IT and Business Insights for SMB Solution Providers

Go Up Market and Raise Revenue with Co-Managed IT

A co-managed IT practice will be unique to an MSP’s skills and a client’s needs, but the overarching selling point is making internal IT’s life easier. By Colleen Frye
Reader ROI: 
CO-MANAGED SERVICES are a partnership between an MSP and an organization’s internal IT department.
BUILDING OUT a co-managed IT practice is an opportunity to go up market and grow recurring revenue.
START WITH a product or service with which you have deep expertise, and that is both easy to deliver and profitable.

This article is based on the Co-Managed IT 101 session at ChannelPro’s Cloud and Managed Services Online Summit in January.

LIKE BEAUTY, a co-managed IT service offering is in the eye of the beholder. In general, it’s a relationship between a managed service provider and an organization with internal IT. “It’s a partnership,” says Bob Coppedge, author of the book I Don’t Want Your Job: Is Co-Managed IT Services the Right Fit for You? “Beyond that, you need to figure out what works best for your organization,” adds Coppedge, who is also the founder and CEO of Simplex-IT, an MSP in Stow, Ohio.

While the services an MSP provides to a co-managed IT customer can vary, it’s not unlike what an MSP is already doing, says Chad Kempt, president of Fast Computers, an MSP in Ontario. “They have a problem, and we have a solution, and we're working together to make everyone better.”

It is a change in mindset, however, says Wes Boggs, vice president of technology for IT Solutions of South Florida. As MSPs, he points out, “we tend to be greedy. We want to get in there and we want to get everything. But when you're in a co-managed situation, you can't be that guy.” Instead, you are a partner of the internal IT team. “Being nonthreatening and an actual member of their team that they can count on is critical to that relationship.”

Bob Coppedge

In the end, offering co-managed services is “all about how you make the internal IT staff's life easier,” Coppedge says.

Types of Co-Managed Clients

With the ongoing difficulty filling skilled IT jobs and the growing complexity of today’s infrastructure, it’s an opportune time for MSPs to solve problems for larger companies. It’s a way to go up market to grow business—using skills you already have.

Coppedge identifies three classifications of co-managed IT clients: top heavy (the organization has a CIO and possibly Level 3 techs, but no Level 1s); bottom heavy (they have Level 1 techs but no senior IT staff), and thin (they have a range of IT staff, but they’re lacking RMM and ticketing tools to make them more productive).

An MSP can identify where there’s a need and fill that gap. For instance, says Boggs, a bottom-heavy client is very good at the day-to-day help desk, “but they're missing some of those more critical skill sets that we can go in and backfill, whether that be network security and firewalls, routing, switching, and edge, [or] data protection and business continuity.”

“Our larger clients, which would be in the 2,000 seat and up space, tend to have a full complement of IT staff,” says Kempt. “What they usually do is pick one thing they want to offload,” such as backup and data protection.

“Where you need to fill in a particular hole or a particular silo, we call that ‘silo IT,’ where we're basically going to take on this one subset,” and market it, Coppedge says.

Getting Started with a Specialty

To determine which service or subset to offer prospective co-managed clients, Boggs recommends something your MSP is already an expert in, a service or product that is both easy to deliver and profitable, with easily defined “edges.”

Wes Boggs

“When you're siloed and you're doing something like data protection/business continuity, it's pretty easy to determine the edge of that service,” he notes. “And when a new service ticket comes in, you know this is 100% going to IT Solutions versus it's staying with the internal IT department.”

Coppedge echoes that approach. With prospects, the conversation is, “’We're not going to take your job. We just want to take this one headache off your plate with something that we're doing for dozens of companies.’ If there's two things you can do well, go with both of those.”

As you gain experience and collect client referrals, you can build out from there, he adds.

Fast Computers started by carving out a data protection and business continuity offering leveraging their Datto expertise.

On the network security side, Kempt says they started offering network as a service. “Through our contact network, we're able to get boots on the ground pretty much anywhere within reason. And so, some of these [co-managed] organizations, they're housed out of Toronto or Vancouver or somewhere in the U.S. and they just can't get boots on the ground everywhere.”

Some of Fast Computers’ co-managed clients that started with one product or service have added more services over time, Kempt says.

About the Author

Colleen Frye's picture

Colleen Frye is ChannelPro's managing editor.

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