The New Year is on its way. As we enter late December and the slower season that brings MSPs a little reprieve from their long, stressful schedules, everyone gets a chance to catch up on past-due projects and finalize renewals. The changeover to 2020 feels a little different than past years.
In addition to its symbolic reference to “perfect vision,” providers are facing a number of new challenges and opportunities that must be addressed in the not too distant future. Why not kick that off that planning process today?
No matter how much success your MSP firm is enjoying, there always seems to be some apprehension about what lies ahead, even if you support high-profit business sectors and your employees possess the most in-demand skills. The unknown presents risk and most MSPs are exceptionally cautious when it comes to gauging market strength and future growth.
Nonetheless, providers have to plan ahead and make good investments. Understanding what business customers will want and need in the coming years is a responsibility every MSP must take seriously if they wish to maintain and grow their operations. Even when economic indicators trend downward, your clients will look to you for sage advice, skilled support, and technological innovation.
Most MSPs (as far as we know) are not psychic. Future planning for your business, as well as your clients’ operations, requires you to pay close attention to market trends, proposed legislation, and a host of economic factors ‒ from a national and world level down to the specific communities you support. No provider can afford to be caught off guard by an issue where all the indicators predicted trouble ahead.
The possible closure of a local manufacturing plant can be as detrimental to your customers and a significant drop in the stock market. It’s impossible to foresee every potential issue that might affect demand for your services. However, MSPs who take notice of industry expert predictions and carefully invest in services offerings that SMBs find useful, including those with a proven business case, will likely find themselves in a better position to succeed.
2020 Channel Predictions
So, where should MSPs focus their efforts and resources in the New Year? Naturally, as is nearly always the case in the traditionally conservative IT channel, none of the biggest trends is new for 2020. However, industry experts expect to see MSPs focusing on some of these topics with a higher sense of urgency in the New Year. Which trends will entice providers to make a shift in their business (or at least get the wheels in motion) in 2020? Five of the most talked-about prospects are:
1. Cybersecurity: from ransomware and phishing to social engineering and supply chain attacks, these threats are gaining momentum in the business community. Organizations are struggling to stay ahead of the security curve and will rely even more on the support of MSPs and MSSPs in 2020 and beyond. Those with extensive expertise in designing, implementing, and monitoring information security systems are in a better position, from both a competitive and client retention perspective. With a little effort, MSPs with strong security practices can expect their sales and profitability to climb substantially in 2020. High growth channel offerings include:
- Penetration testing- this new IT standard requires a high level of cybersecurity expertise (and the associated high salaries), so many providers rely on MSSPs or other specialists to deliver these services.
- 24/7 Advanced Support: data protection is not a part-time job, though MSPs don’t always have the bandwidth to have someone available around-the-clock to handle certain issues. An internal or outsourced SOC (Security Operations Center) will ensure your clients have people and technologies constantly monitoring and analyzing activity on their networks, servers, endpoints, databases, applications, websites, and other systems.
- Secure payment processing: what are you doing to protect the one thing cybercriminals want to access most or all (your clients’ financial resources)? MSPs can not only lock down those systems and minimize risks but drive new revenue streams for their own businesses.
Have you implemented these services internally? Cybersecurity experts consider these the mandatory areas for “eating your own dog food (or drinking your own champagne)” to best protect your end of the supply chain. Securing your own systems protects the “keys to the kingdom” that today’s cybercriminals are increasingly targeting.
2. Cloud/Digital Transformation: The naysayers predicted virtual technologies would be the beginning of the end of the channel. Sure, the MSP community experienced some challenges in the early days of the cloud transformation. Still, most IT pros quickly learned to embrace these platforms because of the business and financial advantages they create for clients and providers. After more than a decade of sales increases, the adoption trends continue to climb and many small businesses rely on MSPs to help them select, procure, implement, integrate, and manage it all. Those new recurring revenue streams help providers fuel their expansion plans and hiring/training efforts.
3. MSP Business Efficiency: doing more with less is crucial for maintaining a healthy competitive posture today. MSPs understand the importance of running a tight ship. In fact, CompTIA’s latest IT Industry Outlook report lists “increasing internal efficiency” as a top-five contributing factor for ensuring positive growth in 2020. Rising labor costs and recruitment difficulties, especially when trying to hire professionals with advanced technical (especially cybersecurity) skills in some areas of the country, are fueling automation and process improvement initiatives. Expect efficiency to remain a common mantra in the partner community in the coming year and beyond.
4. M&A: Those involved in buying and selling IT services firms have been busy this year, including a number of venture capital-funded organizations, and those activities are sure to accelerate in 2020. Few industries are as profitable and undervalued, and many MSP businesses could benefit from an infusion of cash or other resources. It’s the perfect time for potential sellers to tighten their financial controls to fatten the bottom line and strengthen the value of their businesses. Are you preparing for retirement or readying your firm for new investors? Focus on cash flow improvements (get paid faster) and enhancing/lengthening the terms of your clients’ services contracts to increase your MSP’s market value next year.
5. Recurring Revenue Enhancements: which services are you not currently offering that your clients need (or be willing to pay for every month)? In the cloud-first era, most MSPs are missing out on opportunities with their existing customers and finding those “gaps” is often a matter of asking the right questions. What solutions and services are your clients self-procuring or getting from other sources? Some of the more common third-party options include:
- Phone services
- Physical security
- Payment processing
- Printer/MFP management
- Collaboration tools
Your clients may also be paying others for specialized consulting services without notifying the IT team (or you). For example, imagine a sales manager wanting to implement Slack or Teams to improve team communications and contracting with an outside expert to provide implementation and employee training services. While those situations may seem strange to some, those things happen in small businesses (or big businesses, for that matter), and savvy MSPs make sure to educate all decision-makers on their comprehensive services offerings.
Onward and upward
Smart providers constantly assess and strengthen their businesses. The decisions you make and the plans you put into place over the next twelve months will have a prolonged effect on your company’s long-term profitability and potentially its viability.
Periodically re-evaluate your MSP’s practices and portfolio, taking care to identify gaps and potential future growth opportunities. Look for ways to innovate and transform to keep pace with your clients’ shifting priorities, compliance requirements, and competitive environment.
The more you know, the less risk you’ll assume, and the easier it will be to make the best decisions for your clients and your own business. And stay tuned for new opportunities with ConnectBooster in the New Year. In addition to our secure payment platform for MSPs, in 2020, we’ll be rolling out a program to help boost your recurring revenue streams. We can’t wait to ring in the New Year with fantastic new opportunities for our partners!