With the extraordinary advances in technology and mounting cybersecurity concerns for businesses, managed service providers (MSPs) have seen a rapid uptick in demand for security offerings in recent years.
However, growth is a double-edged sword. The future of managed service providers is flush with opportunity, but with this comes a host of challenges and complexities. As technology grows more sophisticated, so too do hackers - and organizations expect managed service providers to be able to deliver the right expertise and solutions to meet their developing needs.
As an MSP, scaling your security offer sustainably and efficiently is key to thriving in the future. As you prepare your business for 2019 and beyond, here are three of the biggest challenges the MSP industry will face when scaling SOCs; and how you can tackle them.
The challenge: maintaining margins amidst pricing pressure
“Smart MSPs know their businesses won't be successful without the right resources and support from their partners. They find partners with superior support, sales enablement tools, and other resources, to ensure they're making the best margins, acquiring new business on a regular basis and maintaining high customer-retention rates.” - Greg Arnette, founder and CTO of Sonian
A recent study has shown that while new revenues have increased by 42% for MSPs, profit margins have shrunk by a third. This erosion of profit margins comes largely from the growing pressure on MSPs to deliver complex services and additional cybersecurity coverage, all while keeping price points competitive in an increasingly crowded marketplace. Key stakeholders in customer organizations may also struggle to understand the complexity and value behind an MSP’s security offering, leading to skewed expectations and a price-first mentality.
In this climate, MSPs are faced with the challenge of innovating and automating security processes to keep up with demand whilst trying to stay cost effective, rather than investing to scale up SOCs to increase margins.
How to address it: reiterate your value add
As an MSP, establishing a trust relationship is about understanding customer’s concerns and addressing these through clear and constant communication.
It’s beneficial as an MSP to adopt an advocacy approach by providing internal best practices for cybersecurity to your customers, and training their teams on safe password creation and cybersecurity awareness.
The ‘surprise and delight’ factor can also build rapport and help enhance the value your business provides to customers and sets you apart from the pack. Set aside time with your team to focus on surprising and delighting, whether through value adds such as invitations to seminars on privacy protection, or operating under a “project manager” model with regular client face-to-face meetings to give a consistent and regular voice to your business. These meetings are also the ideal opportunity to encourage two-way communication and feedback, in order to strengthen loyalty and receive valuable feedback to guide your business when scaling and innovating your offerings.
The challenge: finding the right experts to manage complex and dynamic security threats
“MSPs will really need to take a hard look at their security offerings or lack thereof and work to expand it to stay relevant in the years ahead.” - Rich Delaney, Founder of Delaney Computer Services
54% of organizations have experienced at least one endpoint attack that compromised their data or IT infrastructure, and over two-thirds of these attacks used fileless hacking techniques, according to a recent report by Ponemon. As hacking groups grow more sophisticated in their approach, organizations are relying on the expertise of MSPs to protect their data from the latest cybersecurity threats. Hackers are also beginning to target MSPs directly, which tasks providers with the dual need to protect clients and protect themselves.
This rapid need for expertise is causing a talent shortage crisis in the cybersecurity industry, with a recent managed service provider report showing that the cybersecurity gap will widen to 1.5 million roles in 2019 - up almost 30% from 1 million roles in 2018. As demand outstrips supply, MSPs are challenged to find and retain the right employees and management teams that are needed to scale up security offerings that answer to the complex needs of the market.
How to address it: rethink the way your teams are structured
As the talent war wages on, providers who can find the right talent and expertise will come out on top. The traditional approach of talent recruitment and retention is being challenged, and it’s time to think differently when it comes to recruiting the right experts for SOC teams. Promising alternatives are emerging if you’re looking to scale security offerings quickly. Organizations like ours support MSPs on their journey to becoming Managed Security Service Providers, by helping them scale their security offerings to better serve the ever-changing needs of their customers. As an MSP, you can also benefit from ‘as-a-service’ business models, with remote teams serving a variety of customers, analysts can identify security breaches or threats from one customer and use those learnings to help deliver patches that protect others.
The challenge: setting your sales and marketing teams up for success
"Almost every MSP I talk to wants to do better in sales and marketing, but they rarely are resourcing those areas of their business correctly. Sales and marketing take time and effort, and that can take away from the time an MSP has for its customers."
Austin McChord, CEO at Datto
With the MSP landscape steadily evolving, developing and scaling, it can be a continuous struggle to market your offering with clear and robust conviction. Data released from Datto Inc. showed that 53% of MSP respondents stated that marketing is currently their main challenge.
A large contributing factor to this is the fact that growth hasn’t translated to scalability in the industry. A strong MSP marketing strategy would be to scale your existing customer base, but instead, many MSPs are pumping money into marketing campaigns hoping for new customers; only to be left disappointed.
How to address it: rethink your marketing efforts
A strong, smart and considered approach to marketing your security offering is a must. Your marketing efforts should be giving you more than what they are taking out of your wallet. At the end of the day, leads and traffic won’t matter if you’re not converting them to a customer. The key to this is to build a sales workflow that supports a strong lead-generation and lead-conversion process.
Over to you
It’s an exciting time to be an MSP and, as you scale your security offer, the right partners are key to accompany you along that journey. By rethinking your team’s structure and building a trust relationship with your customers, you’ll have all the tools needed as an MSP to take your business to new heights in 2019.
If you’re ready to start scaling your SOC, we’re here to help.