and resources needed to support the new business model; and the more onerous responsibility of delivering a broader range of more complex IT services to the same high standards that your customers have experienced from you in the past.
And it goes without saying that you can’t become an MSP overnight. You need time to develop and market the new business model – and to acquire the skilled resources necessary to deliver against it.
There are basically three routes to acquiring these resources:
- Organic growth: you acquire the new skills and set up the infrastructure required in-house, from scratch. This is probably the most difficult route, requiring capital expenditure and time – both in considerable quantities. You also risk ‘missing the boat’ with your customers who may get tired of waiting for the new services to be realised.
- Acquisition: you acquire one or more established MSPs to provide an immediate, experienced footprint in the market and ready access to the sales and technical skills required. This being a high-cost route, it has typically been the preserve of the largest companies, such as Xerox, Ricoh and Konica Minolta. It can be risky too – if there is not a good ‘fit’ between the companies involved, for example. Divestment can be expensive.
- Partnering: you contract with an experienced partner whose expertise and scalable resources can bridge the gap while you develop your own resources, by providing rapid access to experienced technicians and the necessary infrastructure. This option means early deliverables for your customers and fixed, predictable costs for you – rather than high levels of capital investment.
For most OTRs, partnering offers the fastest, least risky and most cost-effective route into managed IT services.
This is where Inbay can help.
With a growing team of skilled support staff responsible for an established base of MSP partners and thousands of users and devices globally, we have the scale, resources and experience you need to help you cross that chasm and add the most commonly required managed IT services to your offering. That is – monitoring and management of both virtual and physical devices and cloud services and first line end-user technical support, on a 24/7, in-hours or out-of-hours basis.
We know how to help our MSP partners to run their managed services business more successfully – and more profitably.
1Managing Director and Co-founder of The Chasm Group, LLC
2Source: Market and Markets, Managed Services Market – Market Forecast and Analysis