What should MSPs do with their new-found efficiency?

Automation and machine learning promise to revolutionise the business of MSPs. By automating everyday workloads, support technicians can focus only on the tasks that truly require human intervention. Machine learning can take care of threat detection, system analysis, software patching, and more, before they affect operations. There's even talk that the first level of IT support will likely be handled by an AI chatbot rather than a real person.

While some of these technologies are still some ways off and need to mature before they can be deployed, some are available now. An MSP that's dedicated to implementing what is viable will be able to slash costs and free up capacity to sell elsewhere - and those that act quickly enough will have a leg up on their slower competition.

But simply sitting on more profit is for many, not enough. Those MSPs that want to use this opportunity to improve their business will need to figure out where to reinvest what they have earned back. Making the decision to adopt automation and machine learning is a wise decision - yet even more wisdom is needed to make the most of it.

Wise investments

When building a business, the focus is understandably on creating offerings that meet customers' needs, and putting together the right combination of infrastructure, tools, and personnel to support these. Marketing is often relegated lower down the priority list.

Even once the MSP is out of this early stage, there's still a tendency for a business built by technical experts to retain a certain disdain for marketing. The natural scepticism of engineers means that they will often see it as a "necessary evil" rather than an outright necessity. But the fact is, buying a service or product, whether it's a breakfast cereal or a business supplier, is as much an emotional process as it is an intellectual one. And marketing is absolutely necessary to help guide that investment.

One of the best uses of these efficiency savings is to develop a better marketing plan, better marketing materials, and possibly also investing in marketing staff. This will mean better sales leads and the chance to attract more profitable customers - most likely those being underserved by MSPs that are not exploiting automation to improve efficiencies.

MSPs should also consider how to create additional services for their existing customers. By including managed backup, risk analysis, or additional security tools in the service portfolio, MSPs have the opportunity to upsell and increase the worth of the customers they already have.

They also have the potential to increase sales by ticking more boxes for companies that are on the lookout for a new MSP. No business will want to deal with an array of MSPs to handle discrete parts of the IT estate when they have the option to deal with just one. Offering a wider array of services, even if it's through a network of white-labelled partners at first, will increase the chances of making a buyer's shortlist and reducing churn.

Unwise investments

If an MSP has become more efficient through automation, and can handle more clients with the same workforce, it can fill this new capacity by undercutting its competitors and seizing business off them. After all, low overheads can mean low prices.

Given the opportunity, many industries will reduce prices while maintaining margins in order to retain and increase their market share. Supermarkets regularly engage in price wars with each other - offering big discounts and two-for-one deals.

MSPs should avoid this; price simply isn't the powerful deciding factor that it's believed to be.

There's very little evidence of price pressure in the MSP market. Any examination of the market will show that the most successful MSPs do not cut prices to win business. In fact, MSPs are usually in competition with themselves, not with other MSPs - losing business because of their inability to demonstrate their value, rather than a cheaper rival.

Creating an identity

The creation of efficiency savings is an opportunity for an MSP to reflect, consider its market(s) and perhaps redefine its own identity.

It's rare to find any solutions provider that's 'maxed out' and has nowhere left to grow; opportunities are always available. Efficiency savings are an opportunity to pause and define the specialism that the business should focus on, whether that's a city or region, a vertical such as healthcare or accounting, or a particular size or make-up of business.

Defining this speciality means that the MSP can focus on investing in the right tools and personnel to meet the chosen target area's specific needs - such as high security, bulletproof backup, or availability of staff to be on-site quickly. The marketing that MSPs so often need to improve can then be far more targeted, increasing the chances of sales.

Machine learning and automation will be vital to MSPs that want to thrive, but just as vital is what is done with the potential this unlocks. By improving marketing, expanding their offering, and finding and owning their specialism, MSPs will make the most of this opportunity and allow these technologies to redefine their growth ambitions, rather than just save some money.

Dave Sobel is senior director of community at SolarWinds MSP