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Managed services model enters 'new era'

The MSPWorld 2020 event points to an industry that's finding itself in the spotlight as MSPs see greater attention from customers, investors and government regulators.

The managed services model has become more valuable amid the COVID-19 pandemic, opening opportunities for MSPs and raising the IT services sector's profile.

The current environment has ushered in a "new era of managed services," said MSPAlliance CEO Charles Weaver at the organization's MSPWorld conference on Wednesday. The pandemic, he said, has disrupted MSPs and their customers, dealing damage particularly to businesses in the hospitality, travel, tourism and food services industries.

Charles WeaverCharles Weaver

However, while some industry segments suffered, a new generation of MSP customers has emerged, Weaver noted. Those customers, who never previously relied on MSPs, sought MSPs' help with the sudden need to support remote work.

"You had a … massive spike in demand … on MSPs to help out with a radical, global transition to remote work scenarios," Weaver said. "The old-world model of IT management was not equipped to answer that call."

Buyers and regulators come calling

The spotlight on MSPs has attracted investors and regulators to the managed services model. Weaver cited "unprecedented interest" in MSPs among private equity firms and other investors. The same forces that have made MSPs more valuable from the customer point of view have also sparked M&A activity, he said.

The challenge of the future is a challenge that can only be solved by proactive managed services.
Charles Weaver CEO, MSPAlliance

Weaver added that stock market volatility and economic turbulence, in general, might have also diverted investment dollars into MSPs as a lucrative opportunity.

Government regulators, meanwhile, are also looking at MSPs. Weaver noted the MSP registration law in Louisiana that will go into effect in Feb. 2021 and cited additional legislative activity in the U.S., Canada and elsewhere.

"The world is now aware of MSPs, and [regulators] are now acting accordingly," Weaver said.

The rise in regulation, however, shouldn't be viewed as a defeat for MSPs, according to Weaver. "This regulation is the price of our legitimacy," he said, noting the MSP sector is shifting from fighting for legitimacy and recognition to protecting its legitimacy.

Weaver also tasked MSPs with reducing their reliance on reactive services such as break/fix if they haven't already done so. The role of reactive services in the modern era is diminishing and MSPs should develop a plan to transition further into proactive services, he advised.

"The challenge of the future is a challenge that can only be solved by proactive managed services," he said.

Managing MSP sales

Other challenges for MSPs includes sales and marketing, a perennial pain point. It's a rare MSP that employs a massive sales force. So, the task becomes making the most of a salesperson's time, noted Kris Kilgard, director of sales at Locknet, an EO Johnson Company and MSP with operations in Wisconsin, Minnesota and Iowa.

Locknet employs the hunter/farmer sales model, which means each salesperson has responsibility for landing new accounts and making sure current customers remain satisfied. Speaking at MSPWorld, Kilgard called the hunter/farmer model a tough balance but noted the company has taken steps to give salespeople more selling time. For example, Locknet found that salespeople were spending a considerable time managing projects and onboarding new customers. As a result, the company has hired a project manager to take on that work.

The company also hired three sales engineers that the company's sales team can call upon for pre-sales activities, Kilgard noted.  A sales support person, meanwhile, handles administrative tasks once assigned to the sales team and also takes care of end-user sales -- desktops and peripherals, for instance.

Salespeople, Kilgard said, "are much more valuable in the field, finding the next deal."

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