Information Technology, Small Business, Small Business CIO

The Future of Managed Services Providers (MSP’s)

Managed Services Providers (MSP’s) have been around the IT space for years. Most small and medium organizations have experience have experience working with MSP’s in IT, finance, HR and other areas of the business.

The role of the MSP is an important one in the small and medium business (SMB) space. An MSP provides the ability for a small or medium business to offload those pieces of their business that aren’t driving value or competitive advantage. For example, a non-profit that focuses on delivering meals to the elderly should – in most cases – hire a managed services provider to manage the IT for the organization. IT isn’t a key driver of value of this organization and should be outsourced to an MSP.

In order to continue to drive value as a trusted business partner, MSP’s have needed to stay on the forefront of technologies.  Over the last few years, the MSP’s that have thrived have been those that have adopted the cloud as a way to deliver more value to their clients. The next generation MSP understand the cloud, social and mobile to help clients run and grow their business.

Additionally, those MSP’s that have been most successful have moved away from solely focusing on delivering “IT” to their clients and have begun helping drive business solutions. This is, in fact, the same thing that the good internal IT groups have done over the years – they’ve stopped focusing on delivering “technology” and started delivering solutions that the business needs.

Timothy Tsao hits this pretty well in an article titled What does a “next generation” MSP look like? How does it act? where he writes on this exact topic.  In that article, Timothy writes:

The next-generation MSP is business-focused, not IT focused. This means: in order to counter MSP commoditization, a next-gen MSP differentiates itself and understands how to sell the front office: the CMO, CFO, the procurement officer, the supply-chain officer. These are people who have traditionally dabbled in ERP. They’re increasingly becoming part of the conversation, so the successful next-gen MSP must have a business mindset in terms of how it sells. In other words, it’s about numbers: translating the benefits of what the customer gains into specific dollar amounts.

Emphasis mine.

Whether an MSP, an internal IT group or a consultant, the way to differentiate yourself today and in the future is to be able to talk about how your services can help the business rather than simply that you can ‘manage IT’ for their clients.

The future of the MSP looks great if they can move away from providing just IT services and move toward providing provide business value.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.

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About Eric D. Brown, D.Sc.

Eric D. Brown, D.Sc. is a data scientist, technology consultant and entrepreneur with an interest in using data and technology to solve problems. When not building cool things, Eric can be found outside with his camera(s) taking photographs of landscapes, nature and wildlife.
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10 years ago

Based on my experience tand that of many others I have worked with through the years. outsourcing to low wage countries is a big failure. When SLAs are not met and cost rise due to inexperienced MSP personnel who rotate projects every 18 months, this model becomes more expensive in the long run for customers. Investors love it when another round of layoffs are announced for American and European jobs going to India and China but, it’s nothing more than smoke and mirrors because the company is losing client account after client account.