Executive Q&A: Building (and Growing) an MSP with SVP Channel Development, Len DiCostanzo

February 12, 2018  
Inspired by the winter Olympics, Autotask executives get candid in this new blog series, MSP – Go for the Gold! Featuring product and industry insights, advice and expertise, this series gives MSPs and ITSPs an inside look at how to seize opportunities and build a winning team to go for the gold in 2018 and beyond.

Len has over three decades of experience and has been on both sides of the channel. Starting his own solution-provider business in 1984, selling it in 2002, and joining Autotask in 2008 - Len has seen it all. Here are his insights on how to build a mature service provider business with a managed services practice.
Q: What do you see as the top opportunities for MSPs in 2018? 
A: It’s a great time to be an MSP or ITSP. With the proliferation of internet connected endpoints, including desktops, laptops, tablets and mobile devices, MSPs have an opportunity to exponentially grow their recurring revenue as they pick up more endpoints to deploy and manage. You had one work device in the old days and now can have three or more at your disposal. These endpoints need to be secured, monitored and updated to minimize vulnerabilities that can be exploited. In fact, Autotask’s 2017 Metrics that Matter™ survey found that 63% of more than 1,000 IT service provider respondents said they are supporting 50% more endpoints than last year, and I expect this trend to continue.

Business continuity (BC) is another solid recurring revenue opportunity for service providers.  While BC has always been an opportunity since technology has become a critical foundation for business over the years, it is more important than ever. While the early business threats were around infrequent disasters striking, like hurricanes, tornadoes, floods or even terrorist attacks, now it is all about constant vigilance around ransomware and other type of malware attacks that compromise business data and infrastructure. As MSPs educate their clients to the reality of today’s world, with the help of constant news about global ransomware attacks, it will be simpler to deploy total data protection solutions providing for quick data recovery and business continuity.

Q: What do you see as the top challenges for MSPs?
A: With the exponential growth of cloud applications of all types, it is becoming a real issue for MSPs to track and bill clients for cloud licenses, while reconciling against vendor invoices. Back when software came in a box, it was installed, billed and paid for on one invoice. Cloud apps are primarily being billed monthly as a managed service.  While this adds incremental recurring revenue, it adds up to a big headache. Instead of one-time invoicing, MSPs have to manage the constant fluctuation of provisioning and monthly billing of additional licensing and reduction of licenses as client employees come and go. Then, they have to reconcile this against cloud vendor invoices and ensure they are billing clients exactly what vendors are billing them. Over bill and MSPs look bad, under bill and revenue could be lost forever even though MSPs will be on the hook to pay their vendors. This is an industry issue as vendors, distributors and MSPs need to work together to ensure automated processes are put in place to make it easy for the channel to embrace the cloud.

While security is a solid opportunity due to more awareness around ransomware attacks and businesses going down as a result, it is also a big challenge. There is no amount of money that can protect a business 100% from internal or external threats to the business. If a vulnerability is exploited and something happens to a client that threatens the business, the MSP will be on the hook. It is important for MSPs to educate their clients about security issues, and the solutions to prevent vulnerabilities from being exploited, while taking advantage of the opportunity for total data protection solutions as mentioned above. 

Q: What metrics could MSPs track/review to ensure they’re on a path to grow?

A: We do not have the time or space here to share the many metrics MSPs need to monitor, but a couple of key metrics MSPs should set and track if they want to grow are yearly and monthly revenue targets. As most MSPs started their businesses based on their technical acumen, driving revenue through continuous sales and marketing efforts can be a bit foreign to them. I know because it was my problem for a number of my early years. It is hard to grow by accident.  

Set a plan for growth and you have a chance to achieve. And do not set revenue targets without understanding other critical metrics including business overhead and cost of service delivery. These types of business metrics should not be set in a vacuum, or by throwing darts at the wall.  Get the advice of an accounting professional to ensure you are on the right track.

It is also critical to track the pulse of your client base. Are they satisfied with the services you and your team are delivering? Are there any angry clients in your base? It will always cost more to find and onboard a new client than to keep a current one, so tracking client satisfaction via surveys and personal inquiries is critical to getting a view of how your business is doing, and what you need to do to continuously improve. By surveying your clients and their employees, you will also gain feedback and insight into how your own employees are performing so you can make solid personnel decisions.

Q: What advice would you offer an MSP getting started today or who feels stagnant and unable to grow their business?
A: Take time to work on your business, not in it. Do not get caught up in the day-to-day tasks that could distract you from achieving your goal of building a solid and profitable business. Plan time to execute activities designed to give you insight and make the right moves. A key activity is getting out there and listening to what your peers and vendor partners have to say. Attend as many industry events as you can. Being involved in the networking opportunities and knowledge share industry events have to offer is invaluable. 

You should also jump on the myriad of free webinars offered by your vendor partners, and sometimes delivered by their most successful MSP partners, to get a sense of what other MSPs are doing to be successful. And definitely take time to read industry publications sharing similar information.  

I know many MSPs say they do not have the time for these activities, but if you do not make the time, you will be your own worst enemy. And stay focused. Being an MSP can be a thankless job as you deal with client issues, so stay focused on what your business goals are and provide your clients the best experience possible.

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