7 Post-Pandemic MSP Trends You Need To Know About

‘Our clients have now been forced into that future that we wanted them to get to, but we probably just got a five-year advancement on where our clients would have ended up, because they were forced to find out it‘s possible,’ says TrueIT CEO Zac Paulson.

The coronavirus (COVID-19) has increased customers’ reliance on managed services providers, and the post-pandemic outlook sees MSPs continuing to play a more in-depth and longer-term role in their clients’ IT decision-making, according to a panel discussion during The Channel Company’s XChange+ Virtual Experience today.

“The MSP now has changed in terms of yes, you do the support, you do the IT services and you do security endpoints, but now you‘re really part of that conversation where you’re talking about what the long-term technology roadmap is for that client,” said Marcial Velez, CEO of New York City-based Xperteks, a managed IT services provider.

Customers woke up and realized the true value that MSPs provide in a partnership.

Velez, ProBleu IT vice president of sales Craig Hickman and TrueIT CEO Zac Paulson provided a glimpse of what the post-pandemic MSP and MSP revenue will look like, the conversations that MSPs will have with customers and who those customers will be going forward. They weighed in on how MSPs’ access to talent is expected to change and whether the industry will see consolidation among MSPs or spawn new entrants.

The trio also discussed what products and services are selling well in a time where customers have been forced to close their offices and run their businesses remotely, and how the pandemic is an opportunity for MSPs to reexamine their costs from top to bottom, including the costs of supporting certain vendors.

Here’s a look at what they had to say during the question-and-answer webinar, “NexGen: Key Services & Tech Driving MSP Growth,” which is part of The Channel Company’s thought leadership series featuring board members, subject matter experts and peer perspectives.

[Editor’s Note: To attend the virtual event or view sessions on demand, visit the XChange+ registration page.]

The Post-Pandemic MSP

When the pandemic forced the closure of businesses in New York City, many businesses that thought they had all their computing needs covered for working from home actually found themselves unprepared, according to Velez, whose company started as an Apple/PC MSP and grew into cybersecurity and cloud management.

“Now, as an MSP…we‘re helping guide them through their new technology roadmap to say…this is not as temporary as they originally thought,” Velez said. “Some of the companies that we talk to now are looking at saying maybe we’re not going to renew our leases, and (we’ll) stay remote for a longer period of time. So how do you invest the savings that they have on rent to their cloud infrastructure?”

That means Xperteks now is talking to customers about their long-term technology roadmaps, according to Velez.

“That‘s the fundamental change that’s happening right now,” he said.

That’s prompted Xperteks to look at its own business and analyze how its customer tickets and behavior have changed, and how the company talks to its customers.

“Everybody‘s really nice to us now, because they’re really relying on their technology,” Velez said. “Before, it was like, oh, they’re calling us with problems, and we’re having to resolve them, and yes, we do that. Nut now they’re more like, ’So Marcial, how are we going to continue this?’ Now we’re in those kinds of conversations.”

Hickman also has seen customers relying on ProBleu IT for more services.

“What has become more prevalent is they‘re now looking at all their bills and all their services, and I’m looking at more than just the IT scope now,” said Hickman, whose company is a Bloomington, Ind.-based MSP specializing in building and supporting IT infrastructure for small and medium businesses. “I‘m actually talking to and helping businesses with business decisions in regard to how they are spending their funds on various different aspects of how they run their company.”

That includes how those companies are you going to keep their various systems up and running while working from home.

“There‘s a lot of little things that come up that expound into large things that now have to be taken as a whole,” Hickman said. “It’s definitely driving us in a different direction than we originally had planned as a company. Now we’re more valuable in the long run than we were previously.”

TrueIT, a Fargo, N.D.-based MSP that also specializes in enterprise resource planning, customer relationship management (CRM) and software development, is benefiting from its cloud-centric approach, according to Paulson.

“With the big push in (Microsoft) Dynamics, we‘re seeing people that traditionally would have had on-premise accounting software or on-premise CRMs moving that to the cloud, and I think that’s going to change for the future,” Paulson said. “I think we’re going to see more and more clients that are saying, ’I want to work from anywhere. I want to work from home.’ Our clients have now been forced into that future that we wanted them to get to, but we probably just got a five-year advancement on where our clients would have ended up, because they were forced to find out it’s possible.”

If TrueIT had tried to sell apprehensive clients on moving to the cloud or a work-from-anywhere business model, they often were met with skepticism in the past, according to Paulson.

“They were just forced into seeing it‘s possible, and now here we are,” he said. “Some states are opening up, some states are still locked down, and everything is possible. My hope, my dream, is that everybody starts to work the way we do, where you go to a conference, and you don’t need to turn on your ‘out of office,’ because you’re just as present there as you were if you were sitting down the hall.”

The Customer Conversation

The biggest thing that’s changed is how MSPs cross that “trust bridge” now with customers, according to Velez.

“The face-to-face meetings that we were accustomed to as MSPs were always a good way to establish that trust,” he said. “Now, that‘s no longer the case. Zoom and video conferencing is actually now okay.”

MSPs can use and demonstrate the tools that they’re trying to sell as part of their virtual sales pitches and customer conversations.

“Go into (Microsoft) Teams, do a collaboration,” Velez said. “Jump online and do some live metrics and see how they can utilize all these different tools as you are talking to them about the things that you‘re doing as a company. It changes the conversation as to how you can talk to their employees, or how they can talk to their employees, and see how they can be more productive and effective in this work-from-home environment.”

Customers that previously thought of the cloud as simply providing access to their email and files, now have to look at how they can use it to interact, use a whiteboard and collaborate on projects.

“They‘re starting to look at software that enable them to do that,” Velez said. “Since IT is now part of the business decision, we’re there to guide (them) to really put together a technology plan for them, so they can now have more efficient employees moving forward. It an exciting time for us as an MSP.”

Customer Prospecting

How do you determine who the perfect customer is in this environment? It’s not all that easy. But there are ways to find out.

You‘re looking for the customer that if this (pandemic) were to occur again, that they can easily transition and work without having a slowdown in the workforce and moving forward,” Hickman said. “And while that customer exists, it is difficult to determine which one of those can do that.”

A hospitality company is not likely to be a good candidate, but any company that’s doing things such as software development or has remote workers that can produce saleable products are great candidates, according to Hickman.

“It’s looking for the customers that are in the service industry of some type that have the ease of working as a group remotely, and that could be financial, that could be accounting,” he said. “That could be anything that as a group, while they work better together in an office setting, you can configure them to be able to work remotely and safely and not have to worry so much about a pandemic problem when it does hit.”

MSPs have insight into how certain industries are faring, because they often work with many types of customers.

“You can easily look at your client base and determine what‘s working and what is not working, and who was hit hard, who was not, and who’s exploding, and who’s in the downturn,” Hickman said. “We’ve had a few customers that actually had to close their doors, but we’ve had some that are just hiring and buying just like crazy.”

MSPs have to expect the best, but also plan for the worst, according to Paulson.

“This is going to happen again in some way, shape or form, whether it‘s a localized catastrophe or whether it’s a national one or worldwide one like we’re going through now,” he said. “As MSPs, we just have to look at what did well during this time frame and what did poorly. With the (Microsoft) Dynamics consulting, we do some of the restaurant chains, and they were hit very hard. Some of them pivoted well to the takeout and those types of things, but many of them had cashflow issues. They had to lay off staff and, coming back, we’re finding, is not very easy at all. But then there were other industries like trucking that did amazing.”

While Paulson is worried about diving in too deep with retail, real estate and education customers – industries dramatically affected by the coronavirus pandemic – he said the idea that education can now be delivered through technology “may be a big shift for us.”

“I think we can come in and assist,” he said.

stack of one hundred dollars notes on dollars background

stack of one hundred dollars notes on dollars background

What MSPs Are Selling

Security “blew up,” because companies suddenly need to protect new endpoints, Hickman said.

“A lot of people have desktops, and they ended up going home and using their personal machine,” he said. “How did they access the stuff remotely quickly? That became a priority, and that was a lot of money coming in…getting that all set up and now locking that all down.”

Companies also had to deal with setting up new phone systems.

“There were a lot of little things but...it all adds up to a lot, when you put all the pieces together,” Hickman said. “And...once a client typically purchases something of this value, it doesn‘t go away. It’s sticky in a way, because they like it, and they don’t like to get rid of it. So don’t think that it’s a one-off or it’s going to go away in the future.”

Xperteks is focused on helping clients move to the cloud.

“That‘s really what’s working for us, because it’s not just let’s just move to the cloud,” Velez said. “It’s the different components of a business that move to the cloud in different phases. (The pandemic) exposed all the legacy equipment that the business had that they didn’t pay attention to, because ’if it ain’t broke, why fix it’?”

A lot of MSPs’ work is focused on education, according to Velez.

“It’s almost happening again where we have to educate our clients about what an MSP was,” Velez said. “Now we‘re educating them how to function right now in this world with an MSP and what a cloud infrastructure looks like for real.”

Not simply approaching customers with sales pitches is crucial, according to Velez.

“Right now, it‘s about how can you help, because IT has always been something that’s been on the middle to the bottom of the of the to-do list for a lot of companies, and they have so many more things that they’re worried about right now,” he said. “So going to your clients and just calling them and saying, ’Hey, how are you doing? Is everything okay? How is it that we can help?’ That’s what really works, because all of a sudden they’re like, ‘Hey, how are you doing?’ Now you’re just not having a conversation about technology. Just keep that education going and just keep it human. That’s what works the best for us.”

Accessing Better Talent

Paulson hasn’t seen talent available at a lower cost, because the technology market hasn’t been hard hit by unemployment, but the pandemic has warmed him to the idea of having workers across the country, he said.

“With the IT services, the infrastructure services, I think in my mind I always put it as a local or regional position,” Paulson said. “That‘s changed now. We can have somebody anywhere in the country, and we can pick up talent and collaborate with another MSP as well.”

Paulson believes the uncertainty around the pandemic has more people holding onto their current jobs now.

“They‘re not as willing to move,” he said. “That’s kind of nice for us IT providers. I’m sure we’ve all been hit with that turnover, where it’s easy for them to move. I also think though it’s maybe made us more cognizant of how much we have to work to keep our people because of the pain…when they do leave.”

Analyzing Costs During The Pandemic

MSPs are looking at the pandemic as an opportune time to analyze their profit and loss statements and the costs of supporting certain vendors and purchases.

MSPs should be analyzing their businesses in terms of their tool sets, what their charging for them and whether they bring value to their companies, along with what’s relevant now and will be in the future, according to Velez.

“The idea now is also looking for new tools that are now going to make your team more effective and more proactive…because you‘re not able to go on site and see things anymore,” he said. “There are certain things that you look at from a cost perspective that you may not need in terms of services anymore. And now you’re saying to yourself, ‘Hey, even though they were a good partner, I can now get that same-value tool for half off.’ Now’s the time to do that.”

It‘s a buyer’s market right now, according to Hickman.

“We are in the process of evaluating all systems,” he said. “I‘ve been in one system for 12 years. It works great, but there’s obviously better powerful tools out there. Whatever can make my employees work more efficiently, that’s my goal.”

Prior to COVID, when the economy was booming, there was a point where MSPs just continued to buy tools, Paulson said.

“The market was profitable enough that you just added tools,” he said. “That was even a sales pitch some of the vendors said: ‘Just add it, it’ll add value to your clients.’ We didn’t even increase prices. Now, as we’re looking at costs, it was crazy. So now we’re kind of looking at it as, well, did that pan out? Did we get the return on investment?”

MSPs have a good pulse on what’s happening to their clients during the pandemic, and they know that their own revenue is potentially at risk.

“And so we‘re going to take that time to look at our costs and not necessarily try to ratchet up the bottom line, but protect that bottom line, because we know that we can’t be in business tomorrow if we don’t,” Paulson said.

The Prospect Of Industry Consolidation

Will COVID-19 force MSP consolidation or will the pandemic see the birth of some new MSPs? Velez sees both happening, and MSPs will be competing on a national level.

“Geographic borders don’t matter,” he said. “It‘s the main reason why we call ourselves a master technology service provider, because it’s not just us as a team of experts. It’s also my network of experts that either are MSPs or specialized in different areas. But we are together going out for business, and we’re managing the relationship. That’s what’s really changed.”