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How to transform your existing MSP and be more competitive

We know what a brand-new MSP needs to get off the ground today, but Dave looks at what an existing managed service provider needs to adapt and succeed.

Dave Sobel is the host of the podcast "The Business of Tech" and co-host of the podcast "Killing IT." In addition, he wrote Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business.

For this article, Sobel examines what existing managed service providers need to transform and be more competitive today, while discussing some recent news that makes this path to success even more clear.

Transcript follows below

In a recent video, I answered the question of what I would do if I was founding an MSP today. This video answers what I would consider if I was running one that had been in business for a while and how I might transform it.

The first premise had the luxury of ignoring all the legacy of an existing provider, which allowed me to start from the position of ignoring an existing book of business as well as any legacy products. My end result was a provider that focused on business applications as the core offering, was heavily Microsoft-centric with Azure AD and Intune, and only used cloud native tools. That resulted in an optimized new provider, but also painted a picture of a nimble new competitor.

What if we wanted to transform a legacy provider into this?

For this exercise, let's assume a typical provider; 93% of solution providers are doing less than $5 million in revenue, and as discussed on the show this week, 65% have fewer than 10 full-time employees. Let's also assume most of our business in this example is coming from infrastructure-focused deliverables -- likely so-called "managed services." We likely have a core compliment of engineering-focused people, and we also rely on a fairly standard set of tools -- a RMM, some security solutions, some backup ones and the like.

How do we get to that provider of business service up the stack?

We need to transform our business by deemphasizing infrastructure, ideally freeing up cash to invest in the business process portion, which will be a very different headcount. That path is the easier part, actually -- you have to hire and build the business process consulting practice, and that is the same if I'm starting fresh or transforming. The trick to transformation is getting there through the cash-flow changes.

The reason I picked this topic was because several announcements this week made the path a whole lot more clear. Microsoft Inspire was this week, and I covered some stories on the Wednesday, July 22 episode. That offers several building blocks. At Inspire, Microsoft and SolarWinds announced the integration of Intune-managed devices into their N-central and RMM technologies.

Also announced, Lenovo has introduced Lenovo Managed Services, which is billed monthly and sold through partners, but delivered by Lenovo technicians. Two offerings: Cloud Solution Provider Managed Services includes one-time services like onboarding users, migrating data and configuring applications plus ongoing 24/7 technical support and license management assistance. The Endpoint Managed Services offering adds endpoint and security management service and use of Endpoint 360 Dashboard, adding real-time information on service requests, security notifications and more -- as well as access to Premier Support and Premium Care break-fix support services.

And while not announced at Inspire, a virtualization service called "Cloud PC," which is built on Windows Virtual Desktop, will offer a managed service by Microsoft, sold for a flat per-user price -- per a job description listed. The key difference for Cloud PC is the pricing -- sold for a set subscription fee, versus WVD's Azure consumption model. And we know this due to a job posting.

Let's deconstruct those building blocks and start using them. First, the SolarWinds announcement. The company is not going to build the capabilities of Intune -- instead, make those available within their platforms. They decided that it's not something they were going to build . . . and that Microsoft had it already. Think about that. That's the core management tech -- and one of the RMM providers isn't building it.

This further validates my statement that I'd build my future MSP on Intune; one of the big providers is telling its customers that it's going the same way.

Thus, regardless of being a SolarWinds customer or not, I know that I can embrace the technology, as it is clearly complimentary to my core infrastructure offerings delivered by my RMM. That's my first step on my transformation -- embracing Intune. You actually have a pretty clear migration path to move to Microsoft completely and away from your legacy products when you see this connection.

Embracing Intune makes it easy to embrace Azure AD as I outlined in the first video. This brings me authentication and access management, and I can now start leveraging this to secure and protect the data. This also moves me closer to Microsoft, and allows me to start leveraging the capabilities within Microsoft 365 even more -- and my first obvious sets of services to be leveraging with my business consulting headcount.

How do I free up headcount to invest more?

That's where the other pieces come together… and give me options. I could leverage Lenovo. Here's a channel version of giving away the infrastructure work. Assume I want to build a provider only focused on business applications -- now I can partner with Lenovo, hand them that basic infrastructure work and handle just the high-value services. This isn't even different from my existing billing models, priced on a subscription, where I get margin on the offering. In fact, the intention is to offer exactly this -- a platform for creating solutions combining Microsoft 365 support with my services.

Or, how about I consider Microsoft? Their Windows Virtual Desktop offerings allow me to do managed desktops now, and we can easily see their path to these Cloud PCs -- and have the job listing to know they're hiring for that. A fully managed cloud PC offering from Microsoft is quite compelling. Priced per user, and managed by Microsoft, this is ideal to take away that layer, and seems perfectly suited those who are thinking about focusing just on business applications and not on infrastructure management.

Both paths now get me to the promised land. The selections of my business application to focus on as well as my buildout of the offering look the same regardless of my legacy or not.

Why ditch infrastructure?

Now, some of you may be screaming at me now -- why would you do this? This is great work! We love the infrastructure work! That's great. Seriously, if you are doing well with that, stick with it. Own it. Embrace it.

The question was about transformation, and how do we deemphasize that work to free up cash. If you can transform or invest without that need, you are building on a very strong base, and I'm not here to dissuade you.

What I am here to do is give you something to think about.

Because now think about the fact that these large companies are going to be offering these management technologies. Don't be dismissive of a Microsoft offering of a fully managed cloud PC. That's pretty compelling to me, and likely to others as well. Don't forget, Microsoft has a significant services arm, and this is a very logical progression.

About the author
Dave Sobel is the host of the podcast "The Business of Tech," co-host of the podcast "Killing IT" and authored the book Virtualization: Defined. Sobel is regarded as a leading expert in the delivery of technology services, with broad experience in both technology and business. He owned and operated an IT solution provider and MSP for more than a decade, and has worked for vendors such as Level Platforms, GFI, LOGICnow and SolarWinds, leading community, event, marketing, and product strategies, as well as M&A activities. Sobel has received multiple industry recognitions, including CRN Channel Chief, CRN UK A-List, Channel Futures Circle of Excellence winner, Channel Pro's 20/20 Visionaries and MSPmentor 250.

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