AchieveUnite recently sat down with Rob Rae, Senior Vice President of Business Development at Datto Inc., to discuss the role of MSPs, and their ever-increasing relevance across the market, from SMB to enterprise. In this blog, we explore the rise of the MSP, the wide-reaching appeal of MSPs, and who writes the rules.
The Rise of the MSP
In the 1990s, self-proclaimed computer nerds spent countless hours playing with and learning every nuanced capability of their shiny new machines. Young, eager, and ready to monetize their wealth of self-taught knowledge, many of them leaped to open a local computer repair shop. Rob Rae, SVP of Business Development at Datto, reminisces, “It’s a pretty classic story. One friend asks, ‘can you fix my computer?’ And then all of a sudden, all of your friends are lined up and you’re now running a computer fix shop. The word continues to spread and then your small shop ultimately evolves into managed services.” And here, the MSP was born, but we failed to recognize it as such. By definition, a managed service provider is an expert in highly specialized business outcomes, an aggregator of solutions, all valued in monthly recurring revenue.
The Wide-Reaching Appeal of the MSP
Why are an increasing number of organizations turning to MSPs? The simple answer is simplicity. The rise of the MSP is based on the fact that MSPs are rapidly inventing easy buttons. This is attractive to both SMBs and Enterprise end-users. Rae observed: “MSPs are great at technology. They’re great at delivering technology. They’re great at servicing technology.”
Consider larger organizations – should their IT department be tasked with keeping the lights on or innovation? As technology becomes more complicated larger organizations are moving towards a model where the MSP keeps the lights on, and the IT department is restructured to focus on innovations in customer experience. Rather than staffing expensive resources such as DB Admins, firms are freeing up resources to staff these more customer-focused outcome roles. This shift is due to the explosion of cloud, elasticity, and flexibility requirements bestowed upon the world in March 2020. Rae added: “It was a hard pivot away from the old school way of doing things, the pandemic really accelerated that need for digital transformation, and MSPs were ready.”
The MSP becomes the “cloud” on which firms are standardized, and no longer exists a need to fight the internal battle of IT asset lifecycle management. Who cares about the hardware anyway? Why should anyone (except an MSP) care about what CPU the latest 2U rack server has or the IOPS and latency potential of a storage array? This point becomes especially relevant given the hyper-focused verticalization of MSPs. Pick any six-digit NAICS code, and you will likely find an MSP with expertise. Someone that specializes in 523210: securities brokerage banking services? There’s an MSP for that. This deep level of industry expertise ensures that the MSP understands the needs of the business and can act as an innovation partner by first vetting then bringing forth new business accelerating technology.
For SMBs, MSPs are even more appealing and can add tremendous value. SMBs just don’t have the luxury of the deep technical expertise needed to support every possible business need – from digital transformation and modernization to security and enabling the new WFH employee base. MSPs provide a great value to SMBs and practically own that market.
Who Writes the Rules
Today, MSPs, not the vendors, are the ones who write the rules. “Where there’s a threat, there’s also opportunity” explains Rae. With this paradigm shift underway, vendors must adopt, support, and engage with these MSPs. Their success comes down to strategic, joint planning with MSPs, and alignment of key stakeholders. Bringing a programmatic approach to the MSP world is a misnomer. You can no longer write the rules of the game and expect an MSP to simply sign-up.
There is sufficient overlap across all major technology categories – compute, storage, security, and networking. With a plurality of options available to MSPs, approaching the MSP with a pre-conceived framework on “how to partner” is risky. Alternately, consulting with the MSP to truly understand their unique needs and GTM to help shape a vendor’s program is the new standard. Mature MSPs sell business outcomes, profit from the customer experience, not the brands they sell, and are gaining a significant power advantage.
Vendor’s Value
If you speak with any MSP, you will quickly understand the depths of their technical proficiency. Beyond what most SMBs and IT Departments can offer, MSPs are great at service and delivering technology. Where vendor’s can really help MSPs is not on the technical side, but on the sales and marketing side. “MSPs, while amazing in technology, typically struggle when it comes to marketing and selling their amazing services” adds Rae. While vendors usually have deep expertise in these areas, it’s a great point of collaboration and value-add for both sides.
As vendors engage MSPs, programs should over-invest in developing these skills at the MSP. Co-selling, MDF-type investments, and transformational business training are all great ideas to help your MSPs grow and continue to be the powerhouse they are.
Role of Influencers
Vendor’s looking to get to the right MSPs will value from incorporating Influencers into their ecosystem. Many times, MSPs are connected to influencers in this space and migrate to solutions that are vetted by these influencers. Rob added, “These guys need to see you over and over and over again.” Taking the time to seek these influencers out – whether you are at an event or on social media – will pay off with the instant credibility you get with the right influencer. Rae shared, “What happens is that as soon as you get one of those influencers buying your technology, the rest will follow. It’s very much a sponsorship.”
Conclusion
With the rise of the MSP, vendors are no longer writing the rules. With this evolving dynamic, it’s time for vendors to recognize the value-add of supporting MSPs and develop a strategy that supports the long-term growth and activities of their MSPs.
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