From The Expert Feature Article
July 31, 2013

GFI Finds MSP Vendor Loyalty Far Less Than Perfect

MSPs usually buy a service from one vendor, add management and resell it to clients. For it all to work, the underlying technology has to be good and the price low enough to make a profit.

And, according to new research, the technology has to be agile enough that MSPs can adapt it quickly and appropriately for customers.

The research was done by GFI MAX, a division of GFI Software exclusively aimed at servicing managed service providers.

Image via Shutterstock

GFI MAX surveyed 185 MSPs (the company has way more than that as partners) to explore issues such as profits, staff, utilization and business and technical agility.

The good news is that a solid two thirds of those asked report that demand for their managed services is on the rise, and grew this year compared to last.

Companies like Microsoft (News - Alert) pitch as many features as possible, especially in a product like Office. But MSPs don’t fully exploit all the features available to them, the survey reports. The survey shows that 43 percent exploit fewer than half the features available to them. While one may argue the MSPs are fully taking advantage of the software, you could also argue that MSPs are focused the features they really need to deliver specific and sometimes narrow services.

Agile (News - Alert) Software

Agile has a specific mean for software developers, meaning a faster way of writing and then iterating applications.

For MSPs agile means the software is adaptable, and for many this software is not adaptable enough. “Nearly one-quarter of managed services providers said their businesses would be more profitable if the software solutions that they’re currently using were more agile and better fit the evolving needs of their customers,” GFI said.

The GFI MAX general manager thinks MSPs are right to demand agility. “Now, more than ever, managed services providers need to be agile,” said Dr. Alistair Forbes, general manager of the GFI MAX business unit. “As the needs of customers evolve, MSPs must be agile enough to adapt to their changing needs. Long-term vendor contracts with a specified minimum number of devices will no longer be acceptable to customers. They want accessible technologies that can be up and running in a day and which are easy to learn. Finding and retaining the right caliber of staff is an issue for many MSPs and the overhead of training them to use complex tools is a barrier to their growth and efficiency. Furthermore, time spent configuring, maintaining and updating systems is time that would be better spent serving customer needs, a need that cloud-based services address very directly. Most importantly, MSPs should not be forced to turn away or incur additional costs to take on new business, but rather should be flexible enough to handle the individual needs of their customers.”

In fact, 18 percent of MSPs turn away new business because they don’t have the right software.

To keep this business, MSPs turn to customization. “Forty-two percent of respondents will sometimes pay more to customize offerings so they don’t have to turn down new business, while an additional 12 percent will frequently or always incur additional costs,” GFI said.

The Profit Motive

MSPs need good technology, but if it’s too expensive or margins are too slight, that technology is nearly useless. Vendors should also note that MSP loyalty is earned, not just a given, as 47 percent of respondents would actually break a contract and switch vendors if the reasons were good enough. “The top reasons for making the switch included cost savings (72 percent) and the ability to offer better software or better service (78 percent),” GFI said. “Of those who would not consider changing vendors, the majority indicated the biggest barrier to switching vendors is that the limitations of their in-house software are not sufficient to justify the effort to change.”

Other Findings

Here are some other results from the GFI MAX survey:

  • “About one-in-five (22 percent) respondents said they sometimes buy more licenses up front in order to get a good deal and then don’t utilize them. An additional 6 percent said they often or always purchase more licenses than necessary.”
  • “More than half of the MSPs surveyed (55 percent) said, throughout their growth, they’ve experienced the need to perform critical business functions (i.e. sales, employee management, recruitment, etc.) even though they would prefer to focus on the service provided to their customers.”
  • “Other challenges MSPs have faced throughout their growth include: finding experienced staff and retaining them (44 percent), getting customers to pay for services offered (44 percent), and needing to remain as agile now as when the company first started (36 percent).”
  • “Nearly half (45 percent) of MSPs believe adapting to their customers’ evolving needs (i.e. BYOD, cloud services, etc.) will be the biggest challenge their business will face in the next two to three years.”
  • “41 percent of MSPs believe a shortage of skilled employees will impact their ability to grow their business.”

Webinar Replay

This TMC (News - Alert) reporter recently hosted a GFI webinar aimed at MSPs, titled “Ditch Tape! Tape is Dead!" The idea is to use GFI cloud backup services to replace the unreliable and difficult to manage tape systems. Check out our replay of “Tape is Dead” or share “Tape is Dead” with colleagues.

Edited by Alisen Downey