MSP Scaling Struggle Continues

While many MSPs understand the need to leave the break-fix model firmly in the past, the channel is still heavily populated by MSPs operating in this way. As we move to a world where everything is being offered as a service, we risk the channel being saturated by MSPs stuck on break-fix and with not enough business to go round. Low customer satisfaction and overloaded staff are other consequences as the MSP scaling struggle goes on.

I think it’s been repeated enough times already by wiser people than me: MSPs must move away from break-fix to a managed services model to scale their business. So let’s face it. Switching to offering every part of IT assistance as a service is not very easy. A lot of MSPs will not be able to make the move, and maybe it is just the way it is.

Through the years I learned that most businesses start with an inner desire to change the world of IT. It could be a couple of tech-savvy friends teaming up and offering their services. Other times the MSP is born out of internal layoffs: The CIO tells the IT admin that they can no longer afford to keep them on in a full-time role. As a result, the MSP starts out with the owner’s old company as its first client.

No matter how the MSP is founded, the overall business mind-set is typically framed around thinking that revenue comes from getting paid by the hour – a break-fix company in other words.

Running out of hours is bad in the long run

As the business grows, the founder(s) quickly face the same problem: They are running out of hours and they have more clients who can’t all be served at once. Which is a problem if they are used to you getting on your superhero suit and rescuing them from their sorrows right after they called you.

It’s been like that for years, and I don’t see why it should change anytime soon. The vast majority of MSPs are smaller companies that invoice by the hour and are stuck in a break-fix mind-set. So, what impact does this have on the channel overall?

First of all, too many MSPs don’t survive. It sounds like a doomsday prediction, but nonetheless we see that clearly in our business. Our clients rarely leave us, but when they do, the most frequent reason why MSPs discontinue using our tools is that they go out of business. There are various reasons, but it has an impact on the industry overall. It’s a hassle if your trusted IT partner is suddenly no longer around. If the average lifetime for new MSPs is low, clients are forced to be extra diligent when looking for the right business partner to look after their IT stuff.

It could easily end up in a situation where clients look for established service providers, which would make it even more difficult for new players to enter the market. That kind of market dynamics is not a good scenario.

Staff overload

Overloaded MSP staff doesn't look like this. But you get the picture.Another downside of the break-fix mind-set is that it adds unnecessary stress, because your clients call you only when things are not working. If most of your work for your clients is urgent, you will find yourself in situations where you and your staff feel inadequate. For example, you may be working in one client’s server rack when another client calls with a virus incident on their network.

There are two things you can do: Overload your staff and make stressful situations a part of their job. Or you can hire more people than you need to deliver a great on-demand service to your clients. Neither of these options is really good for growing a MSP business.

May I suggest a totally different approach than break-fix? Like a managed serviced approach, so you can monitor, maintain and patch your clients’ IT networks and offer a better overall service. It would be better for you, your clients – and the overall reputation of the industry.

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