The Frugal Networker

If you think that your company has what it takes to become a managed service provider (MSP), then you should consider it as a business growth option. Not only can you generate recurring revenue from getting involved in the MSP channel and the “As a Service” business model, but you can also grow your business toward the future. “Remain flexible” and “create strategic partnerships that benefit you and your customers” are the best advice tidbits gleaned from listening to experienced MSP CXOs.

Although not always the case, most businesses that transition into the MSP business do so because they already offer direct managed services to their customers. And those who already provide a service are considering or are working toward providing more services, mostly as a result of customer needs. Many MSP customers or potential MSP customers all report the same three primary pain points:

• A desire to offload infrastructure management
• A need to maintain a predictable technology budget
• A requirement to respond quickly to changing business needs

A managed service provider (MSP) delivers network, application, system and e-management services across a network to multiple enterprises, using a “pay as you go” pricing model. A “pure play” MSP focuses on management services as its core offering. In addition, the MSP market includes offerings from other providers — including application service providers (ASPs), Web hosting companies and network service providers (NSPs) — that supplement their traditional offerings with management services.

A potential MSP needs to be mindful of two specific fears that businesses have when considering offloading their support to a third party: control–or lack thereof and response time. Anyone who’s ever dealt with third party vendors can testify that response is often lackluster and sometimes downright inexcusable.

To alleviate those fears, you have to ask yourself two questions before you decide to become an MSP:

Does your staff possess the desire and ability to respond quickly to customer needs?

Do you plan to allow the customer to exert a moderate amount of control over his or her environment?

If you can’t answer a confident “Yes” to both questions, you need to reconsider your choice to become an MSP.

Having stated that, you can train and motivate your employees and you can make the decision to allow the customer a moderate amount of control. The company that you choose as your upstream partner has a lot to do with how successful you’ll be, so choose carefully and thoughtfully.

You should also consider how you’re going to meet service level agreements (SLAs) with your customers. Regardless of what your contracts state, customers expect 100 percent availability from you. To meet those expectations and SLAs, you have to purchase reliable hardware and software, you have to provide outstanding customer service, you have to backup customer data, and you have to provide monitoring and alerting services. If you fail to provide any one of those major cornerstone services to your customers, your business will likely also fail. Remember the number one rule of customer feedback: If you make a customer happy, that customer might tell one other person, but if you make a customer unhappy, that customer will tell everyone. And these days with rating services, online feedback forums, and social media, your business is only a few negative tweets or one star reviews away from failure.

In the MSP business, customers assume that you have excellent, redundant, unbreakable systems underlying your services, but what they’re really after is a competitive price point and top notch customer service. They also want a fair amount of control over their leased infrastructure. What’s that old saying? Build a better MouSetraP and the world will be a path to your door. Count on it.

If you’re looking to enter the MSP channel and you’re also looking for a partner, check out what IBM can do for you as your upstream partner. IBM supports MSPs with training, technical support, marketing resources, sales resources, and the finest available hardware. Find out how you and IBM can accelerate your business through a valuable strategic partnership.

This post was brought to you by IBM for Midsize Business and opinions are my own. To read more on this topic, visit IBM’s Midsize Insider. Dedicated to providing businesses with expertise, solutions and tools that are specific to small and midsized companies, the Midsize Business program provides businesses with the materials and knowledge they need to become engines of a smarter planet.