The future success of MSPs depends on their ability to resolve the prevailing 'analysis-paralysis' paradox, according to speakers at this year's Managed Services and Hosting Summit (staged by IT Europa, 17th September at London's Bishopsgate).
It could be strongly argued that the managed services environment is maturing nicely, but ironically, the organic nature of managed services could also render it locked in a near-permanent status quo, never developing to its full potential. At one end of the spectrum a stream of stimulating new entrants and technology innovations will refresh the traditional IT industry anew, but on the other hand, customer inertia will stunt an industry that perforce cannot realise its full capacity for growth. Therein lies the paradox: Customers are holding back from making buying decisions because of the pace of change, a condition SolidFire's CEO Dave Wright calls 'analysis-paralysis'.
Changes in customer buying behaviours are influencing the development of emerging managed services providers as well as more established ones. Therefore the industry must reconsider its sales approach and customer engagement processes if it is to achieve its full potential. MSPs need to be smarter at understanding the technology needs of end users, as well as knowing how the different departments within an organisation use technology.
In a keynote address to delegates, Mark Paine (pictured), Research Director at Gartner, underlined these factors and cited research that illustrated the shift away from traditional selling methods like direct telesales towards engagement with a broader range of buyers who are more informed about the options available to them. 'Knowledge is a dangerous thing', and selling to such customers can be a challenge with 45 per cent of IT spend already decentralised.
The 'empowerment' of end users could be interpreted as a baby step towards disintermediation, but the opposite is true, with fears over the possible commoditisation of the sector allayed by David Bellini, President of ConnectWise, who has been selling managed services for 25 years. He boldly claimed a premium over other service providers because his people are 'better', they can resolve issues quickly and the solutions he provides are generally 'more reliable'. "The commoditisation scare resurfaces every few years and we've seen it off every time," he stated. "Standing your ground as a MSP depends on improved management within the company. Everything has a ticket, including people."
The fast-changing and rising expectations of customers are a key point of difference, believes Bellini. In such a fast moving industry a new buzzword could within a year become mainstream language. Millennials are helping to catalyse the acceptance of new phrases into everyday speech. They expect always-on comms, constant innovation and are less keen on face-to-face engagement. They're even turning against voice and phone communication. As customers, millennials have different demands on MSPs compared to earlier generations, yet MSPs must still cater for the expectations of more traditional users.
The one common factor that bridges the generation gap is customer service. Mark Banfield, VP of International at Autotask, cited research undertaken by the company that underscores the importance of QoS, delivering on time, sticking to budget and specification, as well building a close working relationship with customers who want solid advice and a single point of contact. "Price should not become an issue if you get these things right," he added. "This works for us. We are absolutely not the cheapest in the market, but we obsess about the customer experience."
The go-to-market philosophy advanced by Banfield is a proven antidote to the 'analysis-paralysis' scenario identified by SolidFire's CEO Dave Wright, who also affirmed that differentiation through good service is key. However, promoting stand-out attributes can be problematic. "In many cases customers can't identify differentiators so they go with familiar brands," he said. "Many MSPs are struggling to stand out and this can limit their success."
The Managed Services and Hosting Summit identified the primary determining factors that are likely to shape the future look and survivability of MSPs, whose longevity cannot be separated from their ability to unlock the status quo while keeping in touch with a traditional base. Their priority is to action a new approach to customer engagement that reflects changes in end user buying behaviours. Just as important is having the capacity to differentiate. This can be achieved through outstanding consultancy, faultless project delivery and impeccable after-sales service. None of this is rocket science, but turning the obvious into actionable strategy remains a challenge and until achieved the 'analysis-paralysis' paradox will remain unresolved.