Ten tips for mastering managed services in Australia

8. Eat your business (disrupting yourself)

How do you manage decline while building a bridge to managed services? Maybe launch a start-up free of the baggage, says Applegate. 

“They have to leapfrog the traditional MSP model; reinvent the business to align with the cloud. That’s not a gentle transition. 

“They need to restructure, to re-divisionalise the business. The traditional model would have to wind down because there’s not a place for break-fix – they would have to start up a new entity and get the right people and the right mindset.”

9. From services to products (commercialise your own IP)

It might be counterintuitive, but your managed services could become a saleable product, says eNerds’ Warner.

“When I started 15 years ago at the age of 22 straight out of uni, it was an ad hoc model selling support packs. I realised after 12 months that wasn’t sustainable. We went to managed services charging monthly fees without the tools to do that. And we used physical labour to check things,” Warner says.

He says there weren’t any SaaS affordable ticketing systems out there, so eNerds built its own. 

“There’s no doubt in my mind you’ll struggle unless you get some IP [intellectual property] to get more than a six-times multiple to sell your business.”

This is the same model that market leader ConnectWise followed way back in the early days of managed services. Brothers David and Arnie Bellini founded ConnectWise as an MSP in 1982 and after searching for a software solution that would help them better run their company, none cleanly matched the unique requirements of their growing business model, so they developed their own. The company now has more than 100,000 users and claims to have around 65 percent of the world’s MSPs as customers. 

Building out your own IP also makes a company a more attractive acquisition target, according to Brennan IT’s Dave Stevens.

At last year’s Microsoft APC, he said: “There are only a few reasons why we’d want to make an acquisition: to get into new areas of technology; to get some intellectual property; or acquire a profit. Most of the businesses in Australia are not going to have intellectual property, unless you’re in Nintex or someone like that.”

10. Become a virtual CIO (The ultimate trusted client advisor)

As customers start to rely more on their MSP for daily business activities, there’s scope to expand what was a transactional relationship into a strategic one, going so far as to become the customer’s CIO or CTO, says HTG’s Applegate.

“If you’re going to be a virtual CIO, you have to deliver to your client then make sure you have relationships with cloud vendors. That’s where vendors have to support the channel.”

It’s not a model that will suit all MSPs, he warns, because a “virtual CIO has to be incredibly well structured and organised”. 

A MSP could even become a mentor to their client, flipping the power dynamic. “That’s a big part of the future. There are resellers doing that consciously and naturally. But I don’t think they’re doing a good job explaining what they’re doing for their clients and putting a price on it.”