You can’t imitate your way to success

The technology-as-a-service market is getting crowded. How can the MSP differentiate its business?

Mike Tyson. He stood out from other boxing professionals because he knew what he wanted, what he stood for and what was important. An extreme desire to win coupled with his trademark spartan attire (black trunks, black shoes, no socks, no robe) enabled him to focus on what was important; knocking out 22 fighters in the first round. This differentiated him from others who often let the hype distract them from their objective.

The B2B IT market is hyper-competitive. Being able to differentiate your product or service while focusing on your key skills is critical. Being different helps you win contracts, grow market share, build loyalty and compete against bigger players.

What is Differentiation?

We see products and services being differentiated by price, geography, industry and customer type. Does following this strategy allow you to win consistently?  Mike Tyson knew that real and long-lasting differentiation comes from knowing what you stand for. What do you want to be remembered for?

Sixteen years ago, we founded a channel value-added reseller, called Silverstring. Our basic plan was to sell IBM storage solutions at low-cost to the smaller enterprise, but it just didn’t get the juices flowing. Our business only grew once we differentiated; providing a consistent customer experience, at scale, in the data protection niche. Our focus became operational processes and service methodology. We used automation to create consistent experiences; freeing up our skilled employees to add value to the business.

As a service provider (MSP), what will make you stand out from the crowd? I’m a big believer that the answer lies in the name, service. Your service should define your brand, not the technology features of your products. Technology inventions are notoriously elusive and easy to copy. Imitating a service or company culture is far harder.

Winning in a crowded market

Take the business I know most about, backup and recovery. In 2017 it attracted one-third of the venture capital money invested in IT infrastructure and yet no vendor has more than a 20% market share.

The data protection industry is predicted to grow from $7.17 billion in 2017 to $11.6 billion by 2022, a compound annual growth rate of 10.2%. Much of this growth will be from data protection delivered with a consumption or utility model, BaaS and DRaaS.

This is a huge market and can be profitable for large vendors. However, the channel players can find the market fragmented and hyper-competitive. VARs and service providers should look beyond price as a competitive advantage (you’re not Amazon). Look to differentiate through better service, better processes, brand identity and culture. Peel back the layers and define the core customer problem.

Let’s look at another competitive business, aircraft manufacture. An engineering and technology business you might think. In fact, the industry spends $15 billion a year servicing these aircraft. This equates to $3.6 million per aircraft per year or around $1000 per flight hour.

At trade fairs the latest technology from Boeing and Airbus make the headlines. This is ironic considering what matters most to the flying public is the quality and professionalism of the maintenance.

It’s the same with protecting your customers’ data. Even great technology can fail. If the service is lousy, sooner or later an event will happen causing data loss and damaged reputations for you and your customer. It’s not enough to just focus on the vendor technology which underpins your service.

Advice for the Managed Service Provider

Remember Mike Tyson? To differentiate, MSPs must personalise their service offering and focus on what’s important to them and their customers.

As a starter-for-ten here are some ideas to get you thinking about how to create a competitive advantage:

  1. Focus first on your customer service team before your technology platform
  2. Make it easy to engage with your service
  3. Deploy new workloads faster
  4. Customise your offering for a specific industry
  5. Innovate your pricing model – reduce financial friction
  6. Build confidence in your service – find ways to be more transparent
  7. Have differentiated branding and appeal to narrow market segments
  8. De-risk the outcome – put some skin-in-the-game and commit to results

Be more like Mike. Be remembered for delivering excellent outcomes every time.

Please feel free to send us your questions on building a growing MSP business. We can be reached at info@predatar.com

Written by Alistair Mackenzie, CEO, Predatar