[Opinion] When MSPs try to build software products: what usually goes wrong

At some point, almost every Managed Service Provider has the same realisation.

You’ve solved the same problem for the tenth client this quarter.

You’ve written the same scripts. Built the same dashboards. Re-explained the same workflows.

Someone eventually says it out loud.

“We should turn this into a product.”

They’re not wrong. Productisation can absolutely transform an MSP. But this is also the moment where many MSPs quietly burn time, money, goodwill, and team morale. Not because the idea was bad, but because they approached product development like a services engagement.

Building software products is a different game. Different incentives. Different risks. Different ways to fail.

Here are the realities MSPs need to confront before they decide to become software vendors.

Your internal pain is not automatically a market pain

MSPs build tools to survive their own operations. That does not mean there is a market waiting with credit cards out.

Internal pain is often:

• Annoying rather than urgent
• Specific to your delivery model
• Tolerated because it’s familiar
• Markets pay for pain that is acute, visible, and expensive. If you can’t clearly say who this product is for, what problem it solves, and why someone would buy it without your services attached, you don’t yet have a product idea. You have a hunch.

The fastest way to waste a year is to skip this validation step because it feels obvious.

It never is.

You’re not building a product. You’re testing a hypothesis

MSPs are conditioned to deliver complete solutions. That instinct is fatal in early product work.

An MVP is not a slimmed-down platform. It’s not a roadmap teaser. It’s not a technical flex.

An MVP exists to answer a single question:
Will users do this repeatedly without being chased?

One workflow. One core outcome. One measurable behaviour.

Anything else is noise. If your MVP doesn’t clearly test a hypothesis, you are not learning. You are guessing with confidence.

Existing clients are your greatest risk factor

Having customers sounds like an advantage. In early product work, it’s often the opposite.

Your first three clients will all want different things. They will all sound reasonable. They will all push you toward custom logic and edge cases.

If you listen too closely, you will build a product that works brilliantly for three customers and poorly for everyone else.

Products scale by identifying commonality, not by accommodating every request. The discipline to say no is far more important than the ability to build quickly.

If you don’t define a core metric, you will lie to yourself

MSPs are especially vulnerable to soft validation.

“We’ve had good feedback.”
“A few customers are using it.”
“People say they like it.”

None of that matters.

You need a small number of brutal metrics that remove interpretation:

• Weekly active usage of the core feature
• Retention after 30 days
• Conversion from trial to paid
• Frequency of use without prompting

If usage drops the moment you stop reminding people, you don’t have a product. You have a demo.

Metrics are uncomfortable because they remove excuses. That’s exactly why they are essential.

“We’ll sell it to our client base” is not a go-to-market strategy

This is the most common self-deception in MSP product thinking.

Selling software is not the same as selling services. The buying decision is different. The messaging is different. The expectations are different.

You must answer hard questions early:

• Who is this actually for?
• Why would they buy it separately?
• How will they discover it?
• How do you explain it in one sentence?
• How does pricing work without undermining your MSP offering?

If you don’t think about distribution until launch, you will launch into silence and then blame the product.

Your tech stack should optimise for learning, not ego

MSPs are full of strong engineers. That’s a strength, but it’s also a trap.

Early product work does not reward elegance. It rewards speed and adaptability.

Over-engineering is common because it feels responsible. Microservices for ten users. Complex infrastructure for hypothetical scale. Rebuilds before validation.

Your MVP stack should be boring, familiar, cheap, and easy to change. You are not proving architectural excellence. You are trying to discover whether anyone cares.

You can rebuild later. You cannot recover wasted time.

Product work will compete with your core business

This is the unspoken killer of MSP products.

Client emergencies will always win unless you actively protect product time. The best engineers will be pulled back into billable work. Roadmaps will stall quietly.

If you can’t clearly answer who owns the product, how it’s funded, and what gets deprioritised when things get busy, the product will die slowly rather than dramatically.

Most products don’t fail loudly. They fade.

The moment you ship, you become a software vendor

The first release changes expectations immediately.

You now own uptime, security, support, documentation, roadmaps, pricing, and customer success. Clients will compare you to real software vendors, not other MSPs.

If you’re not ready for that shift in mindset, you will resent the product faster than you expect.

The bottom line

The MSPs that succeed at productisation are not the most technical or the most ambitious.

They are the most disciplined.

They validate early.
They cut scope aggressively.
They measure reality rather than optimism.
They separate ego from outcomes.
They accept that rewrites are normal.

Building a software product can absolutely transform an MSP. But only if it’s treated as a deliberate experiment, not a side project powered by enthusiasm and assumptions.

And if that doesn’t appeal to you, that’s fine. Running a great MSP is a perfectly respectable business.

Just don’t half-build a product and wonder why it didn’t work.

techpartner.news provides a platform for guest opinion articles such as this one to foster debate within the IT industry. The views expressed in these guest opinion articles are those of the author and do not necessarily reflect those of techpartner.news or its publishers.

Nick Beaugeard is the co-founder and CEO of Australian business process automation company World of Workflows.