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MSP business model moves toward three key staples

An ancient agricultural method and the modern MSP business model wouldn’t appear to have much in common.

Yet there are some interesting parallels between “three sisters” farming, which originated thousands of years ago, and how a number of managed service providers are currently cultivating business. Native Americans planted maize, beans and squash — the three sisters — together in the same field. As the maize grew, it provided a natural pole that the bean plants could climb. The squash spread close to the ground, discouraging weed growth that could hamper the other plants.

The practice, also called mixed-cropping, contrasts with monoculture, where fields of the same crop are grown separately. MSPs also pursue mixed-cropping of sorts. For a growing number of firms, the three sisters are managed services, cloud and security.

This pattern can be seen in recent MSP newsmakers: Logically Inc., based in Portland, Maine, and KSM Consulting, based in Indianapolis. Logically launched April 8, integrating Winxnet and K&R Networks with the objective of building a nationwide service provider. KSM Consulting announced April 9 that private equity firm Renovus Capital Partners had acquired a majority interest in the company. Logically is focusing on managed services, the AWS and Microsoft Azure public clouds, and security. KSM Consulting, meanwhile, provides managed services, Microsoft cloud solutions, and cybersecurity architecture and strategy.

Over the years, the MSP business model has typically been diverse. Companies offered managed services, of course, but a lot of other services as well — including break/fix and product reselling. But MSPs appear to be striving for greater harmonization when they emphasize the foundational offerings of managed services, cloud and security. As with mixed-cropping, the three components of this MSP business mix aim to complement each other.

Here’s how: Managed services, established two decades ago to remotely manage customers’ on-premises IT, provide a pillar of expertise that now supports the growth of the cloud business. As it turns out, cloud-based IT requires as much management as in-house gear. Customers face issues such as workload allocation and cloud cost optimization. MSPs have plenty of room to offer their services.

The need for security, meanwhile, permeates all aspects of IT — whether the technology resides on-premises or in the cloud. It’s no longer an afterthought or something an MSP can ignore entirely. Industry executives are in general agreement that an MSP has to offer cybersecurity services, either on its own or through partnership.

Channel business models inevitably shift to keep up with technology and customer buying patterns. The core elements of managed services, cloud and security, however, could provide some stability.

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