If you are a regular reader of our newsletter, you would have seen that Channel Dynamics has been working with global not-for-profit channel association CompTIA to establish an ANZ IT Channel “Community” to advance the industry through education, research, networking events and professional certifications.
Last year, CompTIA worked with research firm After Nines Inc to conduct a series of in-depth interviews with management-level professionals responsible for hiring or managing MSPs. While this research was conducted in the US, the similarities between our markets means that the findings provide valuable insights into what our local customers expect from MSPs in 2016 and beyond. The key findings from this research are outlined below:
Cost and ROI are Not Primary Considerations.
Few customers actually perform an ROI analysis on MSP contracts. Cost is a factor, but the customer’s own priorities – and how well the MSP aligns with those priorities – is the chief consideration for selecting an MSP.
In particular, for higher‐margin services, customers especially valued time to market or quality over the pricing conversation. This presents a tremendous opportunity for those partners able to upsell on business knowledge, who understand how to support customers within their existing and/or future workflows.
MSPs Must Now Deliver an Experience.
Consumer apps and customer experience increasingly dominate the IT department’s mindset. That means “Look and Feel” is as important as functionality. Millennials are strongly influencing IT’s direction, but not dominating it. Customers want MSPs that understand views and needs across multiple generations (Millennials, Generation X, Boomers, etc.).
IT management and refresh cycles must now resemble the cloud world. Instead of promoting massive forklift upgrades (like an operating system rollout) every few years, MSPs must provide gradual, continual innovations every month or at least every quarter.
MSPs Must Bring Specific Expertise to the Table.
The customer mindset is extending beyond “managing devices” toward “managing and monetizing information”, from on‐premises to the cloud. Several executives mentioned that MSPs have largely failed to evolve toward that new IT reality.
Of the four big IT trends (cloud, big data, mobile, social), executives say MSPs are performing reasonably well in portions of two areas: Cloud (particularly backup) and mobile (particularly hardware). But customer perceptions suggest MSPs are laggards on big data, mobile apps and business-oriented social media.
Customers are pushing for shorter MSP contract lengths, influenced by no-commitment cloud services that allow customers to cancel IaaS and PaaS engagements with zero notice and zero penalty. Those realities have spilled over into the MSP industry, where customers are starting to question and/or decline contracts that extend beyond one year. Customers aren’t necessarily looking for MSPs that have their own clouds. Instead, they want MSPs to manage workloads in well-known, reputable, third-party clouds.
Three Customer Priorities Are Converging.
Customers are demanding that MSPs go deeper on (1) vertical market SaaS, (2) compliance and (3) security mandates. While there’s still room for basic infrastructure management, generic approaches no longer generate higher-margin fees.
Vertical market SaaS expertise is now a big market differentiator, especially as customers move to the cloud-first mindset. High-profile cyber security incidents have forced customers to seek out MSPs that truly understand the nuances of specific vertical markets and their associated regulations.
Beyond Devices and Data Protection.
Customers want far more from their MSPs than traditional PC, server, mobile device, network and storage management. The next waves are intelligent data management and big data.
The rise of cloud-based analytics and low-cost reporting software is an opportunity for MSPs. Even small businesses now want data integration, management and monetization across multiple systems (web, CRM, mobile, social, etc.)
MSPs must help businesses move far closer to their end-customers via mobile, social and big data applications. As described earlier, MSPs are perceived to be late or missing completely from the big data conversation.
Core Infrastructure Management Remains an Opportunity.
Although basic PC management and network management are mature managed services, there’s an opportunity for MSPs to pursue those opportunities in fast-growth companies. Infrastructure management can include non-traditional projects like end-to-end fibre and other high-performance build-outs.
Customers are seeking guidance as data centres converge (servers, storage, networking) toward the software-defined data centre. In particular, customers want to know if it’s cost effective to re-architect their on-premises data centres for the software-defined world, or to instead transition workloads more quickly to public clouds or off-premises private clouds.
The IT Gatekeeper is Changing.
Although CIOs are still the primary IT Gatekeeper, they increasingly lean on data-aware employees for guidance on overall data gathering, security, privacy and monetization. Consequently, MSPs need to identify the Data Owners.
Interestingly, Marketing and HR are viewed as the most aggressive adopters of cloud applications. Lead generation, marketing and talent management systems are fading from on-premises servers; they’re rapidly going cloud. Finance is viewed as late adopters because of compliance issues, but this is gradually changing because (A) CFOs value predictable costs and (B) numerous financial applications are now proven in the cloud.
Some organizations are hiring chief data officers (CDOs), but that position appears relegated to larger enterprises. As a result, midmarket MSPs can become virtual CDOs that guide CIOs toward proper data policies for information gathering, management, protection and monetization.
Physical Location Remains Important.
Despite the rise of anywhere, anytime cloud and mobile computing, customers for the most part want regional or local MSP support, and face time.
Face time is about listening, not selling. Yes, monthly face-to-face reports and quarterly status gatherings are welcomed, but customers confirm that these meetings are highly valued for near-term problem resolutions and long-term strategic planning.
Winner Takes All.
Multiple MSPs can share an account, but MSPs that offer end-to-end managed services (from on-premises infrastructure to third-party cloud infrastructure) are displacing traditional MSPs that can’t manage cloud workloads.
MSPs focused on the application level are typically considered more highly valued partners. MSPs focused on the infrastructure level are typically considered less strategic.
MSPs that control how customers gather, manage, store, protect and monetize data will earn the closest working relationships with the customer’s c-suite team (CEO, CFO, CIO, CMO, etc).