Originally presented at Accelerate 2020 by Neural Impact ↗
The economic aftershocks of COVID-19 will be felt for years. Most businesses have spent the pandemic struggling through depressed markets. A fortunate few sectors saw near-term gains ↗. But one thing every business had in common this past year was the need to make major, rapid changes to how they operate.
Established managed service providers (MSPs), service integrators and anyone else looking to become a cloud provider needs to be comfortable with change, now more than ever. Yes, that means supporting their customers’ change. However, the best-positioned cloud providers in the post-pandemic economy ↗ will be those that lead by example and transform the way they do business.
Understand the latest managed service market disruptors
Disruption and transformation often go hand in hand. Some current disruptors are obvious; we haven’t been able to meet face-to-face with customers and we can’t go on-site to work on various projects. But there are other, more subtle challenges that MSPs must also now deal with, such as:
- Widespread cloud adoption: Cloud services will be mainstay MSP offerings for years to come, but they’re only going to differentiate providers from their competition for so long. The day is fast approaching when cloud services will be an essential service every MSP is expected to offer. When that day comes, what will set you apart?
- IT decision makers are now business-side, not IT-side: Enterprises have long leveraged IT as a strategic business asset. Cost and other barriers have since fallen to the point where SMBs think about IT in the same way. This has led to more and more decisions about IT being made by business leaders instead of just IT managers.
- Buyers are conserving capital: In tight markets, corporate buyers want to keep capital budgets low. They only want to spend on technology for business impact services that help them keep the lights on. For example, by setting up remote work solutions to keep everyone coordinated and communicating from home offices.
- Immediate ROI is important for clients on tight budgets: Another consequence of buyers tightening budgets is that some services with less tangible returns, like security, become harder sells. Those buyers are looking for an immediate return on investment to make a purchase worthwhile from their perspective.
So—how do MSPs adapt to or embrace these forces of disruption? Follow this seven-step framework for change.
7-level framework for change to become a cloud provider
Every MSP should take a good look at what the near and mid-term future holds in their respective markets. Just because a service offering has shown good returns for the last ten, even 20 years doesn’t mean it’s going to work in the next five. Change is hard, but now it’s also necessary.
So how should an MSP go about transforming their business? In our MBA for MSPs ↗ program, we explore a seven-level framework for supporting change. Each layer in this framework acts as the foundation on which the next is built. Let’s go through them all!
1. Finance: Develop recurring revenue
Shift your income streams from project-based work to monthly recurring revenue ↗. This better aligns your MSP business with what customers want to do in the current economic climate. They’re looking to shift from cap-ex to op-ex spending as much as possible.
When you become a cloud provider, those MRR targets will be easier to hit. Cloud computing is an inherently service-oriented technology.
2. People: Expand domain expertise
Technical expertise will always be important. You don’t want to lose that. However, MSPs should also look to expand their available domain expertise to build on their technical success.
Those business decision-makers now in charge of IT purchasing are looking for partners that understand their workflows, concerns and business models. Having domain expertise in-house helps MSPs craft service offerings that better align with those customer needs.
3. Structure: Optimize systems, processes and operations
Build and optimize the systems within which your MSP business operates. Invest in customer relationship management (CRM) tools to track your existing relationships, leads and opportunities. Also, optimize your enterprise resource planning (ERP). Track things such as invoicing, cash flow and revenue margins.
The goal of implementing these systems is to create more and better customer interactions. Make the marketing, financial and other administrative tasks that come with running an MSP business as streamlined as possible so you can focus on what matters most: working with the customer.
4. Delivery: Get closer to outcomes
MSPs need to figure out how to deliver the same outcomes customers expected when we could go on-site with them, even though that’s often no longer an option under the current circumstances. Consider what tools might support this goal. Online learning platforms, self-paced training (using QuickHelp, for example) and knowledge bases are all good options.
5. Products and services: Meet modern business needs
We need to consider new ways to package offers, not just resell products. Help clients build a modern workplace ↗. Create service packages that clients want to keep for the long term, not drop when a short term business goal has been achieved.
To do that, focus on business outcomes rather than individual technical problems. Tailor your service offerings to achieve those outcomes. For example, instead of selling support for sales software, think about creating a lead management solution that includes CRMaaS and industry-specific database customization.
6. Customer service: Help clients see ROI faster
Develop a customer service model that gets customers what they want faster and more often. Look for ways to drive up the lifetime value of each of your customer relationships. Get them to see the ROI they want faster, increase their satisfaction, and you’re more likely to keep them in your monthly recurring revenue stream.
7. Marketing: Let smart digital solutions do the work for you
Move beyond hunting for leads or relying on referrals to bring in new business. Create marketing campaigns that do the selling for you.
Digital marketing tools are an excellent way to market smarter. Sherweb partners, for instance, can access a Partner Toolbox filled with templates and ready-made campaigns you can use to bring in new prospects with less effort.
8. Bonus! Sales process: align to customer needs
Once the other layers of your business are in alignment, look for ways to shorten your sales cycles and lower the costs of selling. Understand each customer’s needs and timelines. Package your service offerings in a way that demands as little customization as possible to meet those requirements.
A solid foundation helps you build for the future
To become a cloud provider in today’s climate, you need a business model that helps your customers achieve their desired outcomes faster and easier. One of the best ways to build that business model is by working with a trusted partner like Sherweb. Sherweb can provide technical support, marketing expertise and strategic guidance to help you set your business up for long-term, sustained growth. Join our partner program ↗ to get started!