A supply side view that matters to buyers, too: MSP 1.0 vs. MSP 2.0

ATN-300InsightaaS: Like the InsightaaS site as a whole, ATN is directed at management with an interest in the application of IT to business challenges. A focus on “buy side” rather than “sell side” issues isn’t explicit in any description of the site, but as a practice, we focus primarily on topics that we think will be of interest to CIOs and their management peers, and tend to believe that these perspectives will also be of interest to suppliers of technology.

There are, however, cases where this logic is reversed – where issues that are important to IT suppliers will ‘cross over’ to be of interest to IT buyers as well. Today’s feature, drawn from the website Reframe Your Clients, is one such example. The post deals with the evolution of the “MSP”, or managed service provider, business model. MSPs are one of the most successful segments of the IT channel that supplies and supports technology for most SMBs, and in some cases, for departments within large enterprises as well. MSPs offer advanced service levels at reasonable rates because they are able to supply services to a cluster of clients through remote connections, given them the ability to share the cost of highly skilled professionals across multiple client accounts. MSPs are also notable because the model is well suited to provide a ‘stepping stone’ to cloud provisioning and support; clients of MSPs today have a reasonably high likelihood of having access to sophisticated cloud services tomorrow.

In today’s feature, Denes Purnhauser, president of Reframe Your Clients, walks through some of the key issues in evolving from a “MSP 1.0” business model to a more effective and sustainable “MSP 2.0” approach. From a buyer’s perspective, both the text and context are important. In the text, we see that MSPs should be offering business value and advice rather than being strictly tied to technology issues; they should be consultative rather than ‘pushy’ in their sales approach, and be able to demonstrate rapid time-to-benefit; and as a result of this business focus and consultative approach, an MSP should be able to work directly with business managers, rather than staying focused on IT staff. From a context perspective, it behooves buyers to look for these kinds of suppliers, as they are more likely to be viable partners over the long term than firms with ‘1.0’ business models who may be unable to keep pace with changes in the industry, and consequently, may fade away as suppliers over time.

This type of post, then, serves both the IT user/buyer and IT supplier communities; it comes at its issues from a different perspective, but is still of value to the entire supply/consumption chain.

So the MSP 1.0 is a business model is not even widespread yet, and here is the new 2.0 model already.

I guess you would like to see what the key differentiators between the two models are. The list is referring to an average, but not remarkable MSP 1.0 and MSP 2.0 practice.

We are assuming that the MSP 2.0 model is heavily supported by 7C [editor note: 7C is a management framework]. The differentiations could be simplistic, but our aim is to show the possible limitations, challenges of the MSP 1.0 model, and the opportunities of the MSP 2.0.

You have to understand that MSP 2.0 is not a substitution of the 1.0 model. It is the extension. So you can move your existing 1.0 services forward, but with 2.0 as a companion your existing options are going to be very promising.

Tech value vs. Business value

Giving someone a technology solution is different than giving business value. The technology solution is only a part of the complete solution. If it is ERP, the software is just part of the whole internal processes, interactions etc. If it is an email system, it’s also just part of the whole communication of the company.

The business value of an ERP project to is to drive out the fat of their processes, with automation and streamlining. The business value of the E-mail system is an effective, well-processed, internal and outside communication with limited access in a secure way.

The technology is 30%, the rest is HR, management, controlling etc. In MSP 1.0, usually the MSP only does the technology part of the project. In MSP 2.0, he becomes the leader of these projects and evaluates vendors, does the project management, quality control, and the technology part. This is a big difference in value to the customer…

Read the entire post on the Reframe Your Clients website: Link


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