In a quest for higher profit margins and improved customer service, experts are calling for MSPs to further automate their businesses. But sometimes, chatter doesn’t explain much how to perform that automation.
In many ways, that quest more Automation requires another MSP mindset shift. Early cognitive changes, as you may recall, involved adjusting from:
- CapEx product sales to OpEx monthly recurring revenues.
- Client-server in cloud services.
- Device-centric models prioritize user experience.
Previous changes have mostly served the MSP market well. In fact, the top quartile of MSPs now generate at least 18 percent EBITDA profit margins or more. However, not all news is good. The lowest quartile of MSPs are still losing money, Service Leadership says.
Next-Generation MSP Automation? The Answer is in the Data
So where do we go from here? The answer, as I pointed out before, may involve MSPs gaining end-to-end visibility into their customers’ systems and workloads. But here’s the twist, and the next mindset evolution:
“It’s time for MSPs to shift again — this time from user-centric IT support models to data-centric scaling models.” — ChannelE2E
The reason? Gather and analyze the right data, and you’ll likely make smart business moves that potentially make your customers happier and grow your own business even more.
My thoughts parallel some recent moves at Liongard, the MSP software provider. Take a peek around, and you’ll see Liongard is positioning its software to provide MSPs with three operational advantages:
- First, really smart MSPs always run in a known state. That means MSPs can gather, inspect, transform, and unify all IT systems data into one actionable asset, Liongard asserts.
- Second, operationally mature MSPs always know when and how their IT worlds are changing. How? The answer involves having accurate IT visibility tracked over time — aligned with alerts that anticipate what’s next to stay ahead of threats or jump on opportunities, the software company says.
- Third, operationally mature MSPs can level their team’s performance through end-to-end data collection and analysis exercises. Armed with the right data and the resulting insights, MSPs can theoretically automate the mundane; troubleshoot issues faster; and move to a more proactive state of operations, Liongard asserted.
Enterprise Automation and Data Trends: Coming to the MSP Software Market
Liongard CEO Joe Alapat
Those points and more came up in a July 2022 briefing call between ChannelE2E and Liongard CEO Joe Alapat. Throughout the conversation, I started thinking about Liongard’s work — and how it compares to enterprise-focused software giants.
I’m referring to data-centric names like Splunk and Snowflake; observability names like Datadog and Dynatrace; and workflow automation software companies like ServiceNow. At first glance, those companies compete in different market segments. But look closely, and their focus includes gathering and observing the right data to:
- Automate tasks;
- help enterprise customers make faster, smarter decisions; and
- extend automation beyond IT to functional departments such as finance, HR and SecOps.
Why MSPs Should Care: It used to take about a decade for enterprise-class software trends to trickle down to the SMB market. However, cloud services and MSPs are shortening that journey — allowing enterprise trends to reach the SMB market faster and faster.
The twist: Enterprise software companies don’t have the right pricing and software consumption models for MSPs — leaving a void in the market that needs to be filled by some software company (or companies). .
Raising a Deep Data Platform for MSPs?
So how can a data-centric mindset penetrate the MSP and SMB markets? Here again, Alapat of Liongard shared some thoughts with me. If MSPs embrace a deep data platform, he says, they’ll get a “living system of record” for their IT stacks. The data platform, he insists, must:
- Automatically analyze customer environments from cloud to endpoints;
- transform complex config data into a centralized data asset;
- continuous auditing of arrangements to detect changes; and
- connect and fuel MSP workflows.
Roll all that together, and MSPs will further automate their businesses, Alapat asserts. The graphic below further captures what Liongard does:
Source: Liongard
Liongard’s View: Right or Wrong?
Overall, I agree with Liongard’s view: The future for MSPs is in the data — how you gather it (end-to-end), analyze it and use it for more automation. That automation, in turn, provides an opportunity for operationally mature MSPs to raise their profit margins even higher. Furthermore, less mature MSPs who jump on the data-centric bandwagon can actually elevate themselves to a more mature business status.
However, the MSP software market is like any other technology market. Many companies have the right perspective. But the path to success ultimately requires fanatical execution. We’ll be watching closely to see how Liongard and its MSP partners execute their data-centric journeys.