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So we all agree that IT companies are facing challenging times, right? We all need to figure out a new business model in the near future. But what about the clients? Are they facing a similar problem? We have to take a good look at what’s happening on the client side to understand the trend.

We’ll use a chart to make the explanation easier. We’re looking at how things have changed in the last couple years, and where it could go. 

In this chart the horizontal axis is the business impact of IT. It shows how in time, the overall IT influence has changed on the client's side. How the IT impacts their everyday activities, but also product development, communications, service offerings, manufacturing and so on.

On the vertical axis you can see the overall complexity of the IT ecosystem, showing that over time it also has changed on the client's side: the number of different processes supported by an IT system, the amount of software and, hardware, connections, and network infrastructure in their ecosystem.

We graphically emphasize the overall IT management challenges with bubbles. The bigger the bubble gets the bigger the management challenge on IT.

 

 

So meet Carla, who runs a travel agency with 75 people and in a growth mode which she started in the mid-eighties. She’s quite IT savvy, and so has several legacy custom software applications still in use from way back then - word processors etc. IT wasn’t always a big deal, nor so complex, and had a very limited impact on her business.

In the nineties, they all upgraded to PCs, fax modems, better software, Windows - the big boom of the PC era. At first only the IT-savvy few were using that software, but as Carla upgraded to a more integrated ERP, the whole company started to. IT was getting more and more complex, with more software and hardware.

Even the reliability of a smooth running system was a big issue, but because everything was still backed up in hard copy, in the case of an outage the operation wasn’t catastrophically ground to a halt. When such management issues came up, someone internal who was familiar with the systems did the techy work.

Since 2000 the internet has become ubiquitous in business, so they upgraded again to a better ERP with CRM, and more communication to clients, and invested heavily in infrastructure with servers.
Because collaboration and email was a daily use they had to keep up with new tools as well as products being constantly developed. Every three years they’ve had to change the whole infrastructure with PC-s servers and softwares.

The local IT person was no longer able to manage so they switched to a IT Managed Services Provider, who was able to support all their systems from a technical standpoint, including helping them figure out upgrades, projects, and developments related to the IT infrastructure.

That was the “BC” era... Before the Cloud. In 2010 the cloud became the new standard, and we’re now ‘AC”...After the Cloud.

Carla has several internet based applications running. Now she can acquire and usually run nearly every IT function from the net.

Still she does not want to put everything in the cloud; just the most basic things, both to be more efficient and to incur less expense as a service. She enjoys the continuous development of the services without having to involve herself in big projects, upgrades, or infrastructure investments.

Small companies next emerged in the beneficial new milieu of AC, and had very cheap products available immediately without any server, or PC work. So they decreased their budgets supporting the old-fashioned infrastructure. They switched to Office 365, relying heavily on Google Apps with clients, using mobile devices with dropboxes, etc...hundreds of applications tied to devices without any coherent structure or defined boundary.

So Carla missed the direct but responsibility-laden control of the infrastructure in a way, but is prepared to move on. All she really needs is someone who can give her the control back, but the myriad vendors, ERP, CRM, B2B, B2C, cloud applications, integration software developers, and web developers are overwhelming her.

The MSP is doing his job, but there’s a role going unfilled: someone who puts all this together. The business impact is enormous now; if a system goes out, the company can be entirely missing a part of the operation.

The complexity of the ecosystem is now very high, and aching for adequate control.

This new role needs to be a very high level non-technology oriented management duty. Currently only the structure of the IT is managed. Unfortunately her MSP is focusing on too much on the technology side, which is not an issue. She is missing the management part - the Global IT budget, the management of vendors, the direction of projects, security in global, real IT strategy and so on. The MSP is performing their job at a high level, but aren’t able to give a comprehensive solution for her IT altogether.

So we see the challenge of Carla is to get something that seems beyond the scope of her current Managed Services Provider. She could go the path of developing an internal staff, and solve the problem sooner or later, but it would be far more competitive if the IT company could transition to the MSP 2.0 business model, which is basically management of IT with a global approach to give a competitive edge. Carla is willing to pay the additional fees to the MSP, as they have an established relationship, and she trusts she’ll get the functionality and performance she needs.
 
Carla needs a new working model from the MSP.

 

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.