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MSP IT budget report

There was a State of IT Budget Report - a microscopic view of North America IT spending in 2014 from Spiceworks (RMM tool) during the weekend. It was all about analysing IT expenditures based on a 450 sample size "IT Pro" survey.It was a good report, well-thought out and executed, but there was something bothersome to me that wasn’t the fault of Spiceworks: the general industry definition of scope of IT, and because this is the industry definition, it’s usually our clients’ as well.

I would like to highlight the flaw in an MSP defining their arena of activity based on the same definition. There is a debilitating pattern of industry players limiting the scope of the possibilities of their clients (MSPs) by limiting the scopes of the definitions of what they do.

OK. See how Spiceworks sees the "world of IT":

Hardware:

  • Networking
  • Server
  • DesktopLaptop
Software:
  • OS
  • Productivity
  • Virtualization
  • Security
  • Database

Cloud:
  • Online backup/recovery
  • Email hosting
  • Web hosting
  • Application hosting
  • Productivity solutions
  • Content filtering

Managed Services:
  • Connectivity/bandwith
  • Storage/backup/archiving
  • Hosting
  • IT service providers
  • Consulting


You can download the report from here. Again, it’s a good one.

I think this is a very good classification of the different items a general client is buying now. However, it doesn’t at all address some great opportunity aspects. This is just the traditional MSP 1.0 classification.

1. I don’t see any "new" budget sections that somebody could create based on services addressing client's problems, and suggests that they are not shopping around. The biggest missing point is IT management services. I see a category for IT consultancy, but IT management services are not consultancy. Vendor management, IT reporting, IT budget reconciliation, managing SaaS subscriptions, IT security compliance in general and so forth are not consulting services, but I don’t see the place for those.

Because these are quite new services, clients aren’t yet aware of these solutions - though they do know the problems right now. Service providers should now create budgets for these types of these types of MSP 2.0 services. This is also putting into practice what we learned from the book "Challenger Sale."

2. I also can’t see an "IT Budget" for ERP, CRM, B2B, B2C, custom software developments, online marketing, etc. These are not just "consultancy" or "software" categories. A lot of progressive IT managed services providers are making money on third-party evaluations, project managements, etc.

It is clear that the report reflects only the "IT Infrastructure" type software and has nothing to do with other "enterprise" or internal process management, reporting, and client services like software. This report would have been better titled "2014 State of IT Infrastructure Report." In my opinion, it is critical, not just semantic, that the definition of IT not be limited to infrastructure, software, and hardware.

We limit ourselves in the perception of our clients as well. When we say "IT" or "technology," their definition will be the infrastructure, and if we support this we’ll get more isolated into this slot. 

What does it mean to you?

If you are talking to your clients, they are likely to think of "IT" the way Spiceworks' termed it: infrastructure. But of course you are thinking on a broader perspective: Everything that is made of '0' or '1' is IT. If you do not address that, the new IT-based opportunities such as MSP 2.0, vCIO, reselling cloud-based business applications are not going to be a part of your portfolio.

You have two options:

1. Reframe your clients. Check this short video about reframing what IT can do for a client. This is a 10-minute presentation that shows how easily it can be done. We use this type of discussion with clients to make sure we define what IT really means, and we "redefine" IT using stories.

2. Use different terminology: In this case, you try to introduce new terminology, words, and phrases that help you create the difference in understanding. This is more difficult as you’ll regularly be trying to speak in jargon they won’t understand, like "holistic IT" or "business-focused IT".


Conclusion:

The IT industry has created a world that could limit you, where IT gets defined as IT Infrastructure. This is a limiting factor to you because you are in the IT industry. You need to differentiate yourself either by reframing your client's understanding of your trade or teaching them new terminology.

Please consider joining our webinar with Richard Tubb: Moving from Technician to Business Consultant 

Denes Purnhauser

Written by Denes Purnhauser

Denes has grown his MSP from 5 people to 17 staff in less than a year by implementing business problem focused sales processes with vCIO. He has transformed the client engagement processes of hundreds of MSPs.