UK managed service providers can become global leaders in the market, attendees of the 2015 CRN Managed Services Conference were told.
John Pepper, managing director of UK MSP Managed 24/7 – one of three keynote speakers at yesterday's event – told the audience that UK outfits are perfectly placed to become "thought leaders" in the global MSP market as new models such as predictive monitoring emerge.
"We have some incredible thinkers in this room and in the industry as a whole. And I think predictive managed services is an area in which we can be global leaders," Pepper said.
Citing the fact that there are 17,000 analytics in an Airbus A380 jet engine, Pepper said the IT sector is "way behind the times" in terms of its delivery, and urged UK MSPs to be the first to pick up the slack.
He said MSPs can move from a proactive to a predictive model in four steps. Rolling out multiple application monitoring tools (he said Managed 24/7 uses six) is the first step. MSPs should get their techies to "start playing around with probes and sensors", before building a data warehouse to capture the resultant activity. The final step is to add a business intelligence layer, he added.
"If you get those four components lined up – and it is a lot of work – you'll then be completely independent," Pepper (pictured) said. "We are into a whole new level of monitoring and 'MSP 8.0' – or whatever you want to call it – has emerged and we can be thought leaders in the UK for this".
Also giving tips on how to transition from a reseller to an MSP model and to build a more successful MSP business were Tim Walker, managing director of Taylor Made Computers, and Matt Tomon, managing director of Green Fields Technology.
Pepper's comments came after CRN editorial director Sara Yirrell unveiled CRN research indicating that, despite perceptions to the contrary, UK MSPs are level pegging with their US counterparts when it comes to the maturity of the managed services they offer.
The research also pinpointed collaboration between MSPs as a hotspot, with 53 per cent and 59 per cent of respondents in the UK and US, respectively, indicating they partner with other MSPs to offer a full service.
This point was picked up in the panel debate by Paul Stringfellow, technical director at Gardner Systems.
"We often look for where we have gaps in our service and look for service providers to fill that gap," he said. "It offers a better, rounded service for our customers. Somebody told me yesterday you could probably position us as a manager of managed service providers. I don't know whether the MMSP is a thing yet."
Asked during the panel debate how the MSP industry will change over the next 12 months, Paul Shannon, chief operating officer at ANS, predicted more customers will demand being able to look inside the "black box" of the MSP's offering.
"[Previously] we were strongly protecting anything we were managing because we were so protective over our SLAs," he said. "But we've realised over the course of the last few years that customers do want to look inside the service you are providing. They may have spent £10m on kit, infrastructure, software and cloud services – it is deeply arrogant for a service provider to turn to them and say 'you're not even allowed to look at it'."
The MSP market is becoming more crowded, but that does not mean rival MSPs shouldn't open up to each other and swap tips on pricing models, service delivery and how to reduce costs, Paul Tomlinson, managing director of Mirus IT added during the debate.
"It's great to have an open conversation with someone who runs the same type of business, warts and all," Tomlinson said.
"The best one for us was a couple of years ago. [Previously], we paid all our sales team on recurring revenue so every month they would receive commission regardless of whether or not the customer actually bought something from us.
"One sales guy who sold £300 worth of product in one month still managed to receive £10,000 – clearly that wasn't something we were able to continue with. So we shared our compensation plan with people, who all laughed and shared some great ones they were working with that actually drove the right behaviours. By implementing those in the business, we have seen increased sales and increased retention of customers."
Meanwhile, Shannon said recruiting talent was the "single biggest problem" he and his team face as he talked through the Manchester-based firm's journey from VAR to MSP over the past four years.
"There is a very limited talent pool out there on the technologies we work with and, quite frankly, I don't want to be in a position where I'm taking phone calls from the CEOs of competitors we have genuinely good relationships with, saying 'why are you constantly poaching my staff?'. Setting up a technical academy three years ago was the best single people innovation we've done in my time at the company."
Even though the MSP market is growing in double digits – compared with a 5.5 per cent forecasted slump in the wider IT market this year – presenters and panellists agreed the transition to an MPS model is a painful one.
But keynote speaker Tim Walker, managing director of Taylor Made Computer Solutions, which has shifted from VAR to MSP over the past few years, claimed the metamorphosis has paid off for his firm.
"Prior to moving into managed services, we had a very similar portfolio to I'm sure a lot of people in this room," Walker said. "It was very product focused, and to be blunt the revenues were pretty lumpy, and that's a relatively hard business to manage if you are trying to build consistent profitability into your business."
During the panel session, ANS' Shannon said the spark for his firm to move to an MSP model came four years ago when the board noticed the margins on kit heading south.
"Some of the sales guys didn't make it because they couldn't get their heads around it. We lost some sales guys and engineers, some service desk guys and some management," Shannon said.
"But actually the business, and the profitability of the business, is more important than individuals in the business. We chose to take the hit, and if we hadn't I can guarantee we wouldn't be where we are now. We were bold and I genuinely don't see how we could have done it without all the board waking up each morning and saying 'we're a managed services provider'. Even at the start, when we were still a VAR, we woke up and said that, and every word that came out in front of customers and staff was managed services related."
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