Guest Post

What modern SMBs can teach managed service providers

As new SMBs lay the groundwork for their IT operations, cloud offerings will factor into many business owners' decisions. Find out what this means for MSPs.

Dave Sobel is 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.

In this video, Sobel explores basic technology decisions involved in starting SMBs today. These technology decisions point to what the typical SMB of the future could look like, which has big implications for MSPs.

Transcript follows below. Minor edits have been made for brevity and clarity.

Dave Sobel: I've previously commented on what I would do if I was starting an MSP, how I would adapt one and how I might choose different tools. But I wanted to take another step even further back and think about what a modern SMB business would look like.

This is a useful exercise for a number of reasons. First, these are just broad recommendations from a technologist for someone starting a business. I've spent my entire career thinking about technology, how it's used, what works and the like. Second, understanding what a technology profile of an end customer looks like builds a target to build services for.

Let me start my qualification here. I'm thinking about businesses with generally sub-100 users in their growth plan over, say, the first three or five years. These numbers capture the absolute vast majority of all business types. Despite the fervor of thinking about growth, most businesses are going to stick well below this number. I think this recommendation probably scales, and I could have easily chosen 50 as a target.

The SMB infrastructure decision

Let's build a basic infrastructure first. The first key decision is around the line of business itself. If you're in a business that requires special software, that will be the first selection. Legal services will need some kind of case management software. Medical, some kind of practice management software. Retail, that's a point-of-sale system and likely some kind of e-commerce system as well. Restaurants and services businesses fit this category, too.

The theme: Start with the business application. Figure out what the business runs on.

A simple example. My business is a media company. I make podcasts as my first product, and I picked my podcast hosts as the key decision and knew the subsequent decisions around my e-commerce platform and web content platforms would stem from there. That's where my business lives.

My advice is to absolutely go software as a service here. You want something running in the cloud that you subscribed to that gets supported and managed in a way you don't have to think about. Make the management, updates and backups of the software somebody else's problem. You just want it ready on demand for you.

For those in IT services, this is what you need to learn your expertise. I referenced this in my video on starting an MSP.

The accounting software, work platform decisions

Tied to this will then be your accounting software decision.

Again, for a small business: cloud, software as a service. You'll consult with your accountant, likely outsourced, on what works best. In the U.S., that's generally a reasonable choice of QuickBooks Online as what's used. I use it. That's not an endorsement. It's simply a statement.

Next up, you'll be thinking about your work platform. What I mean by this is email, collaboration, communication, calendaring and the like. You have two basic choices in my mind: Microsoft 365 and Google Workplace. That's it. Sure, there may be a ton of other solutions out there, but from a practical perspective, they are all irrelevant. There's a limited number of sufficient reasons to deviate from these two. The main reason to choose one is to use what works best with that previously chosen business solution.

And here's where my recommendation and my own business choice are different. I will say I recommend Microsoft 365 for most. Why? You get the bundling of their Office technologies combined with email collaboration and the like. Why did I not choose them? Zoom. For me, I wanted Zoom as my conference technology because I find it far superior to Teams for those of us who need to collaborate with other companies. That's how my line of reasoning worked.

The backup, security decisions

So, I have a way to make money -- the line-of-business application -- and then a way to track the money -- the accounting software -- and a way to discuss things around the money -- the collaboration and communication software.

Now, to protect the money, a backup solution. This is where generally an IT provider is my recommendation for a small business owner. Why? Make the risk shared. If you're a small business owner, you want someone else invested in protecting your business.

I'll observe something here. I personally overinvest in this. My working theory is I can recover from just about anything except the loss of the crown jewels: the stuff I create. Downtime sucks, but what sucks more is not being able to recover from a failure. I assume there will be some failures.

Now, IT providers, note what I just did there. I define your value as risk sharing, not technical know-how. Use your technical knowledge to reduce your risk. And, remember, that's now how the customer views the value.

Beyond that, systems will need to be configured for security and monitored. My recommendation for small business owners is to invest in multifactor authentication, either something with physical keys or with app-based one-time codes. As the owner, this is a hard, absolute policy. Everything is protected with multifactor. It is non-negotiable. Then, paranoia, protect the data, backups, failover, long retention. These are my crown jewels. Protect my data.

An ongoing strategy with the tech team

And everything I just discussed is wrapped in an ongoing strategy with my technology team. I want to be looking at ways to both simplify and invest in my technology to drive new results. Add revenue, grow customers, drive new speed, add or remove a product or service -- all things I want to know about from my tech team.

Think about this now and in the future. With the majority of SMBs, it's now passing 50% using SaaS all or mostly. Most companies look like what I just described than those with on premises. That's legacy now. That's the past. So, let's think about the future.

About the author
Dave Sobel is 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.

Next Steps

A disconnect between MSPs and cloud: The cloud opportunity

Dig Deeper on MSP business strategy

Cloud Computing
Data Management
Business Analytics