There is an old saying that a builder’s house is never finished, and the same sentiment could just as easily be applied to MSPs, where decades of straining to meet client expectations has for some led to a lack of investment in internal systems and processes.

But as the use AI becomes more prevalent, MSPs will have no choice but to invest – initially to reduce service costs, and then hopefully to create new services  - but eventually, just to survive.

When MSPs were asked which areas they were planning to invest more in over the next 12 months, two thirds responded by referencing AI. This was only slightly ahead of the 52 percent who nominated automation (although there was some overlap between the two).

By far the greatest area of investment in automation was for internal automations to improve technician efficiency (72 percent). Beyond this, the adoption of automation was widely distributed, with almost half stating they used basic automation within their tools, and the same percentage also using dedicated automation tools or platforms.

A significant portion of MSPs were also applying automation to client management, with 46 percent reporting they were building or using client-facing automation to reduce support load.

Automatic for the people

At Melbourne-based MSP, The Virtual IT Department, automation has become the mainstay for its service delivery model. Directors Anna and Liam Furlong have used the security automation and orchestration platform Rewst to transform a traditional MSP into one where 50 people are now doing the work of a hundred - faster, and with fewer errors.

In October it launched its client portal, which allows customers to resolve common technical issues such as mailbox share permissions and stale device cleanups without the need for intervention by a technician.

The next stage in automation is the launch of a self-service portal designed for microbusinesses, which Anna Furlong said would significantly expand her company’s customer reach.

“It gives the businesses that are 98% of our economy here in Australia, who have the same regulatory and security and compliance needs as any other large business, access to baseline security,” she said.

As a pioneer in the use of automation, Furlong said her company was having to navigate a number of challenges, such as ensuring that users actually tried the automated self-service offering before calling a technician.

The adoption of automation also meant the company had to navigate a fundamental transition for its skillset, which was now very different to that of a traditional MSP.

“It is shifting the way in which our team has to work to not only identify a need, but to work through the stages of development, put it in a sandbox, and then release that and help everyone know it is there,” Furlong said.

“We reassess our tech stack six monthly and we are constantly asking if we are using best in class, because there is such a range of tools hitting the market all the time. So we are asking our staff to be learners in new technologies.”

Having started on the automation path, Furlong said she now had a better sense of what was possible, and greater certainty that there is no other possible path forward. 

“You can’t outrun some of the developments that the industry is doing,” Furlong said. “You have to join in, and you have to join in intelligently.”

Building foundations

But for many MSPs, significant work first needs to be done to get the fundamentals of their business in order, before any progress can be made on automating it.

While 46 percent of MSP Index respondents to our survey believed that investing in internal process documentation was the action that most significantly improved operational efficiency, only 16 percent had internal processes were audited for compliance or quality. Thirty percent reported their processes were fully document and followed, although this was well behind the 38 percent who said their processes were still only mostly standardised.

The actual methods for investing to improve efficiency are diverse, with the survey finding equal weighting given to improved RIMM automation and alert handling, streamlined onboarding processes, and changing staff structures.

The allure of AI was also represented by the 38 percent of MSPs that had already incorporated generative AI into processes, while 30 per cent were investing in automated billing and invoicing.

The next most common response to the question of investment was security, covering both cyber and physical security, with focus on specific disciplines such as managed detection and response (MDR) and security information and event management (SIEM). Certifications and standards were a key focus, with half of respondents reporting they had achieved ACSC Essential 8 Maturity Level 2 or greater. The next most sought-after accreditation was ISO270001 (32 percent), and then the small and medium business specific SMB1001 certification standard.

MSPs have also been hard at work on their own security protocols. Just over half reported they had updated client contracts to better define liability and scope, while almost two thirds reported they had purchased or reviewed their cyber insurance policies. The desire to limit liability was also shown by the 32 percent of respondents who indicated they had declined or terminated risky client relationships.

Building a differentiated offering

But with each MSP ultimately limited by the technology available to sell and the willingness of customers to buy, creating true differentiation remained a challenge.

At the mid-market MSP blueAPACHE, head of marketing Renata de Stefano said a decision to invest in brand marketing was enabling the 21-year-old company to build awareness in new markets.

To truly understand an MSP’s brand, she said it was important to truly understand its culture.

“Everyone talks about their people being the best, but is it people or the culture and values that you driving from your business?” de Stefano said. “Because the values are what drives people’s behaviour and how they show up representing your brand.

“If your brand promise isn’t strong and your reputation isn’t strong, then why would they stay with you if they can get the same solution from another provider for less cost?”