An Insider's Take on The MSP Industry

Why Choosing a Managed IT Services Provider is Challenging

The IT services industry has a fundamental flaw. And that flaw is not going away anytime soon. It underlies nearly every aspect of the services we deliver and the value a client receives.

That flaw is the presence of two factors in the same market – information inequity, and a lack of consumer protections.

Information inequity is a common economic problem that occurs when the buyer and seller of a product or service have asymmetric information. A used car transaction provides a good illustration of this point. The seller of the car has perfect information about the automobile, but the buyer’s information is extremely limited. Without tools like Kelly Blue Book and/or intermediaries like dealerships, these information inequities will make the transaction difficult. As we increase the symmetry of information, we increase the likeliness of trade and the chance of a fair outcome.

The IT industry is loaded with information inequities.

The consumer of the service has a very difficult time inspecting the quality of the work and frequently doesn’t understand the technology well enough to even know whether the promised “work” has been done at all. They have a difficult time measuring the quality of “advice,” and they frequently undervalue any work that is not directly observed.

Information inequities like these are not uncommon.

We expect that our lawyers understand the law and that our doctors understand medicine far better than we do. We don’t typically worry about our house burning down on account of our lack of expertise in mechanical and electrical systems.

However, most industries that are built around information inequities have created market-based solutions to protect the consumer.

Lawyers are required to get a law degree from an accredited school and to pass their state bar exam. They must maintain their status with the bar association in order to continue to practice. Doctors have similar requirements, and professionals in both fields face severe economic penalties for malpractice.

Unfortunately for the IT service consumer, no such safeguards exist.

Think about this: does it really make sense that your hairstylist needs a license but the consultant who manages IT security for your bank does not?

The dynamics above have created an extremely low bar to be an IT professional or an IT service provider. It’s almost comical how little you need to start an IT service business.

This is just the start of it. More in the full report ...

We put a lot of energy into increasing the symmetry of information between Endsight and our prospects/clients. Understanding the implications of our industry’s dirty little secret is an important place to start. 

Download the Report: “An Insider’s take on the MSP Industry - Why Choosing a Managed IT Service Provider is Challenging” – No email address required! Just click to view the complete document. We want organizations to be armed to mitigate the risks associated with how our industry functions.

What we reveal in the document:

• How little is required to start and operate an IT services firm
• Why even well-intentioned providers  defer or even skip tackling work that is critical for your systems
• The risks of working with an IT services company that follows either of two common business models 
• Flaws in the typical ways that companies evaluate IT services providers, and how to do it better

This report is written by Mike Chaput - An MSP Insider

Mike has competed in this marketplace for more than 20 years. He has seen from the inside after winning hundreds of clients, as well as collaborating with competitors.

He’s met thousands of industry CEOs at hundreds of industry conferences. He has participated in an IT service peer group for more than 15 years, meeting with industry CEOs for 6 days per year sharing best practices and financials. He has been a member of various industry groups with thousands of other IT service businesses (TruMethods, Venture Tech, True Profit Groups, Service Leadership, to name some). He currently serves on the CEO advisory council of a multi-billion-dollar software company in the IT service industry called Kaseya. That board is made up of a dozen of Kaseya’s top MSPs internationally, which gives him an international perspective on the industry.

Mike is a paid consultant and serves on the board of directors for a private equity fund that has
invested hundreds of millions of dollars in the sector. And he earned his MBA from Columbia
Business School in 2010. That formal business training gave him an analytical framework for
thinking through the strategic landscape of this industry, after having worked in it for years.