I admit, I borrowed the title of an excellent presentation by Dr. Joseph Williams, Director generally, Microsoft WW SaaS Channel. He gave a presentation at the recent Microsoft Hosting Summit, and the point is this:
The hosting market is crowded and includes huge players such as Microsoft itself. If you want to maintain good health hosted services company, do not chase the same basic product offers everyone, and do not try to compete with the offers basic online Microsoft itself. Instead, in competition with one or more of many ways to differentiate your service.
Just because the market for managed services and hosted services is growing, that does not guarantee that you can keep the margin. And if all you do is price competition, it will be a race to the bottom ...
The differentiation of spectrum
one way to think of service differentiation is along a spectrum. At the bottom are the services that commodity have to be offered - like the dedicated email or servers - which help to gain basic business. Or maybe they are just "check mark" MSP requirements should offer. However, these basic services are generally low prices with low margins.
But as you move along the spectrum to the right, your offerings (as well as sales, support and technology models) will change. Maybe you begin to offer cloud services. Or maybe hosted applications. Or even basic hosted desktop. These services can command much higher prices - value because they are higher - but will require you to rethink how you provide it. Rather than offering product offerings or custom services "tailored" you are used to, offers high value must be scalable. This means fewer references and an approach more punch to the sale and set up. Why? They are by nature more complex at the base, and therefore must be replicable - avoiding risky customization
As your customers to migrate to high value-added services, everyone is better served. The customer - whose IT needs are met at all levels, and MSP - benefiting from higher value services and (probably) a customer relationship more "sticky". We try to focus on this theme in the context of partners Citrix Service Provider program as well.
The many ways to differentiate
As Dr Williams pointed out, there are many dimensions along which a company can differentiate its brand. But in the case of a crowded commoditized market such as hosting services, often competing on price is futile.
Instead, the best strategy is to focus on a market or a specific service aspect. Perhaps a technology or a unique product bundle. Perhaps it is providing service and outstanding support. The strategy could be to focus on the needs trust / security of a particular set of users, or on the specific application requirements of a vertical industry. One could even imagine the needs of a local market (or legal requirements, even local ones, such as sovereignty data).
marginsBy focusing and developing one or more of these areas, MSPs can order added because they provide specific value.
And any small business will tell you, the hardest part of this strategy is to say "no." In other words, not saying to try not all . In other words, trying to respond to all forms of differentiation - which means no differentiation at all. It may seem paradoxical, but focusing on a smaller market, you will find it easier to market, sell, and ultimately retain customers. As I noted above, the managed services market (eg, desktops hosted) could be as large as $ 5.6 billion in a few years. The pie is big enough for everyone. So focus.
Determining what to pursue
So you have decided to focus, perhaps responding to a vertical market. Maybe you have a number of customers in a given vertical, and you learned about the specific needs, applications, regulatory issues and levels of providers these enterprises need. You're lucky - and continue to pursue the development of your brand and reputation
If you have not yet chosen a home, consider the skills you may have already developed -. Treat yourself to a service HIPPA compliant? Are you certified ISO001? Can you guarantee data sovereignty? Do you support specific standards of the industry association? These can be competitive advantages to exploit.
The other approach is to pursue a vertical specialty. In a recent study MSPmentor, the majority of MSPs concentrated in one or more vertical markets - be Health, Banking / most popular financial, legal and accounting services. But even these are large - consider a more narrow specialization - service discovery may be legal or medical billing. Remember, the more focused, more marketable and more valuable
Another observation about the MSPmentor study you may have noticed :. Nearly 34% of respondents said "no concentration on the vertical market." Unless they have another differentiation in their favor, I would question their sustainability.
your next move ...
Andy Grove of Intel said famous "Only the paranoid survive." In our context of differentiation, we must assume that there will always bigger players with deeper pockets that can compete on the scale / cost -. And win
Your job as an MSP is to find ways to serve the unique angles of the overall market - areas where your brand, value, and ultimately your margin - is maximized. It is all about focus and differentiation. And with a market worth billions of dollars for hosted services, even a small percentage can be more business than you might be able to handle
Coda :. If you are a Managed Service Provider looking to expand your business, consider working with Citrix to deliver additional hosted services, including hosted applications, desktops, mobility services, etc. We would like to help you build your business.
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