Why the Managed Service Provider Model Will Grow

In our company we call lone-wolf IT people “handymen”. These individuals are typically outsourced IT professionals who charge a billable rate by the hour. They serve numerous clients to varying degrees and can thrive during downturns as companies seek to minimize IT spending and limp along. There are inherent difficulties to being a handyman, here are the top three:

1. First, it is hard to make money. They spend their days running around from job to job, doing their best to be fair. They take calls in the evenings and weekends. Work late hours catching up on invoices and all the duties of running a business. Their effective rates per hour often end up quite low, so the likelihood that the individual will burn-out and take a job with stability and benefits somewhere else is very high.
2. It is very hard to be the expert on every potential tech problem. Every professional has several disciplines or aptitudes in which they excel, several in which they are decent, and the rest they are poor to very poor at. So handymen are constantly trying to Google or fumble through problems they don’t really enjoy solving. This is discouraging and frustrating.
3. There is no stickiness. Clients use handymen as a resource, but the advice the handymen give is typically hard to bill for. So handymen look for solutions that are hands-off, low touch and easy to sell (cheap). This allows them to remedy the issue at hand and get on to the next billable job. Unfortunately for them this doesn’t ensure that the customer is getting the best solution long-term, which may take more detailed analysis and justification. These short-term solutions eventually end up being expensive for the client, and diminish loyalty and stickiness.

It is projected that the managed service model will grow by 45% over the next 5 years because it solves all these challenges and more. Indeed, a rough count of Upwards current clients suggests that about 40% of all of our client acquisitions are taken from handymen! Here are the advantages to the Managed Services model from a client perspective.

1. Instead of being rewarded (paid hourly) when things break, an MSP makes the same amount whether they spend 3 hours or 30 hours on the clients behalf. So if you can find a good MSP, they should be making lots of money (and have lots of incentive to invest in making sure they provide great service and solutions into the future), this means they are good at what they do and have effectively steered your company towards stability and productivity.
2. MSP’s distribute knowledge across a high-functioning team. Team members are encouraged to develop skills where they have an aptitude and not forced to tackle problems they will be inefficient at fixing. This means the customer almost always has the most effective resource for the job. This collaborative approach contributes to cross-pollination of wisdom and skills. So a good MSP should always continue to get better and better as your relationship persists.
3. MSP’s are strongly incentivized to implement long-term solutions. This often involves more account management involvement and longer sales cycles, but doing it right versus doing it now will almost always provide long-term ROI to both parties. Whether the client realizes it or not, there should always be a healthy tension between the IT group and whoever controls the purse strings. It means the IT company is being vigilant and willing to risk rocking the boat to keep your business moving forward.

If you are still working with a handyman IT guy, it may be time to investigate a relationship with a company like Upward Technology to see about promoting your company to the next level.