Transcript
Welcome to the Beyond the Horizons podcast. In this episode, Stephanie Hammond, Head Sales and Marketing Nerd at Enable, and Jeff Nelson, Enable's Chief Marketing Officer, take a deep dive into the newly released 2025 MSP Horizons Report and discuss the key implications and insights for MSPs. Hello everyone, so happy that you're here joining us today where we happen to be in the world. We have a very exciting conversation coming up. We're going to be talking about Enable's latest MSP Horizons Report just dropped yesterday. My name is Stephanie Hammond. I am the Head Sales and Marketing Nerd here at Enable. I basically work with MSPs and I help them build and implement sound sales and marketing strategies to help them grow their business. I also help our MSPs with their packaging and their pricing challenges and how they can work to drive higher monthly recurring revenue and higher average contract values from their customers and their prospects. I'm here today with our CMO, Chief Marketing Officer, Jeff Nelson. How are you doing today, Jeff? Doing great, Steph. Thank you. Wonderful. Maybe just give everyone a quick introduction about yourself. Yeah. So I'm Jeff Nelson. I've been here for about four years and like Stephanie is trying to build sound sales and marketing plans for all of you, I'm trying to do the same thing for Enable. And frankly, Stephanie is my inspiration in a lot of cases. So thank you for that. Well, I'm going all flush now, Jeff. High praise. Perfect. So this is our second year partnering with Canalys to put our Horizons report together. For those that are watching, maybe they missed 2024, I was hoping maybe we can start off kind of talking about, one, why did Enable decide to produce a report like this? And then from an MSP perspective, how do they use this report? What kind of value can they drive from reading this type of report? Yeah. Great, great question. And we built it to be a pragmatic set of insights that can be used by MSPs to build their business. The why behind this is because if we're going to show up and have some level of trust and confidence, we've got to understand the space and arm ourselves, not just our marketers, but our front lines and our thought leadership in a way that really does understand where the industry is headed. And we took a look around at what was out there. There was a little bit of kind of state of, that type of thing. We didn't see a lot of future-looking things. We didn't see a three-year view from anybody. And it was always numbers and good numbers, which is great, and we include that in ours. But we wanted to supplement that with stories, real-life stories, real-world stories that bring together the number and the data with how do you actually take that and make it actionable. So I'll actually be up on stage at Empower, a little plug for Empower, April 7th in Berlin. If you haven't gotten your tickets, please do so. And I'll have a panel up there talking about some of these insights, and I'm going to grill them and you're going to hear some great insights and real-life stories of how they've taken that insight and brought it to life in a way that has demonstrated success. Perfect. So really kind of the idea, the goal behind this is for MSPs to read the report, reflect on maybe some of the changes that they might need to be made within their own MSP, and kind of looking at it as maybe somewhat of how they can benchmark their MSPs against the survey respondents. A hundred percent. You got it. All right. And in going through the report, it looked like, and it makes sense that we did get a good mixture, a good cross-section of MSPs that were surveyed and interviewed because it's part surveys, part interview, which I think is fantastic. Does it really seem to be skewed in any sort of region or demographic? You know, a good mixture of larger MSPs, smaller MSPs. I think that's fantastic. Yep. We partnered with Canalys. They've got a great panel and they understand this industry really, really well. Our goal was we need to match the industry in terms of the respondents. And so there are, I think, over 460 responses to this. They range across the globe, just as heavily in Europe as they are in North America, and representative sample from APAC and LATAM and all shapes and sizes of MSPs. We do have the ability to cut it, and we'll speak a little bit to that today in terms of which segments seem to see differentiation across growth areas. But it's a really well-represented sample. Yeah. And I think that's wonderful because whether you are in North America, EMEA, APAC, like you said, Latin America, the report is relevant to any MSP, wherever you happen to reside in this world. And I think that is a very important thing that I really wanted to highlight in our discussion. In reviewing the report, so much great insights, great content in there. The one big thing that, well, a lot of big things, but a big thing that did jump out to me in reviewing the report was the growth outlook of MSPs for 2025. Still lots of optimism within the MSPs that we surveyed. Almost half, like 49% of the MSPs that we surveyed, they're expecting more than 20% growth in their managed services revenue this year. So what do you feel is driving that continued optimism? Yeah, well, first of all, it's wonderful to work in an industry that has such strong growth and has such optimism. My take on the optimism is that, I'll go through why I think it's happening, but I believe that it's really good that we've got these group of MSPs, actually less than 5% believe they'll be flat or declining. It's incredible. And there are many industry reports that are suggesting kind of low teens or 12% to 13% growth overall. You're all a little bit more optimistic than that. And that's not a bad thing. I think it's a good thing. It's a little bit of a warning as well, just to make sure that where you believe the growth is going to come from, you are actually building the plans and you're building teams and accountability mechanisms and all the things that you need to, in order to deliver against that. So industry analysts saying 12, you're all saying, many of you at least saying that you're going to grow greater than 20%. So challenge there is make sure that you're setting yourself up for success. When we talk to MSPs, there really are five different mechanisms for growth and Steph, you are solely responsible for one of them, which is go to market. And I think you understand this one really well, but folks who invest in go to market, see growth. It's not easy. You hear about that every day. And by the way, if you haven't, please, please log into some of Stephanie's webinars, reach out. I'm sure she'd be happy to chat. She's got incredible insights here, but go to market is number one. M&A is number two, new verticals and new channels are three and four and new services is the fifth thing. So these are the things we hear most regularly. And I'll tell you the folks, and I referenced this, but the folks who allow themselves the space to stack back and think about which of those are they going to invest in, which of those are they most or best suited for success in, and do they have the product or the service, the route to market, the mechanisms to measure, the mechanisms to test, the space to understand, willingness to fail along the way, because it will happen. It's those folks who give themselves that space to step back, decide, and really go after one that are having the most success. I heard a great example on the way in this morning. I listened to our Now That's It podcast, and one of the MSPs was talking about that one week between Christmas and New Year's, and they use that to really reflect on their business and where the industry is heading and to make their double down decisions. And they do it as a leadership group because you got to drive awareness and commitment internally to find success in those things. Talking about those different levers, those different drivers that you were talking about I think it's important to maybe start drilling down into some of them. You listed new services last, but I'm going to say that that's number one, because that's really the world that I live in when I help MSPs with their packaging and with their pricing is kind of looking at what are the different new services that MSPs, because they're reading reports, they're listening to podcasts, they're in tune to the industry and the trends that are there, and that's really the driver around the new services. I think I probably know the answer to this obvious one, but what are some of the potential new services that MSPs should be looking at and adopting to improve their MRR and drive those higher average account values? Yeah, really good question. So look, the very straightforward and I think somewhat obvious answer here is cybersecurity. And of course, there are many flavors of that. But just to give you an idea of what the data suggests, 90% of partners believe that over the next three years, a significant portion of their growth will come from cybersecurity. And what's really interesting about that 90% is it splits down the middle. Half of the 90% already have a meaningful portion of their growth coming from cybersecurity. The other half don't. They have a small portion, if any at all, but they're expecting it to grow. And what that tells me is that if you're not planning now to position yourself well, you are going to find yourself on the wrong end of that equation with some of your competitors swooping in with cyber and you finding it even more difficult in the future to catch up because labor has become more scarce, because compliance has become more challenging and more complex, because overall technology and sprawl has become more complex. And so and bad actors have become more sophisticated. So the longer you wait, the harder it is to get into this game. My very strong recommendation is that you lean in now. And one way to think about it, because there are so many ways to cut this, is imagine or lean in on verticalization. Think about which parts of the market, which industries, could be geographies, but think about industries that you want to serve. And that will be a path to solving multiple challenges for you, I believe. Growth is chief among them. But we also hear that you are challenged with upskilling your staff. You're challenged with securing infrastructure. You're challenged with customer budgets. If you verticalize, and let's say, by example, you choose financial services as a vertical to go after, well, you're going to get really good at growth because you built a product and a service offering that caters to an audience. You're going to get really good at selling that because you've sold it many times over. And each time you're speaking the language and you've built something that is going to meet the need in a really, really crisp way. You're going to get better at upskilling talent because you focus on a real specific need that has to do, in this case, with financial services, right? They have a specific environment. You'll understand it and you'll build your skills that way. You'll also be better positioned to secure that environment, which is challenge number three that we hear about, right? Because you, again, you understand it and you're specialized. And lastly, a customer budget challenge. Financial services, again, that's one example. But what I hear from MSPs is we don't build a good, better, best packaging when it comes to financial services. We only build the best because compliance and regulations require it and they cannot go with the good. They cannot go with the better. It must be best. So a huge opportunity, really, whether you're small or large to lean in both on choosing the right tech that when you're building your security stack, it's got to be best of breed. You cannot compromise. 100%. And building the service around it, whether you're going to do that yourself, which you could, right? That's expensive and hard and takes time. Or if you outsource it through MDR, which is becoming more and more affordable and more and more popular. Doesn't matter if you're small or large, you've got to be leaning in. Absolutely. And I like that you kind of talked about the MDR, the managed detection response, because our report shows that MDR, SOC as a service, XDR, so that extended detection response, they were cited in the report as being kind of key future additions for an MSP service stack. So thinking about what you were saying, because we did interview a broad cross section of larger MSPs, smaller MSPs, are you seeing or are you saying that smaller MSPs are still viewing kind of the MDR as just being for the bigger guys? And maybe they're just not exploiting security like maybe they should? You know, it's interesting. So we do see the larger MSPs using, whether it's MDR or their own instance of a SOC, more frequently than the smaller ones. What's interesting, though, is they both are doing it to a pretty large extent. Almost half of whether you're large or small are planning to lean in on MDR or building a SOC themselves. But the larger ones are about twice as likely to be doing that. And I think the warning here for the smaller ones is unless you're specializing in some form or fashion, unless your strategy is allowing you to differentiate and build a moat so that you can not only win business, but keep business, there is going to be a real risk when it comes to security if all these other folks are building specialty. Of course, as a smaller shop, it's going to seem harder. Those large shops have more resources. And of course, as a small, smaller shop, it's going to seem harder, right? They've probably got a little bit more patience and the ability within their financial model to accept an investment. That is a little bit harder, but you are more nimble. You can specialize and verticalize and focus to a greater extent. You've got your advantages as well. I think, again, both the large and small are leaning in here, but large seem to be doing it at a much faster rate. If you're small, I would be looking at that as a risk and thinking about how do you get ahead of that. Right. Big or small, managed detection response in some way, shape, or fashion should be part of an MSP's key offering, basically. Yes. That's a great way to say it. Yes. On the lines of additional services or needed services, as I mentioned, one of my jobs as head sales and marketing are just to help MSPs with their packaging, their pricing, the go-to-market strategies. When we talk about cybersecurity data protection backup, I'm still shocked, amazed, where I come across MSPs who will tell me that their data protection module, so their backup, it's an add-on. It's optional because if they automatically put it into their program, that's going to raise the cost. They're going to get pushback because their customers are not going to want to pay that monthly per user price. They leave it out and leave it as an optional. When we talk about cybersecurity and more, I think, specifically around business resiliency, because that's really what we're talking about now, is business resiliency. Backup has to be that key pillar of any good cybersecurity program. How do you position the value backup place in an MSP's go-to-market? I agree. That is a shocking finding that folks are still thinking about- Just had a conversation this week on it. Right. To me, it is an aspect of the minimum viable cybersecurity offering that you need to go to market with if you're truly going to claim yourself as somebody who can not only protect, but defend and ultimately respond when it comes to cybersecurity, or for that matter, a natural disaster or just human mistake. Not only having backup as a requirement, but making sure you have the right one, I think, is hugely important. The reality is, if something goes awry, if there is the worst case and somebody gets into the system, a bad actor, or if there is a natural disaster, and the backup's not there, the customer's not going to ... They're either not going to remember that you said, hey, this is wrong- And they turn it down. Yeah. They're not going to remember that they turned it down. Even if you really were forceful and said, I really recommend this, that memory is probably going to escape them at that moment. Most MSPs probably recognize this. You'll be on the hook, rightly or wrongly, you'll be on the hook. I know this isn't easy. I understand the situation can be difficult, but that is a requirement. We hear most MSPs are certainly including that as a requirement. Again, it's not just that you've got it. You've got to have the right backup solution in place, because if you don't ... I heard a story, and I won't name names, but a large competitor, a well-known, and I think fairly respected provider of backup was being used at a 500-person company, and there was a phishing attack. That bad actor got in, they moved laterally, they progressively escalated their permissions. They ultimately were able to access the backup. They were aware of a vulnerability in that case that they exploited. It hadn't been patched, hadn't been managed. As a result, they were able to encrypt and destroy all the backups that were on the network, and the immutable copies, and anything off network. That company, for over a month, was not able to operate, which is for a 500-person company. That is devastating. It's devastating. If you're worried that you might not be able to manage backups effectively, then you've got to look at, and shameless plug, but you've got to look at something like Cove, where it's cloud-first, and it's managed, and you no longer have to worry about doing the patches yourself, because it's done for you. I'd be really thoughtful that in your selection, not only around backup, but frankly, best of breed, I think has got to be just burned into your thought when it comes to building that stack. Good enough is not good enough. I say that all the time. When you think about a proper packaging strategy, especially when in corporate cybersecurity, it is not so much about the prevention and detection. That's a given, but we do have to come full circle and add in that resiliency piece. That's why I'm still somewhat amazed when I do have those conversations. It's a budget decision that's driving the strategy. Especially if you're an MSP dealing with customers in regulated industries, I get it. We have to come at it from a fair and balanced perspective, but we can't allow a perceived budget mindset to really drive what is actually needed to properly protect the organization, its data, and its employees. Because like you said, if you close your doors for a month, I can't even imagine the productivity loss, the revenue loss, the reputation impact that that would have had on that organization. Being an MSP a lot of times is a thankless job. It's like, no noise is good news. I will say I've heard many anecdotal pieces of feedback that the instances where folks can go in when there's been the unthinkable that's happened, and they're able to be there to save the day because they've got recovery, and they're able to do it quickly, and with RPOs that meet the client's needs and expectations, that's when the thanks come in. Finally, that's what it took, but those moments I think are incredibly rewarding because the folks that we work with, and again, we're blessed to work in this industry. They care so deeply about delivering amazing service and creating for the small and medium-sized and even mid-market folks that they serve, creating an element of security and operations and success in those businesses, but they don't often get to hear about it. This is one case where periodically there are some really nice pieces of feedback that come along. Absolutely, and talking about the MSP's role, there were sentiments expressed in the report around, we're talking about cybersecurity and how MSPs got forced into this world of cybersecurity. Originally, because I've been here for 20 years, and originally when I started dealing with MSPs, it was break-fix who were trying to get into the monthly recurring revenue business. Basically, MSPs got into the business because they know computers, they fix computers, they fix printers, and then there's this notion that all of a sudden they woke up one day and they're cyber cops now. I thought that was an interesting interview talking point, but it's the forward-thinking MSPs that are now finding a way to evolve now because it isn't just security. I think as a business owner, I would expect my MSP to be talking about security and helping me improve my security posture and mitigate my risk. I'm expecting that conversation now, I would imagine, but the industry is actually moving where MSPs have to actually evolve and start, you mentioned it, talking about compliance consulting and what is needed as a business from a compliance perspective, helping customers deal with any specific regulations that might pertain to whatever industry they're operating in. What did the Horizons report say about those topics? Well, that they're a massive opportunity. It's funny because three years ago, I remember an MSP came to me and said, I am no longer leading with IT, I'm leading with cybersecurity, and I'm winning the IT business because of that. At that time, I wasn't hearing a ton of people saying that. Today, I think just as many people are saying that as those that are leading with IT. More and more over time, that's going to continue to flip and it's going to be leading with cyber. What comes next are compliance, what comes after that is selling AI as a service, and you can imagine what even goes beyond that. When it comes to compliance, really, there's different levels of maturity that we're seeing in the market. There's some who are talking about, look, I've built an offering. That offering is a take it or leave it offering. I'm going to call it my compliance offering because it meets the compliance regulations of NIST or CIS or whatever, but it requires that you are doing the things you expect. There's patch, there's endpoint detection, there's an MDR component, there's a backup, there's a disaster recovery, there's a service that overlays it all. Unless you're willing as a customer to sign up with me along those lines, I'm not willing to accept you as a customer because there's risk, obviously. Every time I accept a customer who's not willing to take cybersecurity seriously, that's risk for my business, not just for yours. That's one end of the spectrum. The other end is full service, compliance as a service offerings where they're mapping their technology and their protocols to very specific regulations or compliance. That's when they're getting into HIPAA or they're getting into PCI or something more specific, and they're committing to not only getting that company to a point where they are meeting those standards and maybe certified, but that they're staying that way because, obviously, technology and a lot of those regulations change over time. They're including reporting, they're including board meetings, they're including things like pen testing to make sure that they're on top of all this and in those offerings. Yeah, and your way around using compliance as that thought leadership, that education piece. I do that because I'm still seeing, I go and look at MSP's websites and I just see managed services were the best managed services. Here's my bullet list of all the services that I offer, but compliance education, I think, is that wonderful way for an MSP to set themselves up as that expert when you're working to gain prospects and improve the MRR that you have with your existing clients. That is a way to really demonstrate your thought leadership attribute because as one big thing in the report is new customer acquisition. It was a big problem last year for MSP's, their top business challenge. It's still one of the top three business challenges for MSP's this year, but if you are an MSP and you're struggling with trying to fill the top part of your funnel and you're focusing on finance or education or the government sector, that could be a way to win new clients. Part of the awareness and nurturing, seeing MSP's host webinars or in-person events or doing something, like you said, from a boardroom or just getting out there and meeting and providing that education for whoever they're targeting, I just think is just another fantastic way to really differentiate yourself. Then it could be, like you said, compliance as a service, another set of services to bolt on and sell. It's a really good point. The thought leadership opportunity is large. If you are specializing, verticalizing, focusing on a specific element of compliance, the challenge that I think most MSP's have most is there is so much complexity in each of these elements of compliance. They offer up both an opportunity and a headwind, a challenge to understand it, but if you decide to specialize there, then you've got, to your point, this amazing piece of content that you can put into the community and leverage to build leads and relationships and demonstrate your specialty, demonstrate really how you differentiate. It's funny because we think about that. That's our, hey, what kind of content are we going to build? Frankly, there are MSP's out there who are building really good content when it comes to compliance. We know because we're looking for who's doing this really well, and most often it's an MSP or somebody who's very close to being an MSP. It's happening, but that doesn't mean that's happening at scale yet, and there's certainly a huge opportunity for you to go. Yeah, huge opportunity. Then you had talked about AI as well, and so just shifting to the topic of AI for a moment, another, it's new, but it's emerging as another growth lever and another new service that MSP's could begin offering. I'm connected with many, many MSP's on LinkedIn, and I'm starting to see those forward-thinking MSP's that I've known for for years really embrace the co-pilot, the AI training. I'm hearing them, they're doing videos. I see them promoting webinars and in-person events, and they're just using it as And they're just using it as another revenue stream for their business, but also the thought leadership, because they get in there. They offer this free public education aimed at their top customers or top prospects in an industry that they want to delve deeper into, and they're getting the managed services that rise the coattail off of that. So I love seeing my feeds like that. What did the Horizon report have to say around MSPs outlook and how they're using AI today? Because we're still in kind of maybe the infancy, but it's still relatively new. Yeah, I mean, so so your example, I think, is a great one. There are some vanguard MSPs out there who are who are pushing the needle on how to offer this as a service. It's part of their offering. And they're they're selling how to use copilot. They're they're really they're advanced ones are helping folks build products or services. Right. But it's a small portion. It's less than 10 percent that are doing that right now. Most of them are doing it either within their day to day operations, using AI, generative AI to help them understand data trends or to generate content or to deliver better customer service. And that's kind of like lowest maturity is where folks are focused. It's a next level of maturity is folks that are taking AI and trying to make their service better with it. They're trying to make their service usually want to do things more efficient or more thorough, right, more thorough security, more thorough elements of onboarding or whatever the use case might be. And they're either doing that most frequently. They're doing it through vendors, vendors that have built into their own tools, some of the stuff that we've done and our competitors to build AI into for both those purposes. Right. Or and this is less frequent as well. They're building their own instances of AI to drive that same type of outcome. So it's really like these three types of maturity or lifecycle of maturity, pointing it out, operations, pointing at your service delivery or the furthest along would be actually creating a new service and selling that in to help your customer use AI more effectively within their business. Yeah, because there's a lot of risk. You know, if a business just, you know, they sign up for Copilot and then just open it up to their employees to begin using. And so that's really where I'm seeing kind of the MSPs build services around that, you know, making sure it's implemented correctly, professional services, you know, implemented correctly, safely, securely, and that we're not exposing the company's data out there into the web. Yeah, that's a big one. And I don't think many of the of the small business community and some portion of the mid market really are rocking that. And so to your point around content and thought leadership, AI is really ripe for that. Just just like compliances. Yeah. And education wins the client, right? That's my mantra. So it's why I've had a role for 30 or 20 years. I was dating myself there 20 years. So looking at another potential growth driver, the Horizons report talked about the changes that are taking place in the MSPs go to market model. The traditional managed services client that I talk about is, you know, they're smaller, they don't have anybody in house taking care of their IT. So the business owner is non-technical. So they need to bring in an MSP to kind of help with the management and security of their network versus the co-managed where the MSP is partnering with, you know, a CTO, a director. But it's a larger organization where they have that established internal IT. And the Horizons report is noting a huge jump in terms of the co-managed, the number of MSPs that are now thinking of moving into the co-managed space, 37 percent, up 17 percent from last year, which I think is incredible. So interesting survey result. What is the Horizons report saying are the driving factors around that? It's two things. There is, on the one hand, increasing complexity that we're all aware of when it comes to every element of technology, whether that has to do with sprawl or cloud or cyber and all the different ways that we need to we need to protect against the threat vectors. So that's kind of point one. That is a market force. The other market force is labor is scarce and particularly around cybersecurity, but broadly within IT in general. And so what that means then is for these midsize companies who've got a CIO or CTO or somebody along those lines, they're looking at their teams and their teams are made up of individuals usually counted on a hand who are focused on some of these things. Sometimes it's a single individual. And they've got a risk with that because of all the things I just mentioned, it's hard to keep up with complexity. It's also a person's probably going to be in high demand and they don't have any redundancy. And so if that person were to leave all the sudden thing that they were doing, whatever that thing was, is is at risk. And so we're seeing more and more of those folks reach out to MSPs who have five or 10 or 15 or 20 or 50 of these folks on staff and create redundancy. In many cases, it's more cost effective for those folks. In many cases, it's also more effective because these MSPs have specialized, they have verticalized, they have positioned themselves to be experts and they're further along than than the CTO has sitting sitting within her or his staff. And so this is a huge opportunity. I was I was listening to a customer talk about this just the other day. They built their whole business around it. And they are really smart because it's driven great growth for them. But everything follows the positioning, first of all, the offering, how they've built their product and service, but when they talk about that, the way they show up and do thought leadership, it all follows that strategy of we're leading with a with a co-managed approach in terms of our go to market. Yeah, and if I can do a shameless plug here, I have actually written the co-managed digital playbook on on how does an MSP, if you're thinking of moving up market and want to target these larger organization, you know, what do you sell them? How do you package it? How do you price it? How do you go to market? How do you deal with objections that you might hear? So I actually have version four that should be coming out anytime. I'm working with content right now, just getting some final cleanup done. So that that new version will be available in the Resource Center shortly to download. So keep an eye out for that. It's a great resource. It's incredibly pragmatic. Like it is long. There's a lot of detail in there. You will you will walk away with a very clear understanding of what's needed. And that was my goal with it. I'm very if anybody's read any of my stuff, I'm very prescriptive. I'm a person that likes give me the step by step and don't be vague. I don't like vague. So so I'm not brevity is not in my my middle name there. But another growth driver, I think you mentioned the beginning mergers and acquisition, M&A, another interesting finding from the report, especially how it differed from last year, like really no one was looking at M&A last year, like I think 44 percent of survey respondents were actively looking at M&A as a growth strategy. Ninety percent now in this year are looking at M&A for their MSP. Why such a big jump? It's really intriguing, right? So this is 90 percent of MSPs are thinking about making an acquisition. Yeah, just being acquired, but actually making an acquisition over the next few years and so what's changed that certainly the debt environment, the lending environment has changed a little bit more favorable. I think that's part of it. I think a lot of it has to do with there's an increasing understanding of what drives growth. And it's those things we talked about, right. Things like verticalization, things like specialization, things like focus on geography and it's a build versus buy decision that MSPs are having a really very strategic and important conversations around which of those two routes do we want to take or maybe a partner route is a third one you can take. And and so they're having to consider it because it is such a hard thing in many cases to build. They're having to consider the option to grow and buy. And on the other hand, what they're hearing from anybody who is focused on this, a lot of the PE companies or some of the aggregators is what they favor when they look at these when they look at these MSPs is people who are verticalized, is people who are specialized and they're getting higher multiples. And so they're looking at it as if like, hey, I'm either going to be eaten. And we heard people talk about this, right? Like I'm going to one person said if there's a six person shop out there, they're my target. Just like I know I'm somebody's target who's bigger than me. Everybody's somebody else's target. I think folks are recognizing that they've. They their exit strategy, whether their long term goal is a lifestyle business that they can hand down to a kid or they want to have a big exit and retire or they're in for 20 years. It kind of doesn't matter. They've got to have a path towards differentiation. Yeah. And M&A is a meaningful way to get there. Not the only way, but it is a meaningful. So a lot of people are considering it. Probably what's going to happen is that's going to drive multiples up over the coming years if that plays out. And there is the interest that seems to be seems to be percolating here. You know, the folks who move quicker will benefit. Yeah. And that's usually kind of if I'm meeting with an MSP for the first time, that's kind of where I start is is is the exit strategy like you're in this business. Are you a lifestyle business? Are you looking to get acquired or acquire, you know, so kind of tell me about your story and then making sure we're working backwards to putting all the pieces in place to make your MSP more saleable. And I think whether if it is just a lifestyle business, I think it is still a really good exercise to be going through to make sure that, you know, I'm not here to sell it, but I want to make sure that I'm running my MSP in the most operationally efficient and effective manner. Yeah. You want to have a business to be able to, you know, continue to have that lifestyle with or to pass along to a family member in five or 10 years, you know, don't do some of these things, then that may not may not be the case. It doesn't mean you have to do M&A, but you do have to be very purposeful about where you're going to invest and where you're going to grow. Absolutely. Now, we've talked a lot because we're marketers around verticalization, specialization, and it's interesting that, well, we are talking about this so much because one of the quotes from one of the interviewees really kind of talked about the over commoditization of the industry. And they're seeing that as being kind of a really big threat. So you've mentioned a few other things, but, you know, specifically, what are some things that MSPs can focus on to avoid becoming that commodity in this industry if there's other MSPs that are kind of really thinking, yeah, it is a threat to my business? Well, so I think, you know, first, the the tech stack that you choose and making sure that you're focused on best of breed, your customers are going to rely on you to make those choices and that the outcomes will will follow. And if they don't, you'll you'll suffer, obviously, the results of that, just like they may as well. So making sure the stack that you choose is best of breed, very much leaning on that. I would lean in then on how are you differentiating the overlaying services that you bring to the table? Right. That's where things like verticalization and specialization can can play out. If if you even if you don't have a marketing department and a service delivery department, you're a five person shop and you are everything. Imagine yourself as the marketer. You really you need to be able to go tell a story that is differentiated. And if you feel like your service so that you don't allow yourself to become commoditized, right, if you feel like the value prop service and the product is not meeting the aspirations that you as a marketer or the left side of your brain as a marketer is thinking about, then you got to challenge the other side of your brain or you got to challenge your your person who's creating the services in a in a, you know, in a collaborative, productive way to think about ways to evolve so that you can differentiate. Obviously, you want to be authentic. You don't want your marketer going out there telling a story that you can't back up. They can be a step ahead. They can tell a story that's coming. But of course, if it never comes, then you'll lose your credibility. So it's a balance. But it really is up to you to make sure that you don't become commoditized. And that has to do with how you build your offering and how you tell your story. Yeah. And almost like one of the stats that I use all the time, and I'm glad that there's a new stat in this year's report is, you know, as I'm talking or giving a boot camp or my office hours, one of the stats I give all the time is, you know, there's three hundred and thirty five thousand of you out there globally, you know, doing some sort of managed IT. That was now three hundred and thirty eight thousand I saw in reading through the report. And so there is so much competition out there. But when you know, when you're talking about the services that MSPs are delivering, you know, they're they're doing a lot of things like they're doing the cybersecurity, they're doing the compliance, they might be doing the consulting, they might be doing the data protection, you know, helping organizations prepare, you know, for a hurricane or tornado season and stuff like that. So I know MSPs are doing that because you have that conversation. and they will tell you everything about their business, but they're not talking about it. And that's kind of my bugaboo is you go to their website, you go to their LinkedIn, there's zero communication there. Everything is generic, everything is vague. We're using MSP everywhere, which is an industry term. I know we use it, but we're in the industry. And so really kind of what my main focus is and what my mandate has really been was just to kind of really get MSPs to think about all the other things that you're doing. Talk about those, build the stories as you mentioned, build the stories around that. Verticalization comes into play because you have that in-depth knowledge and you will have those stories because you've dealt with those industries. And so it's really kind of, like you said, focus on the services that you're doing, but making sure you're just getting out there and you're talking about it on your website, on your LinkedIn. So that if I'm a non-technical business owner, I decided that I'm kicking my current MSP out to the curb today, I need options. And who's gonna talk to me about their different, those stories, those are the ones that are gonna be attracted to. So I use myself as an example. I'm like, pretend you're trying to sell to me. What's gonna make you stand out to someone like me? I think that's a great example, a great way to think about it. Yeah, so, and then you did talk about new channels about as another growth driver. What channels could MSPs look at exploring? Yeah, and I think some of this, going back to a similar theme here, but the more you can kind of set a strategy around what's their focus, the better you can identify a channel. So I don't think you can think about a channel before you know your focus, but I'll give you an example. If your focus is around cyber security, and if it's specific to even to a vertical within that, you can start to find some other folks that might offer new routes to market for yourself. And so that might be an incident response company, right? If you can find a local company who's just focused on the IR, well, usually what happens when there's an IR, that person's looking for an alternative coming out of it. And if you're that great alternative, then the IR company can be a really good partner for you. And of course you probably can reciprocate with them, hopefully not too regularly, but once in a while. So that's one example, but I think you could look at cybersecurity brokers, sorry, insurance brokers that are local. If you are verticalized and you're focused on healthcare or financial services, there's a lot of different membership that has to do and there's kind of good culture and community around that. And you can join those groups and you can become, bring your thought leadership to them, show up once a quarter and show off a little bit your knowledge and help them get educated and solve the problem for them over time. That's a route to market. You'll learn a business out of that. Yeah, and I love the IR example that you gave because when I was at the business of security in Austin, there was an MSP that went up there and their legion is partnering with insurance companies. And so when the insurance company gets a breach incident, then they reach out to this MSP and then the MSP has their IR services that just jump into play. And it is a wonderful legion, but I also like my kind of comment to the MSPs in the room is this is a warning signal. Because that IR company is gonna come in and they're gonna install their RMM, they're gonna install their backup, they're gonna install all their security tools because their job is to get that MSP back online, get their data recovered, get their employees back to work. And then when that's all done, who do you think they're gonna stay with? Who is the hero in that situation, right? So it's kind of was my, I always take that as a warning that if there's an MSP in your area that's offering IR, you need to make sure that you are having those security and those risk conversations with your customer that you're not pre-objecting because I hear that all the time. Well, my customer would never go for this. They don't have the budget. We have to stop pre-objecting. We have to go have those conversations because if you don't, something like this could happen, their insurance company could bring in this IR company and then you've just churned a client. It's a great point and you do need to have those conversations. If those conversations don't ultimately go the way that you need to, then you gotta look at the type of customer you're targeting and you might need to rethink the type of customer that your ideal customer profile may not be the one that you're actually servicing or maybe it's a portion of who you're servicing. Understanding which of those are most profitable and offer the most growth is a huge mechanism in determining your strategy and ultimately executing against that. Absolutely. So I think in closing, Jeff, we just dropped the Horizon Report yesterday. How can MSPs get their own copy of it? Yep, check it out. It's on our website. If you navigate to the Resources Center, you will find a link to it. We hope that you find true inspiration, pragmatic examples of what works. We'll be over social media and through some other channels. You'll see a lot. We'll be talking about this in many different forums. So if you forget, I'm sure we'll remind you, but we very much encourage you to spend some time on that. And of course, if you do have any feedback, we would love to hear that. Absolutely, yeah. And it's a very, very good read. It makes it very easy. You can see the different bullet points and the findings that Jeff and I talked about today. So definitely, as Jeff said, really encourage MSPs to take the time, read it and use it to kind of help maybe get your planning in place if you haven't really done that for the short term. So wonderful. All right, well, thank you for your time, Jeff. Absolutely appreciate it. And we appreciate everybody watching today. Hope you have a wonderful day and wonderful rest of the week. Take care. Same here. Thank you all, bye. Bye.
