CloudJumper has announced strategies for managed service providers (MSPs) to help in successfully competing against the growing number of telecommunication firms transitioning to managed services. These strategies include activities as simple as expanding one's knowledge base to leveraging innovative product/service licensing models that differentiate the organization against new market entrants. With the right mix of business strategies and solutions, established MSPs can enhance their positions for increased market share.
According to a forecast* from independent global analyst firm Ovum, "Telecom service providers will grow their revenues from global services to enterprise customers to more than US$297 billion by 2020. The biggest contribution will come from new strategic ICT services revenues at nearly US$173 billion, which will increase at a CAGR of 9.9% over the period 2015-2020. Telcos overall have taken more than 14% of the global ICT services market in the last couple of years, and should reach more than 18% by 2020."1
Many telcos are actively trying to make use of their existing scale and IT savvy to move beyond basic voice and data services in order to begin selling a managed service or growing their portfolio of managed services. While horizontal services such as email, backup, disaster recovery, and security are typically at the top of the adoption pecking order, Software as a Service and Workspaces as a Service2 are enabling businesses to benefit from applications previously unaffordable using a cloud-based computing infrastructure that offers the promise of greater efficiency and productivity.
Ubiquitous availability of broadband for business and mobile computing users has provided an opportunity for organizations to change the way communications and productivity are measured. With cloud computing and the maturity of mobile computing infrastructure, businesses are maintaining their move toward a more decentralized operational structure. While this has increased the demand for cloud services, it has also resulted in increased competitive pressure from telecommunication providers that operate their own networks as they move toward managed services.
According to Max Pruger, chief sales officer for CloudJumper, "MSPs are awakening to increasingly intense competition from telco providers. Therefore, they will need to arm themselves with the proper tools and strategies to outmaneuver this growing class of competitors entering the market. As an organization that is focused on supporting MSPs globally, CloudJumper is spotlighting several business strategies and solutions that will help these IT service providers retain and profitably grow their operations."
Five Strategies for MSPs to Stay Ahead in an Increasingly Competitive Market:
1. Expand your knowledge base: Leverage the network of people you are connected to whose expertise you can draw from, and whose ideas and actions you respect. There are organizations, publications, and social networks focused on the MSP space that are excellent educational resources. Additionally, MSP focused vendors often have significant partner ecosystems that allow knowledge transfers among partners. Capitalize on this and build your own network from these sources.
2. Strengthen the portfolio of offerings with high demand cloud applications: Almost 60% of large and small scale enterprises have deployed some kind managed service as part of their overall IT strategy.3 Among these high demand applications are Software as a Service, Office365, managed communications, remote monitoring, mobile device management, disaster management, managed network security, and Workspaces as a Service.
3. Explore the use of innovative licensing strategies as a competitive differentiator: A great licensing model passes three tests: First, it is easy for the customer to understand. Second, it is aligned to where the customer receives value in the product. Third, it grows with the customer's usage of that value. MSPs that separate themselves from others in their category using licensing better align to their prospective customers' needs.
4. Grow profit margins through automation: Selecting technologies with a high degree of automation support the MSPs ability to meet and exceed service level agreements (SLAs) as automation workflows can be implemented to expedite activities and enhance service levels. This means improved operational efficiency across the board.
5. Stay focused: Lack of focus leads to scattered resources. Devoting time, energy, and money to multiple strategies and marketing channels at the same time leads to a reduced ability to execute as well as they otherwise could be. Experts recommend staying focused on the organization's overall business strategy which is the big picture and ultimate direction and purpose of the organization. This should not change unless there is a major market shift. Next, campaigns and initiatives support the overall strategy and goal so a lack of focus in this area can lead to wasted time and money. Finally, at the tactical level, follow the Pareto Principal (80/20 Rule) which states that 20% of one's actions and inputs will create 80% of the desired outcome. The key is identifying and focusing on the 20% that is actually achieving the 80% of desired outcomes.
"Both competition and opportunity for our business is strong. Our belief is that a combination of strong operational disciplines with a keen eye on the future is essential," said Frank Picarello, chief operating officer for managed services provider, TeamLogicIT. "With more than 10 years of success in the managed services space, we are in close agreement with the strategies and technologies presented here as our organization has grown significantly over the last several years, in large part by following such strategies."
The competitive environment for MSPs is no longer "business as usual" as it has been replaced by a broader and more complex playing field that now includes well-funded telcos. With a thorough understanding of the technologies and market opportunities, managed service providers have the tools and talent at their disposal to compete effectively in this changing environment. The insights provided here are only the first step in strengthening an organization's competitive position, thereby increasing revenue and generating greater profitability for established market participants.
1 Ovum Research, Telco-Managed Global Services Revenues to Reach US$297 Billion by 2020, http://www.fiercetelecom.com/press-releases/telco-managed-global-services-revenues-reach-us297bn-2020
2 Markets & Markets, Workspace as a Service Market by Solutions (VDI, Applications, DaaS, Hosted Applications, Security Solutions), Services (Managed Service, System Integration, Consulting) - Global Forecast to 2019, http://www.marketsandmarkets.com/Market-Reports/workspace-as-a-service-market-250917058.html
3 Infinit Consulting, The 10 Biggest Managed Services Trends to Watch in 2016, March, 2016