A tectonic change is overtaking the managed services industry. With the significant market share to be earned through selling integrated cloud-based telecom services, historically “IT-only” MSPs are now expanding their client relationships to include these services. For some, this is part of a once-in-a-generation growth opportunity. For others, it’s simply a matter of survival.
Last year, the telecom cloud market was valued at $25.33 billion and is expected to grow to $74.36 billion by 2026. For the MSPs offering these new cloud-based services, much of the growth attracts customers away from historically IT-only service providers.
This dynamic is projected to accelerate as the distributed workforce settles in as a new reality, even in a post-COVID world. The superior margins and ease of onboarding gives first-mover advantages to those MSPs who have organized their back-office operations to handle this new type of business.
On Your Marks
The key to this transformation is the trusted relationship that reliable IT MSPs already have with their clients. As providers of heartbeat IT services for business, they are ideally positioned to expand that relationship into related offerings. And, for most companies, all things “cloud” can appear related. So it’s easy and sensible enough for a provider of one set of IT services to propose porting a client’s communications services over to their platform.
If two MSPs share different portions of a client’s business, this is an opportunity for one of them to consolidate the account. The more services an MSP offers, the more business they can secure. Conversely, the fewer services an MSP offers, the more at-risk that client account might be.
From the clients’ point-of-view, it’s all about cost efficiencies. If they can obtain bundled services of baseline quality for less than the sum of the components, they’re going to consider it. And when choosing between two comparable packages, cost is always going to be the first consideration.
But two MSPs offering identical telecom services won’t necessarily be able to provide the same price. Operational efficiency becomes a key advantage in pricing. And this is where too many MSPs can lose the race.
Set, Go! Not ready?
Ensuring full quote-to-cash from telecom services is usually the biggest hurdle for historically IT-only MSPs. Transitioning from simple monthly retainer billing to potentially variable, usage-driven billing might seem like a small step. But the inputs to telecom-specific billing are incredibly complex and dynamic.
Organizing product catalogs, dealing with complex telecom tax regimes and other cost components like usage-based charges and tiered rates can quickly become unmanageable. That’s why subscription billing platforms designed for this unique market have emerged as critical infrastructure for these operations. These billing platforms — like the revenue streams that fuel them—are cloud-based.
The increased efficiency and automation that these platforms provide allow MSPs to maximize their margins. They also enable MSPs to protect their existing book of business without taking hits to the bottom line. At this critical junction in the industry, the MSPs with the best billing, customer management, and payment processing operations are the best positioned to survive and prosper.
Eyes on The Finish Line
As any MSP knows, the most important thing they offer clients is peace-of-mind. That relationship can be a powerful insurance policy against client churn.
Here, too, effective back-office operations play a role. Nothing can disrupt a relationship like billing issues. The ideal billing operation is both frictionless and predictable. It should capture every penny in charges without fail, and not a penny more. A conversation about billing irregularities can quickly devolve into one about the basic relationship. That is a stumble no MSP wants.
In fact, this trusted position allows MSPs to be uniquely familiar with their clients’ distributed workforces, the types of services utilized, and what additional services an MSP can offer to address those needs. Those clients will be increasingly receptive to proposals to move their telecom to the cloud as more work is performed on cloud platforms.
As the race to the cloud heats up, the best equipped MSPs will enjoy an advantage. By seeing to their own cloud infrastructure, they will be better positioned to do the same for their clients and ensure their business relationships continue to hold the inside track.
Edited by
Maurice Nagle
