Dara IT – The start-up story Part 1: Where is the need?
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Are you thinking of starting an MSP? Going out on your own and making a consultancy? Perhaps you just want to get some perspective on this side of the IT industry.
As you read these articles you should be better equipped to make a decision on choosing IT services.
So whether you want to start out on your own or gain insights, please do give your feedback on these articles.
Where is the need?
You are going to get enough money for 1 year’s salary. Would you quit your job and start your own IT business with that? You will also receive 50 new clients for services that you would be willing and able to provide. As a bonus, you can do it under any known brand in the world. A secure safety net of money, a client base ready and waiting to hear from you and an already established brand.
The reality is when you start out, you have none of that. Why would you even think about entering a hyper competitive market? You often have no money, no brand and no waiting client base.
You need to find what “need” there is. What gap is there for you to slot into? Why would I choose you over any other company out there when they have the advantage?
Enter the MSP
One of the most common startups for IT support, is the model “MSP” or “Managed Services Provider”. You can do extensive reading on the subject of MSPs and their model but here is a brief summary of the model.
- Fixed rate costs for different tasks, desktop and server support.
- Relies on economies of scale to offer services for cheaper.
- 24/7 availability with a large team.
- Standardised format of products and installations across their clients makes support costs cheaper.
- MSPs usually becomes resellers of the items they support.
- By using automation and tooling. The idea is that support requests get completed faster. Issues prevented before they take place and that is not all…
- As the owner of the business, Fixed outgoings and reoccurring revenue. You can scale resources up or down to meet the demand, everything is prepackaged to keep costs low.
- When you start up, there is no shortage of MSP tooling and techniques available to you. There are many all in 1 tools out there.
-They can handle your invoicing, documentation, monitoring, patch management. These offer many features which can kick start you into becoming an MSP quickly.
Can you compete?
Let me ask you a question. There are companies out there who are already using these tools, Who already have the significant cash reserves. Established client bases and a brand/reputation that carries weight. So how can you use the same tools and compete with them?
Compromises are formed somewhere, either in price (which does not work for you), quality of the service (which does not work for the client). Remember, the compromise happens somewhere which might not be obvious to you at first. Be careful you don’t lose out on what you are offering.
Many of the proponents of the MSP model, are those who sell the tools to make it work. There is a large amount of marketing declaring the benefits of reoccurring revenue as an MSP. The advantages of automated tools which cut down on the work required by an MSP. Yet how do you know the MSP model is right for you if the main source of data comes from the suppliers of the tools?
Of course you research the clients of MSPs and find out what they think…What you will find is a mixed picture.
Mixed feelings about MSPs
In some cases you will find clients delighted with the MSP model. They are getting a great service at the right price. Few problems arise and when they do, they are quickly and efficiently resolved. When it is time for upgrades, changes everything is smooth sailing.
In other cases, the exact opposite story is told. Clients are either paying too much for what they have compared with the rest of the industry. Problems drag out for weeks on end, the relationship feels like the client is talking into a black hole. Projects are disjointed and revolve around pushing products so the MSP can make a margin.
All MSPs can use the same tools but what makes the difference? Why would 1 do better than the other?
What can you do to avoid becoming at least generic. A clone of various other companies with identical processes and business ways. At worst you become out-dated, under-capable. Soon your reputation suffers as clients tell others about you.
Now even if you become a really good MSP. You deliver on everything you set out to do and manage to offer a unique proposition. Even with growing the business sucessfully with a good client base.
Within the next 10 years. I suspect the market is going to contract and many small to medium MSPs are going to disappear. Keep an eye out for part-2 for the reasons why.