Last updated on: February 03, 2021

The challenges MSPs face

It has never been a better time for MSPs than now. The need for remote monitoring services is on the rise as cloud adoption readily increases and work-from-home setups become the new norm in the midst of a global pandemic. Many organizations are looking to install new hybrid infrastructure solutions while also trusting MSPs with the everyday functioning of their IT, along with their mission-critical systems and processes.

Organizations are looking for a knowledgeable, reliable partner that can deliver services and support consistently. But with a new partner, businesses are going to have to go through a lot of speed bumps while integrating disarrayed systems, facing downtime, and overcoming the inevitable culture clash as two organizations come together.

Let's take a look at some of the key challenges MSPs are likely to face and how to tackle them:

#1. Rapid cloud adoption

As mentioned earlier, cloud adoption is at its peak, and it will be quite challenging for MSPs to quickly adapt in order to offer and manage different cloud-based solutions. While revenue may increase as new services are added to bundles, an MSP’s margins will shrink. Selling cloud solutions requires a new approach, so extra training and specialization for sales and marketing teams will be required, which is going to be costly and time-consuming.

#2. Changing consumer behavior and expectations

Unlike a decade or two ago when MSPs used to be scarce, the number of MSPs has certainly increased. With that, the number of "me too" MSPs—which offer similar services to existing MSPs, at least on paper—has risen as well. The need to stand out has never been more crucial.

Clients are also far more educated about technology than before. Now they may have their own analysts and consultants who engage in a lot of cost-benefit analysis, often resulting in "analysis paralysis" and delaying purchase decisions. This change in behavior affects the way services are sold to clients. More focus is required to satisfy these clients, and MSPs need to think of new ways to add value to the service offerings presented to clients like these.

#3. Managing security issues

As technology has advanced over the years, cybersecurity has become a major challenge. MSPs have grown stronger but so have hackers. Ransomware and DDoS attacks along with different types of malware have threatened countless organizations and brought even the biggest businesses to their knees, resulting in huge losses. This is why many customers are turning to MSPs to provide security measures and train employees on how to recognize potential security risks and different signs of cyberattacks.

Therefore, no matter which market they're in, MSPs must stay up-to-date on the cybersecurity landscape. This creates another challenge for MSPs:

  • Finding the right talent to tackle complex and dynamic security issues

    With the growing sophistication of hackers and an increase in direct attacks on MSPs, MSPs are relying more and more on their employees to tackle cybersecurity threats and protect their own and their clients' confidential data. Many MSPs are finding it hard to discover the right set of talent, form teams that can deal with such issues, and provide new service offerings related to cybersecurity.

#4. Dealing with cultural differences

Culture is an essential part of any organization. So when an MSP integrates with an organization, it's essential that the MSP's employees assigned to that organization become a part of the client's organization and culture as much as any other employee. This should be addressed as soon as possible, as cultural differences can become costly for both parties if things don't work out later on.

#5. Keeping sales and marketing teams on track

Most MSPs rely on referrals for generating business, and research from 2017 suggests that MSPs are most concerned with generating leads and sales conversion. Referrals are not a sustainable path to success when long-term growth is your target.

MSPs have to find new avenues to bring in business by repositioning themselves in the market. In order to reposition and differentiate themselves from others, MSPs will have to offer new services and promote them by investing their efforts in product management and marketing. An MSP should prioritize the needs of its customers beyond the basic standards outlined in the SLA in order to create value around its services.

#6. Customer retention

In an increasingly challenging managed services market, retaining clients is just as important as getting new ones. Customer retention is getting tougher every day as new MSPs are sprouting up and challenging existing MSPs with cheaper prices for almost the same service bundles. Even though the older MSP is offering better quality services, the new MSP’s offers, often featuring substantial price cuts, might sway clients.

For established MSPs, the best way to counter such tactics is by reiterating your value addition to your clients. How do you go about that? Genuinely address your customers' concerns and establish trust through clear, constant communication.

Apart from that, try to delight customers by going out of your way to provide various seminars on data privacy and other valuable topics, taking the "project manager" approach by holding regular client meetings, and building a good rapport with your client.

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