MSPs Still Optimizing Their Models

*Editor's Note: This is the eighth of 10 installments of our 5 Hot-Button Issues series, in which we spotlight five things solution providers should keep an eye on over the coming year in various IT and channel categories.

/**/ /**/

Managed services certainly aren't a new idea, but it's fair to say that the industry is still in the early stages of learning how to perfect and optimize the MSP model.

New ways of offering managed services are colliding with the challenge of financing them. MSPs also are still discovering ways to cut costs, improve billing and reduce the number of overlapping MSP tools.

Gather several MSPs together for a chat, and you would likely hear talk about the following five issues.

1. Hardware-As-A-Service
If done right, the benefits of offering hardware-as-a-service (HaaS) far outweigh the risks, said former MSP Ramsey Dellinger, now president of MSP on Demand, a HaaS financing company in Hickory, N.C.

Sponsored post

Given the proper financing, factoring hardware into an MSP contract can further strengthen customer retention by giving MSPs complete control-- or even ownership -- of a customer's hardware, according to Dellinger.

In fact, MSPs that finance in a way that lets them retain ownership of hardware purchased for a customer yield a mutually agreed-upon form of customer lock-in that can extend an MSP contract indefinitely, because of the high cost that a customer would have to pay to buy back hardware purchased for them. This level of HaaS is the final frontier for MSPs.

2. Surveillance
Remotely managed surveillance services are such a logical extension of managed network systems that Darrin Lipscomb, president of Avrio Group, a solution provider in Salisbury, Md., can't believe more MSPs don't add managed surveillance offerings to their service menu.

"It's a huge growth market, growing at a clip of about a 90 percent compound annual growth," Lipscomb said.

Video surveillance, motion detection, remote-access control, temperature monitoring and HVAC control have entered the realm of IP-based technology, which dovetails into popular MSP platforms, he added. That makes managed surveillance a potentially lucrative add-on for MSPs.

3. The Microsoft Factor
Here's something that some popular MSP platform vendors would prefer MSPs not to know: Microsoft offers many MSP-ready utilities that MSPs don't need to buy a second time from a third-party MSP platform vendor. For example, MSP Schema Networks uses OpManager MSP 6002, an MSP monitoring platform from AdventNet, said Scott Weaver, president of Costa Mesa, Calif.-based Schema. Rival monitoring solutions may offer certain features not found in OpManager MSP 6002, such as patch management, but it's not necessary to pay a second time for a tool already found in Windows, he said. Instead, he opts for Microsoft's remote patch-management utility.

/**/ /**/

4. Professional Services Automation
Professional services automation (PSA) is the next logical step for the plethora of VARs now adding MSP platforms. PSA tools track costs and streamline field-service engagements, making them ideal for MSPs whose long-term revenue accrual models leave little room for dollars to slip through the cracks, according to PSA vendors.

Amy Luby, CEO of Mobitech, an Omaha, Neb.-based MSP, said her company doubled its service revenue by using Autotask's hosted PSA product. The opportunity for PSA vendors is enormous because the pool of new MSPs is growing daily, she noted.

"It's really anyone's game right now," Luby said of PSA vendors in the MSP market. But watch out: Integration of PSA platforms to back-end accounting systems like QuickBooks, Microsoft and Sage Software can be a headache, industry players said.

5. Software-As-A-Service
Ask David Tapper, IDC's research director for the IT Outsourcing and Utility Services (ITOUS) research program, what he thinks an MSP is, and there's a good chance you'll hear words like Google and Yahoo.

For small and midsize businesses, the perfection of secure, hosted, managed Web-based applications holds the promise of being able to leave the computer room in the cloud and take care of all business through a browser. Yet that's not good news for MSPs that make their money shepherding their clients' on-site networks.

Even Gavin Garbutt, president and CEO of MSP platform vendor N-able Technologies, agreed that when customers can really begin to run their businesses using nothing but a browser and a series of Web-based applications, the end game for MSPs may be nearer than once thought.