Inability to balance product resale and services revenue, inability to adjust to a customer-centric approach and inability to align recurring and non-recurring revenues are severely holding back the MSPs. Since 2008 Techaisle has been conducting managed services studies, both demand side within SMB & Midmarket segments and supply-side within the VARs, MSPs, SIs, SPs, Consultants offering managed services. Each year Techaisle (latest report deliverables are here) has been quantifying what separates the successful and unsuccessful managed services channel partners. And there are several data-evinced barriers to entry and success factors. To understand barriers to entry, it is important to first define the characteristics that are important to success as an MSP. There are many but let us discuss three that always percolate to the top:
- The ability to sell services independently from product sales (while maintaining the ability to sell products to customers as well).
- The ability to package and efficiently deliver standardized services to multiple customers, growing by expanding portfolios of discrete services rather than by simply agreeing to address sprawling customer requirements on a ‘one-off’ basis.
- The ability to align internal processes and costs/cash flow with a recurring revenue (rather than transactional) approach to the business.
Techaisle research substantiates the importance of each of these key characteristics.