The #1 Problem MSP Industry Faces

Still on vacation so I haven’t been jaded enough by the daily grind to offer much of an opinion on Vladville but I did chat with a friend that attended a conference over the summer and he offered the following observation (paraphrased):

So there is tons of opportunity out there in tons of different directions.. but the only thing I haven’t been able to find is a large number of successful business owners that have launched into these new tech fields – just one or two vendor prize cows that I’m sure are more there for a free vacation..

In a nutshell, even though the MSPs and VARs have been dying in droves, few have found a way up the food chain or fish in the wide blue oceans many industry experts fantasize about: and the #1 threat to the entire MSP ecosystem is as follows:

Nobody wants to do any actual IT work anymore.

What automation didn’t kill off in the terms of IT personnel – well, the cloud has been finishing off. Meaning the only good MSP food is the most poisonous one: dealing with the clients that have neglected their IT, that received bad advice, that are extremely or unreasonably cheap or limited in their willingness to touch new technology. And once you do try to untangle the mess you’re mostly stuck looking like the bad guy who broke a perfectly functional car made out of glass and ice cream.

The problem for the vendors is that without the new blood coming in to do the grunt work the pipeline dries up, the acquisition of new accounts becomes more difficult and you see what we have now: Vendors with limited prospects getting acquired for close to nothing (ie: “Financial terms not disclosed”) to private or venture interests with hopes of going IPO in the industry that isn’t growing rapidly. In other words: the greater fool theory.    

Real Grunt Work Sucks

Technology solutions come in two ugly and unappealing ways for the MSPs. The first is the easy/cloud/appliance model that completely eliminates the MSP in virtually all areas. There is literally no business model to be built on this and the relationship is typically large-Fortune-500 direct contract with the client. Some like to play on the edge (“We’ll manage your iPhone for you”) but most are finding very slim profit margins and more PITA – so they do it for the sole purpose of keeping the account.

The other model – grunt work – is still there but more often than not gets off on the wrong foot due to the complexity in the existing infrastructure. Things sure were easier when everything wasn’t connected to everything else, huh? There are seemingly two ways of doing it: Plan excessively and kill your profits up front or plan and roll out in stages and kill profits and opportunities over time as one thing explodes after another. I kind of like this model because it funds my business model but the real problem for MSPs is..

Do as I say, not as I do..

Bad leadership. You can hit up Vladville from 5 years ago and read about how the Master MSP thing was gonna work out. When you saw those things folding up and those folks getting jobs or becoming unemployed coaches you could have concluded, as I had, that the model just doesn’t scale and the only massively profitable way out was through the greater fool theory. In this sense, the biggest fool on the block was Best Buy.

Time to despair? If you’re an MSP, hell no. It’s important to have perspective and it’s important to understand your best interest. It is in your best interests to minimize costs, maximize profits, scale and replicate the business model far and wide. But that’s not what you’re going to get from the stage full of vendors – because that is not in their best interest – they need you to get the solution in and get out of the way. They need you buying more tools, getting more stuff, more seminars, more training, more expertise and more SWOT – don’t spend money scaling your business and getting more clients, how the hell does that pay the guy who makes you think that you just need to turn into a Walgreens and sell everything and double up your income from the existing client base that already thinks they are paying way too much for IT and hate seeing you at the top of their A/P every month?

If you have a bleak outlook on the technology business you’re either in the wrong business or you’re listening to the wrong people. And they are coaching experts lowlevelvendormanagement unemployed for a reason.

Edit: I kind of forgot to wrap it up there – my point is that the biggest problem the IT industry faces is the fact that nobody wants to do any actual grunt IT work because bulk of the promotion at the shows and other outlets is on simplicity and easy business. And if it were easy everyone would be doing it, not going out of business. The faster you come to terms that your rapid growth depends on your willingness to get dirty, the faster you’re going to grow. This is what we embraced at ExchangeDefender a year ago when we announced we’d do migrations to our hosted Exchange for free – yes it’s more expensive for us to pull off and it is about as glamorous as working the fry machine – but we’re growing and that’s not something you hear a lot out there these days. My motto is actual $ over opportunity to make $, any day, every day, all day long.