In this series of articles, commissioned by SolarWinds MSP, CRN catches up with some of the UK's leading MSPs to ask them what new services and business models they are pursuing to counteract falling margins in the sector. Part Three focuses on the Internet of Things
Parts one and two of this feature explored how leading MSPs are counteracting falling margins in the sector by boosting their repertoire in backup and security, respectively, two technology areas most providers will always have offered.
But many next-generation MSPs are also looking to new fields, including the Internet of Things (IoT), as they seek to mark themselves out from the crowd.
According to Statista, the global install base for laptops and PCs is a shade below 900 million.
In contrast, some 8.4 billion connected things will be in use globally this year, according to Gartner.
Consequently, there is a huge opportunity for MSPs to look beyond the IT devices they have traditional monitored and managed and extend that role to the billions of other objects in the process of being hooked up.
"With regards to the IoT we are using things like thermal imaging, cameras, airflows, fan speeds etc and looking at if they deviate from the parameters stipulated by the manufacturer," said John Pepper, CEO of MSP Managed 24/7.
"If you are monitoring a ticket barrier at a football stadium, for example, you want to know what fan speeds and temperatures they should be operating at, and then automating something to happen when it deviates outside those limits. You might be looking at a windfarm, a flood defence barrier, or a manufacturing machine - it doesn't really matter."
"People talk about connected fridges, but we run a managed service for large health trusts and one of the things we have censors on is the blood fridge," - Rufus Grig, Maintel
Rufus Grig, chief technology and strategy officer at Maintel, said the midmarket MSP is making use of IoT both to reduce its costs and to boost the quality of the managed services it offers.
"All of a sudden, you have access to these censors, this information that helps us reduce the cost of what we do or enables us to add value," he said. "People talk about connected fridges, but we run a managed service for large health trusts and one of the things we have censors on is the blood fridge. If the motor in that breaks, the temperature starts rising in the fridge that's storing blood that might be needed for a major incident response team.
"That's a very different kettle of fish from running out of milk in your kitchen. So the managed service we offer there is monitoring it, but mobilising quickly if anything happens."
Mark Lowe, strategic director at Pinacl Solutions, said the North Wales-based MSP had recently moved beyond its heritage in networking, systems integration and traditional managed services to embrace the IoT.
Pinacle is currently deploying an IoT network in Newport that will support proof of concepts it will carry out with the local council around air quality, blood monitoring and waste management, he explained.
"A good MSP operates close to the leading edge. If you want to maintain your competitive position in the market you have to bold and brave at times," Lowe said.
Pinacl was previously chosen to build a dark fibre network across parts of the city to provide public WiFi for all the councils' buildings, as well a separate contract to deliver WiFi across the city centre.
"From a smart city perspective, the only layer that was missing for us then was the IoT layer," Lowe said. "IoT typically works using LPWAN [Low-Power Wide Area Network], and there are a number of technologies under that. One of the technologies we have chosen for Newport is something called LoRaWAN [Long Range WAN], and that's the technology we are deploying as we speak in Newport to support the censor network.
"We are working with the council, but it's not solely for the council. Pinacl has built this platform and it's our platform. We are very much professing it to be open access, so anyone can come and talk to us about using it. We are trying to position it in its early stages as a living city lab network."
According to CRN research conducted recently on behalf of SolarWinds MSP, some 23.1 per cent of MSPs are already actively selling IoT solutions to their customer base, with a further third seeing interest in the technology. Even the 41 per cent who said they are not selling the technology yet said they believe customers will come around eventually. Just 2.6 per cent said they don't believe customers will ever be truly interested in the IoT.
Les Keen, sales director at Amicus ITS, said the Southampton-based MSP acquired a holding in data analytics firm, Granger Smith Consulting, last September to bolster its IoT practice.
"Because the IoT will create a lot of information that organisations will want to do something with, we wanted to make sure we had the expertise internally to turn that into useful data that customers could use for either increasing revenues, efficiencies, gaining insights, or whatever else they want to use it for," he said.
Alun Rogers, co-founder and director of MSP Risual, said IoT is still a nascent area for his firm because the censors most projects involve aren't yet standardised or commoditised.
"But what's interesting is that customers are starting to understand it," he said. "The technology is now moving to a point where we are expecting smart cities in the next five years, and that's making customers more aware of it."
A fourth layer?
As we have seen, leading MSPs are bolstering their services in security, backup and IoT in an effort to demonstrate value in what is an increasingly commoditised market.
"We very rarely now start a conversation at a technology stack layer. It's about how we are going to improve the workforce layer," - John Pepper, Managed 24/7
However, when asked about falling margins in the sector, Pepper at Managed 24/7, argued that most MSPs are generally pitching their services at the wrong level.
"What I would say is that most people calculate the cost of IT by looking at three areas: the cost of IT hardware and cloud services; the cost of connectivity; and the cost of the running and operating. MSPs really cover those three things," he said.
"But companies need to understand that there are actually four layers. They also need to look at the impact of their IT department on their workforce productivity. Let's say a business with a £10m payroll loses 10 per cent of its time to poor IT and services - that's £1m of extra budget that you can add on top of your other three layers. Now that's how you differentiate yourself away from the technology jargon and service jargon.
"We very rarely now start a conversation at a technology stack layer. It's about how we are going to improve the workforce layer, and we reiterate that by saying first of all that every ticket they give to us is a failure on our behalf."
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