MSPs are expanding into advising services to improve their clients’ “digital maturity,” allowing clients to capitalize on their potential for growth. This expansion in services is letting MSPs grow their client base while also providing a much deeper level of service to businesses they already work with.
Lane Smith, CEO of Digital Maturity Advisors (DMA), works with MSPs to develop their internal digital maturity services. As a former MSP owner, he has seen how the industry has become stuck providing a service that is becoming a commodity and how MSPs are trying to differentiate themselves.
“There’s a huge disconnect in the IT space,” Smith said. “We’ve created this narrative over the past 25 years that we are taking care of your technology so you can focus on your business. That has pigeonholed us.”
“If we can change the narrative, we can start to get the ear of these business owners and say ‘We’ve been doing your technology, but we know business and we’re running successful businesses. We can help your business mature through digital maturity.”
As basic IT services become commonplace, Smith has seen MSPs begin to bridge the gap between IT services and business strategy. In the modern MSP market, defining your value to clients can make a big difference in getting new business. Expressing why your team is more than another simple IT provider is a crucial step MSPs are taking to stand out from the competition, he said.
Digital maturity is the metric that businesses use to describe how they integrate technology into their business strategy. By using deeper technology integrations in the creation of strategic business plans, advising clients have shown improved efficiency in achieving their business goals. MSPs have seen similar growth by working with their clients as advisors to create strategies, improving relationships with existing clients and bringing in new business.
The goal is to evolve the MSP-Client relationship from just IT services to a business advisory role. MSPs are expanding their revenue base by working with client leadership on how to best use and integrate technology to achieve results desired from short and long-term planning.
“By raising that maturity level, usually it will raise the business maturity as well. MSPs and clients have to look at everything, have a clear vision and mission of what they are doing,” he said.
Areas advisors can assist clients in include application modernizations, collaboration and communication methods, data management, risk management, process, productivity, and operation efficiency.
While MSPs assist their clients with technology and IT planning, Smith said, they don’t often engage with their clients’ business plans further than that. Digital maturity assessments begin with examining the client’s implementation of technology in their day-to-day operations. From there, MSPs can work with clients to create a strategy around how their tech can be used to best support and improve their business operations and future goals.
“Once you’ve got a strategy in place, then you can say ‘Here’s our three primary goals for the next three years. One of them is to increase market share, another is to increase profit, and another is to prepare a company for sale.’ Then you look at what we can do in the clients’ different departments to achieve those goals by leveraging new technology.”
MSPs are stuck in offering similar services as their competitors and, according to Smith, have been trying to branch out into other adjacent service markets such as security. As these expanded offerings become more common, the margins on those services get smaller to keep MSPs competitive.
“The MSPs are adding security services at less margins than they should be. How can an MSP increase margins? Well, they can outsource services and they can raise prices, but if all they’re providing is that utility service, it’s hard to raise prices,” Smith said.
“Go ahead and keep offering the utility. That’s fine. You’re gonna get margins on it, but you need to offer something of high value to the customer and that’s where [digital maturity advising] comes in. It’s a much higher margin solution and that’s how you get out of that commodity trap.”
While the traditional MSP services will continue to be the core of business operations throughout the industry, branching out into a new, high-value field can help MSPs escape this cycle.
By developing the experience and obtaining advising credentials through organizations like DMA, MSPs can expand their customer base and differentiate themselves from the competition.
MSPs becoming advisors have reported more success in landing new clients and securing business over their competitors. With opportunities like programs and grants available to gain advising credentials, digital maturity advising is becoming a big step for MSPs to offer deeper service to new and existing clients.
Smith, who has worked with MSPs to help them get advising credentials, said MSPs have used their credentials as a way to market themselves and uproot other MSPs, a traditionally difficult task.
“While most clients and MSPs form long term working relationships, the role of advisor can be such a strong value add that clients have been swayed to leave their existing MSP to work with an MSP with digital maturity advisor credentials,” he said.
Other financial benefits are also available to MSPs with this experience. One new opportunity for MSPs to develop in this space is the Canada Digital Adoption Program (CDAP), a grant program that offers funding to Canadian MSPs to improve their clients’ digital maturity in order to make Canadian businesses more competitive.
The CDAP program understands that digitally mature companies are more successful and have invested $4 billion into this program to develop Canadian businesses.
Uprooting another MSP is a notoriously difficult task, Smith said, but clients can work with an advisor when they already have an existing contract with another MSP. By getting that foot in the door, Smith notes that an MSP with advising credentials could eventually take on the full contract, pushing out the previous competitor.
Clients are looking to digital maturity assessments that will grade multiple aspects of the organization. From tech integration to performance indicators, MSPs work to develop the strategies to assist their clients. Branching out into advising can not only open new doors for MSPs, but also strengthen existing relationships.
DMA offers a certification program that works to develop the framework for this process. Smith said his organization has successfully helped MSPs gain the skills to bring clients through a “digital transformation” with their six-month certification course. DMA’s certification course prepares MSPs to deliver business improvement reviews, digital maturity assessments, discovery and planning services, and more. Certified advisors also participate in month group sessions to keep up-to-date on trends and best practices.
MSPs are also using services like ScalePad’s Lifecycle Manager and Backup Radar as tools to conduct the digital maturity assessments. These MSPs need to monitor and track the status of client hardware, warranties, and backups, providing vital information for MSPs to work with as part of developing technology and business strategies with clients. The Digital Maturity Index in Lifecycle Manager is just one system that evaluates a client’s tech environment and gives a score based on asset status, age, and warranty.