What is the future of Managed IT services? That's what we're all trying to figure out, right? There are tons of opportunities surrounding managed IT services, but many MSPs aren't sure of the best way to capitalize on the growing market. The spend by small businesses for IT services is expected to cross the $1 trillion mark in 2015. Clearly, there's a lot of room in the market, but it can feel like being a little fish in a big sea.
On Episode 1 of MSPradio, I sit down with Mark Connolly, VP of Sales at Continuum and Mark Zahar, VP of Channel Sales at Continuum, to discuss the future of the industry and how MSPs can take advantage of the opportunity at hand. Take a listen and subscribe to our podcast to get each episode straight to your iTunes!
We'd love to hear your feedback on the show. Tweet us @FollowContinuum or use #MSPradio to let us know what you think.
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Nate: This is Nate Teplow here with continuum managed services. We're really excited to bring you MSPRadio. This is our first ever episode so again we are really excited to have everyone joining us and really looking forward to delivering many more episodes to you guys during our live show at 2:00pm Eastern time on Thursdays and also via iTunes. You can subscribe on iTunes if you search for MSPnow you can subscribe and get our pod cast directly to your iTunes account so you can keep up with them week to week. First off, I just wanted to give a quick little intro to MSPRadio. We're really dedicating this show to manage service providers, giving you guys good tips to survive in the marketplace, to grow as MSP's and hopefully throwing in a few little nuggets of entertainment here and there too. So MSPRadio is brought to you by Continual Manage Services. We are the industries only channel exclusive provider fully integrated manage services. We're going to be live tweeting during the show, so feel free to tweet at us. If you tweet at follow [unintelligible] or use the hashtag MSPRadio, we'd love to hear what you guys have to say. If you have questions let us know. If you have ideas for future topics let us know. We love hearing from all of you so feel free to tweet us again at followcontinuum or use the hashtag MSPRadio I also just wanted to mention that we are having our first ever user conference this September. It's called Navigate and will be hosted at the Seaport Hotel in Boston from September 21-23. You can go to www.continuumnavigate.com all one word to learn more and we are looking forward to seeing a lot of our partners there and some familiar faces. For episode one we wanted to kick things off just talking about the future of manage services, kind of where the market is going, some opportunities there for MSP's and just what to look forward to in the next 6, 12, 18 months. So I'm sitting here with Mark Connolly. He's our VP of Sales at Continuum. Mark how are you doing today?
Mark: Great Nate! Good to be here. Thanks for having me.
Nate: Yeah. We're excited to have you. So to kick things off, obviously the need for IT services isn't going anywhere. There's clearly a need for the market, what is kind of the future for the market for maintenance service providers?
Mark: Yeah, sure. That's a great question Nate. You're absolutely right. It's not going anywhere. In fact to the contrary. IT infrastructure and IT complexity is just continuing to escalate as we all know if we look around we all have iPads and mobile devices and laptops and desktops and it continues to evolve and continues to grow so the great news there for our MSP partners is that the market will continue to grow. In fact Gardiner has mentioned that by 2015 the IT spent in the SMB space that we're focused on will be in the neighborhood of a trillion dollars. There's a massive amount of revenue and a massive amount to spend and in that SMB market depending on the figures that you look at, there's somewhere in the neighborhood of 6 or 7 million SMB's, small to medium size businesses, maybe 5 seats to 250 seats in that range and the vast majority of the smaller companies still struggle with IT infrastructure, number one and they still struggle with how to support that and they generally don't have the means financially to have an IT staff in house and that's where our SMB's come in. The big news is their environment is getting more complex every day, they intend to spend money there and they don't have the money to be able to afford an IT staff, so the MSP is destined to play in that area. All good news as far as the market is concerned for the foreseeable future. We've got some game changing things we'll talk in a few minutes about like [unintelligible] and things like that, but the market is healthy. The market is moving and it's a great time to be in MSP and be a partner.
Nate: Definitely and these SMB's as you mentioned is all these different sorts of technologies and complexities and increasing every day. They're really looking for a partner and sort of a business consultant when it comes to an IT solution problem, not just someone they can call to fix the system or they don't want like a repairman. They really want someone they can trust and go to with questions about all these different technologies they can utilize.
Mark: That's exactly right, that's exactly right. In fact, because of technology and partners like us have that opportunity to not just be that bright fix repair guy that come in with an IT infrastructure that only enterprise accounts have had the opportunity to take advantage of today. They bring that technology down to the SMB level. In most cases they do become that trusted advisor and they're the one that comes in and counsels the SMB's to what they need. When you think of it, if you or I owned a small business, we're good at owning the business. We're good at running that business. We don't want to pay attention to the IT infrastructure. We want to out source that to somebody who is expert in doing that. Yes, these people are looking for a partner from the SMB than they are from someone who will just come in and fix something when it breaks.
Nate: Exactly and to really work to understand the business' goals and not just be a tech guy.
Mark: That's exactly right. The impact on the business.
Nate: Well thanks Mark. What are some other kind of happenings in the SMB market that are really changing the landscape for management service providers?
Mark: That's a great question Nate. What we have seen and what we have observed here over the last year plus is the vast majority of our partners kind of grew up in the data side of the house. A lot of these partners if they go back far enough were retailers who became [unintelligible] who became MSP's and technology could allow them to do that. The vast majority of our partners today have that sort of a profile and what we're seeing is other people, other vendors in other areas of technology that touch the SMB space are looking to kind of move in as well. For example the folks that have historically provided TelCom solutions, their telephone system is now part of a network and they're looking for ways to extend their footprint within their account so the telecommunication companies are kind of getting to the data side of the house and be an IT solution provider as well. Then there's the office equipment folks who historically have provided copy machines and printers and fax machines and then they all became one machine that did all functions and was on your network again and again they've come in and they've done a good job and they know how to sell a monthly repair contract while they're looking as well, so you know a year ago we were talking about this convergence of data and telco and office equipment all going after the SMB's [unintelligible]. Today it might be more of a collision. It's not future, it's happening and we get calls regularly. We work with folks in telecommunications industry and the office equipment industry in addition to the data side of the house and all of these folks are looking at that SMB space again because it's historically been underserved and I think each one of those constituents have some value to bring to that environment. I think that's a changing landscape and I think if you're any one of those three I think what you need to think about is not just how do you defend your core business, if you're the coffee machine person, how do you make sure to continue to be that person or if you're the data person, how do you continue to be that person? Defend your existing thing, but if you don't extend into these other areas they may look to somebody or a provider who can do all of that for them so we see more and more of our MSP's who might take on some of those other components to be a more well-rounded solution. Regardless of that we want to be the provider that has the platform that any of those people could bring in and provide a full and robust solution for that.
Nate: It's interesting because the MSP's have kind of the IT expertise, but they don't have the clients and these telecom and OE suppliers have the clients, but not necessarily the expertise. They're trying to make that leap into that expertise so it's an interesting collision of these different entities that are all converging into this one space.
Mark: It really is and what we've seen as a result of that actually is you see some partnering going on and we've also seen some acquisitions. We've seen some larger organizations look to acquire the expertise they don't have to really jump-start themselves into that space. If I'm a large office dealer I might acquire a small MSP in my space to acquire that skill set and maybe a customer base and that gives me a running start in that industry. I think a lot of things are going to change. Like all industries over time there's consolidation and there's a competitive nature of going after whatever the business is and we have that here. The good news is there's plenty for all of us to go after.
Nate: You said one trillion dollars earlier.
Mark: Plenty of opportunities.
Nate: Great. You are an MSP and you kind of hear this notion of being acquired by some of these dealers. Is there something you can speak to in that regard? Is that an opportunity for MSP's? Should they kind of hold their ground on that? Is there any sort of direction you could give them in that regard?
Mark: I think it varies a little bit based on the MSP. We stay pretty close to our partners and on some regular basis we'll hear from a partner that might be at that point where they've reached a point that they would be interested in selling the business or being acquired by a larger organization and we have others who have an appetite for doing the acquiring so we don't try to play the broker in that, that's not our role, but where we can hook people up in that environment we do. That can be a great outcome and either side of that puzzle could be a great synergy. We've had a couple of great acquirements where again we've had office equipment dealers that have purchased an acquired MSP and the 1+1=4 type of thing. You've brought some sales and marketing expertise to some technical expertise and customer base and the results can be tremendous. It's not for everybody and certainly I don't think the average MSP has to listen to this and say, "Oh I'm going to be acquired or should be acquiring". It's one other avenue to think about in your long-term strategy.
Nate: It really sounds like this big kind of collision course of these different pieces of the puzzle and again just filled with opportunity. As we look towards the future what are some of the technologies or again areas of the landscape that you think will shape the MSP market moving forward in the next year or two years?
Mark: It's a good question Nate and it's something we try to think about quite a bit so that we can be in a position to provide levels of solutions to our partners so they can take advantage of that so I think technology marches on and we're going to see changes in all areas, but one large piece that none of us can ignore is the cloud. The cloud isn't new, but I think it's a new horizon for us and for our partners and for their clients. One thing for sure is the MSP space there's probably a limited expertise on what the cloud is and what it means. Most of these would have heard of 'the cloud', but they'd be looking for somebody to kind of guide and navigate them through the choices that are out there in the world to try to do the right thing. I think the cloud in general, whatever that means, whether it's hosted applications or storing data for backup from recovery and continuity purposes or whatever, I think the cloud presents a huge opportunity for our MSP partner community even in that these SMB's will be looking for guidance and direction so one of the things the MSP's really want to do in our world is to be that trusted advisor relationship because if I do then that SMB is going to turn to me and say "tell me what I should do. Should I be in the cloud? How do I get there? What does that mean? Should I stay here for a while? Is there a hybrid solution that makes sense?" so they're not going to know what they need to do and they're not going to look to Microsoft for that or Google or Amazon. Those are all big companies in the background here of course that are players, but that small to medium sized business wants that person that they're dealing with that they know they trust that can help navigate them through that. What we want to try to do and will continue to try to do is make sure that we continue as we always have continued to provide our partners with the right solutions that allow them to take themselves to the cloud and then also go to the SMB space with their clients and be able to articulate a full message that one size doesn't fit all. Let's talk about your specific needs and why you should do this or shouldn't do this. Is it the right timing for you to do it now or do you do it down the road, but whatever that small businesses needs are, our partners will have solutions from us to be able to provide the proper solution to the end client. We'll be making some announcements shortly this year around cloud solutions that we've been developing that are pretty exciting that are a starting point for us in this whole cloud portfolio of solutions that we'll have over time and it's a huge opportunity for us and I think [unintelligible] for us and for our MSP's as well so we're pretty excited about it.
Nate: Definitely and the cloud is a huge topic. We're actually going to have future episodes solely devoted to the cloud, but it's definitely a game changer when it comes to the MSP space and it's not black and white. It's not like you use the cloud or not. It's not yes or no. It's really about which components of my business can be best utilized in the cloud and what are the best strategies and it's really going to fall on the MSP's to be the experts for their clients.
Mark: That's exactly right.
Nate: Well thank you for joining us here Mark. We're actually going to have segment number two of our first episode here with Mark Zahar. He's going to talk a little bit about MSP's can really take advantage of these opportunities in the marketplace. We're going to take a quick commercial break, but again just wanted to remind you to tweet at us. If you tweet at followcontinuum or use the hashtag MSPRadio we'll be looking out for your tweets and would love to hear what you have to say of the episode so far and any comments or questions you have we will be monitoring. Thank you Mark for joining us.
Mark: Thanks for having me.
Nate: We'll see you guys in a sec.
Nate: All right. Welcome back to MSPRadio. I'm your host, Nate Teplow. I'm sitting here with Mark Zahar who is our VP of Channel Sales here at Continuum. Mark how's it going today?
Mark: Going great Nate. Thanks for inviting me to MSPRadio. Are you excited?
Nate: Yeah we're excited to have you here on our first ever episode so I look forward to more appearances from Mark here. We just spoke to Mark Connolly, not be confused with Mark Zahar who is here now, but Mark and I discussed kind of the market opportunity for MSP's now and some of the opportunities that they can pursue, some of the numbers and I thought I'd direct the question to you of how can MSP's really take advantage of this opportunity? There's clearly this need for IT services, but how can MSP's really attack the market and really capitalize on these opportunities?
Mark: I think first and foremost Nate one of the things I think is important especially right around the cloud is there are all these things that MSP's have to deal with. If you're thinking about their business, how do they go about presenting themselves to the market and I think it can be very consuming and overwhelming for an MSP to understand what the heck is going on. What I would say the first thing an MSP would really have to do is figure out how they're presenting themselves and that to me goes all about the packaging of their business because I think there are a lot of things an MSP can offer to their client base. I think what I would do and what I would instruct these MSP's to do is really figure out what is their product positioning and who are they going to be selling this stuff to? I think there's all these buzz words coming around and I think if you're selling all this stuff to the local business, what are you trying to say and what value can you bring to the SMB and the thing I talk a lot about with our partners is it's not really about technology anymore and I'm pretty clear with them by saying the days of coming into the office with a tool belt on and I joke are gone and I think every MSP needs to be successful, they now have to position themselves and really as an adviser to the SMB market. That means it's more of a board member if you will and really help their partners or their clients from a strategic level. What is going on with technology? How does it really help an SMB grow? That's really the role of the MSP. It's less and less about technology. Technology is still a very important role, but it's more strategic than from a technical perspective. I know that we just talked about a lot of things there so really to summarize I would say it has to do with packaging of your business and really packaging product and services that you can take to the market, number one and being more of a strategic adviser to your customers and then showing them a road map of what you mean by that. Don't just tell me these things, but show me what you're talking about in the impact of my business. Those two things I think are really, really important.
Nate: Definitely. It's really about defining yourself as an MSP. You obviously can't be everything to everyone and once you kind of have your niche in the market you can really go after it.
Mark: Exactly and I think when we talk about areas of opportunity we talked to a lot of partners and a lot of them struggle in and around sales and marketing. It's very difficult to bring on sales personnel. A lot of times sales people fail and they blame it on the sales person, but I would say a lot of times it has to do with the packaging of your business and MSP's so what is it you're offering and then determining who you want to go after, what is that message and how do you track if you're successful? When you look at any MSP trying to figure out what to do, a lot of them have grown organically and that's referral based and a lot of times I always say I equate it to kind of needing a surgeon if you have a broken leg. Most MSP's though very, very confident in their selling ability, the true reality of how good you are is really educating a SMB on your services and make them realize that they have a need because a lot of MSP's are getting called in when there's a problem and most people can fix things when there's a problem, but you can't grow the way you need to grow without really putting a plan in place and executing against that plan.
Nate: When you say 'grow organically' that sounds kind of nice, but really when you're grown organically you're sitting back and waiting for things to come your way.
Mark: It's mostly referrals so how do you change that? From an MSP perspective it's taking a look at where are you successful? That could be a [unintelligible]. I've had a lot of experience in health care or CPA's or manufacturing, so figuring out which area you are successful, figuring out what are the pain points that your solution solves, putting a plan around that and then developing a plan of attack to go after that market because the reality is if one manufacturing company is facing some pain points you go into another and it's very easy for you to share your successes on what you've encountered in that marketplace and be able to help, but it goes back to how you helped your client be successful. Again, either you're saving him time or making him more money. Something has to be there of value and sharing that with your client, an SMB is really important the way they can visually understand the value that you bring into the business.
Nate: Definitely. What are some ways that you can actually go and attack the market? We talked about putting together a plan to attack the market, but what are some of the components of that plan?
Mark: When I look at it again it starts by looking at where you've been successful. Take a look at my current customer base. Look at definable and immeasurable successes or wins. Again, based upon it could be a strategy for new equipment or bringing somebody to the cloud, how can I articulate if I'm talking to a business owner, a small business owner, where do I have demonstrable wins of value? Not just that we changed some technology or hardware, but what did we do operationally for their business? Once you have these wins, what I would then say is figure out based on the market that you want to go after, again if I have success in manufacturing, what I would then do is go to either ZoomInfo or any one of these list providers and I would build a data base or listing of people that fit a certain profile. It could be manufacturing companies within 30 miles of my zip code and I'm looking for maybe the business and the technology people. I would first take a look at what is that market size look like, number one. From there I'm a big believer in several things, but making sure before I reach out there are some things that have to be put in place, obviously your social media experts, but I would look at our website. Does it articulate the value that I'm looking to put out? Do I have a Facebook, LinkedIn and other social media profiles out in the marketplace? If no matter if I start to do my outbound components, my outbound calling and my outbound messaging, once I start to drive people back to me or start to engage people, is it conveying the message that I want to tell? I get to building a list, it's making sure that I've got my own house in order that I can articulate my value. So that's kind of the first phase. The second phase is really how do I go out to the market? I believe, especially if the MSP doesn't have a lot of money, the easiest thing you could do from a social media perspective is getting your name out there and position yourself as an expert in about one or two topics. I don't think I would try to be an expert to everybody. Actually one of our clients, one of our MSP's does a lot around security and he's actually gotten a lot of business through Twitter believe it or not. That's the second thing. Look at the free channels or the ones that don't require a lot of money and that's all on social. That would be the second thing that I would do. The third thing or if you call it 1, 2, 3 I'm a huge believer of lunch and learns and there's a way to do it where it doesn't cost you a lot of money. You can do it with your local chamber, but the other thing I've found a lot of partners do is they actually hook up with some of their clients. If I've got a client that's a CPA, maybe I do something around HIPPA or something of compliance so it's a win-win for the CPA. They're providing value right to their customers and then for the MSP, he's doing something in return so that's something they can do immediately and the value of that is if you don't have a data base today, you're starting to build an organic list and I think that's really important. The last thing that I encourage people to do is you have to put money behind sales. It's the hardest thing for people to do because most MSP's are looking for a quick fix. I want to run one marketing campaign or I want to make one series of phone calls. The reality from a sales perspective is you have to contact somebody up to 12 times to motivate them. The reality is that most sales people fall off after 4 times. What does that say? That says that you're wasting a lot of effort and if you can't afford somebody in sales I would bring in an intern. I think an outbound calling effort in conjunction with social media and a lunch and learn series would be things that are critical in today's marketplace that they should be considering.
Nate: Definitely. You really need the marketing kind of behind the sales to really support them and really compliment those efforts.
Mark: The other thing is when you're looking at where you've seen success and I think a lot of partners will say, "I'm not sure what content I should be writing about" or providing papers or anything around it and I would say to them, "When you look at your customer base, what are the top ten things that you get asked about over and over and over again?" because there's a lot of common themes so I would take those 5, 10 or 15 things and build content around that. It's very similar and as you know from a blogging perspective it could be a couple of paragraphs. Short, sweet and to the point, but it positions you as the expert.
Nate: Yes and you've got to stick with it too. A lot of people say you've got to start a blog and it's not just about starting it or about building a Twitter profile, but really being active on them and keeping up with it. It definitely takes an effort, but it can really support a lot of the sales initiatives that you're using.
Mark: I think it goes back to those people saying, "I'm not a good writer. I don't know what to do." and I'm like, "Let's not over complicate this thing. What are the top ten questions that a client would ask you? Jot those down." You could do a blog a month or if you look at the top ten questions, one question you could have a blog a week on that alone so there's a lot there. You've just got to do it. You've just got to start and I think the nice thing about blog content is if it's fresh as you know, Google is going to pick it up and driving inbound increase is the best lead generation you could do. The problem for a lot of partners is if you do nothing, you're going to get no response so you have to do something and you have to consistently do that.
Nate: Definitely. I think just to end our segment here I'd like to ask Mark one question and I think we've probably touched on this during our segment here. If there's one thing that every MSP should be doing right now or at least start doing, what would that be and why?
Mark: Well I'm a big believer. I come at it from a sales perspective and I think the marketing pieces are really important, which we talked about, but I honestly believe that in order to grow, if you're looking to grow your business quickly with velocity, I still believe it goes back to generating that list, getting an intern or having somebody on a weekly basis put some dials together and reach out to that list because it does a couple of things. It gets your name in front of somebody right before they're ready to buy. It positions your business in a way that people can remember it and last when there is a problem, it might not be in month one or month two, but when there is a problem you're front and center. I don't think enough people do it and I think it's critical because I think from a marketing perspective all those other things take a little bit of time and I think you could get somebody on the phone right away and I think it's one of the hardest things to do and then you'll find that a lot of people will tell you that cold calling is dead. I will tell you cold calling is not dead in conjunction with a well-rounded marketing plan, it will be very, very effective. That's what I would focus my energies on.
Nate: Sounds good. Thank you Mark for joining us. Don't forget everyone listening we're going to be on Twitter during the show. We would love to hear what you guys have to say about the show or any questions that you might have, you can tweet us at followcontinuum or use the hashtag MSPRadio. We'll be tracking and looking over what you guys have to say about the show. You can also visit our blog at blog.continuum.net and we've got a ton of great content there in terms of growing your MSP business, in terms of staying compliant with HIPPA. We love to see you guys on the blog and checking out some of our articles. Lastly you can go to iTunes and subscribe to our radio channel. That's MSPnow. If you search for MSPnow on iTunes you can subscribe and all of these will be accessible via a pod cast straight to your iTunes. Thank you everyone for joining us for our first ever episode of MSPRadio. We look forward to bringing you many, many more. Next week we're going to be speaking with Rob Auder on HIPPA compliance and some upcoming changes so stay tuned for that. Thanks again everyone for joining us.
By Meaghan Moraes
By Lily Teplow