The cloud is leading many SMBs to completely outsource their IT, and for MSPs who support SMB customers, that’s leading to dwindling business and profitability. It's time for MSPs to assess their company and see if they're ready to offer cloud services.
The cloud is leading many small-to-medium businesses to completely outsource their IT. They are adopting cloud-based storage and backup, as well as software services such as Microsoft Office 365 or Adobe Creative Cloud. For MSPs who support SMB customers, that’s leading to dwindling business and profitability.
Many MSPs are looking for ways to reverse this trend, and are starting to consider how they can capitalize on cloud opportunities. Some are looking to become cloud service providers (CSPs) themselves, providing/hosting a customer's infrastructure. One way to become an effective CSP is to analyze your strengths, weaknesses, opportunities and threats (SWOTs). This enables you to identify the advantages you offer and areas needing improvement, to capitalize on business opportunities and to overcome forces working against them.
The MSP model generally offers these strengths, weaknesses, opportunities and threats:
S – Strengths:
- MSPs are their customers’ IT department, and understand their customers’ needs and challenges.
- SMBs have a significant financial investment in their MSP.
- MSPs use streamlined processes for IT monitoring, management and backup.
W – Weaknesses:
- Most MSPs have little or no experience/expertise in cloud and virtualization technologies.
- Most MSPs lack both the financial resources to pursue new services or a business plan to demonstrate their ROI.
- MSPs may not have a datacenter, or a relationship with one, to host customers’ infrastructure.
O – Opportunities:
- MSPs are in the best position to provide customized services.
- The cloud can lower the entry barrier for new customers and lower costs for themselves.
- Pay-as-you-go models tie customers to long-term monthly service contracts.
T – Threats:
- Cloud services for storage, email, software and computing are replacing MSPs.
- Financial investments to own hardware and maintain a datacenter increase financial risk.
- Customer expectations/demands for uptime and service can be hard to achieve.
What does your SWOT analysis reveal? You should do a SWOT analysis specifically for your business, customers and market. Some of the questions you might explore include:
- What services do I provide? Am I a break/fix shop, system administrator or strategic IT partner?
- Do I have monthly SLAs, or do I bill hourly? How “sticky” are my customers?
- How comfortable are my customers with changes to IT?
- Do my customers understand the concept of the cloud, virtualization or hosted services?
- Have my customers shown interest in hosted services?
- Are my customers and I struggling to keep aging hardware or legacy applications running?
- Are other MSPs in the area offering hosting, virtualization and/or cloud services?
- How large is my staff? Can I provide support for hosted services?
- Are my staff and I knowledgeable about the cloud and virtualization? How can we develop the appropriate expertise?
- Do I have a data center or a relationship with a data center?
Take the next step. Now that you’ve completed your own SWOT analysis, you have a better idea of where you fit into the cloud landscape, what distinguishes you from the competition and what you need to work on. Don’t wait for the CSP market to erode your business. Be proactive in creating a proper cloud offering. Pursue professional development for the business and technical knowledge you need. For example, Zenith Infotech’s MSP to CSP: A Practical Roadmap seminars provide great information about the cloud market and how MSPs can transition to a CSP model. Then develop your plan, partner with good IT solution providers, and get started!
Rich Reiffer is VP of Cloud Practice at Zenith Infotech. Rich has been in the business of technology since the dark ages starting with Burroughs Corp., spending time with Steve Jobs (NeXT) and Ray Noorda (Novell). Rich has been in the VAR channel since the mid 80's with companies like Inacomp and Businessland finally forming his own company, Trivalent, in 1991. After 20 years of building data centers, etc. Rich has come on board with Zenith to head up the Cloud group. Monthly guest blogs such as this one are part of Talkin' Cloud's annual platinum sponsorship.