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  • John Harden

SaaS Management, An Untapped Market that is Ripe for Solving by MSPs

Looking at the MSP Trends

When you look at the big picture of why you’re working as a technology consultant, or why you personally are sitting here reading this post, what you’ll most likely land on is the fact that you really, really love helping your customers. People who invest time to grow and learn about their space and choose to master their crafts are the best advisors. But it’s not as simple as loving your job or honing your skills, it’s about solving real problems. 

It’s clear that in 2021 certain markets are going to grow faster than others. With the rise of work-from-home, the fact that cyber-security is more important than ever and the growing reliance on cloud managed services, what everyone planned to do in their 2020 playbook, instantly shifted in March/April. Have you taken the time to re-evaluate since then? 

With the dust settled and as we look into 2021, a very clear picture is forming for priorities into this year. Simply looking at the CAGR (compound annual growth rate) of managed service areas: managed network growing at 6.3% [1], managed security growing at 8.0% [2], managed IT growing at 8.1% [3], and managed cloud growing at a whopping 13.3% [4], it’s clear that managed services are becoming a more important part of businesses strategic growth plans. 

However, there’s been one thing that has continued to lurk in the background, not completely unnoticed but somehow unhindered: SaaS Growth. According to market-research completed by Gartner, SaaS growth is projected at a stunning 12% CAGR in 2021 [5].

What does this all mean?

As everyone rushed to adopt new technologies to answer the problems that the world presented in 2020, we saw enormous adoption and some unicorn-style growth in a few select software solutions (let’s face it, you probably have Zoom installed on your computer). However, what was left behind was a trail of un-canceled software subscriptions, software that was introduced by internal teams not sanctioned by IT leaders (this is commonly referred to as Shadow IT), and lots of unchecked security concerns as solutions were adopted quickly without regard to traditional operating procedures. And all of this was after the already many years of rapidly growing and completely unchecked SaaS adoption.

This happens because, in today’s world, SaaS is as easy to adopt as picking up a bagel at your local coffee shop. You go to the front of the line, you swipe your card, and boom, there’s your SaaS (I’d like to think of SaaS as an everything bagel). Hyperbole aside, that’s a really large (and not so tasty) problem. Think of any other tool, process, or mechanism that works like that inside your company, where a single team member can introduce security concerns, wasted money, and operational breakdowns with such ease? Because SaaS is so easy to adopt and every little problem can be solved with SaaS, businesses have opted to treat their SaaS management practices like the everything bagel: just throw all our problems at it without any strategic plan and just wait to see what the results are.

Is it really that big of a deal?

Well, yes, quite frankly it is. While these SaaS solutions are not being managed, your clients sit in a void where no-one really knows what’s going on. If you ask the IT manager of the normal small business (between 1-100 employees) how many applications they have, they’ll typically throw a number between 20-40 at you. This is, in most cases, wrong by almost a factor of 3 times, as the average business of this size is sporting a whopping 102 SaaS applications [6]. The amount of SaaS isn’t the actual problem, but the lack of knowledge is. How are you, as the trusted technology advisor supposed to help with this problem if your client isn’t even aware of what is going on in their landscape?

Clients Before Management

Let’s Look at the Facts: 

  1. The average annual spend on SaaS for a small business is $202.2k, with the employees having $5,736 in SaaS licenses. [6]

  2. The average amount of SaaS apps in a small business is 102. [6]

  3. The average amount of unique billing owners in a small business is 10. [6]

When you move to mid-market businesses (on average 288 employees), these numbers move to 2.47MM annual spend, with 288 SaaS Apps, and 32 unique billing owners [6]. How is it possible for the small and mid-market business to be successful with their SaaS management with so many applications, so many different business owners and so many licenses to manage without anything in place to manage it? Wouldn’t it be great if there was a trusted advisor that they already leaned on to help them with all this? (Hint, there is, it’s you.)

How do we tackle this problem as a trusted technology advisor?

As the trusted technology advisor, it’s your job to wrangle everything IT and manage all aspects of technology, or at least that’s what the clients expect out of you. As you manage your client’s technology, you wouldn’t simply allow them to add network equipment without working with you, you wouldn’t anticipate that they would draft up a brand new cyber-security plan without bringing you in, however, we just don’t seem to care that much about them introducing SaaS without consulting you. This isn’t okay, because this means your clients are unintentionally introducing risk and waste in their organizations without you or them even knowing it.

SaaS needs to be managed by you, and it needs to be operationalized now. Some problems can be solved manually, by interviewing your clients and building processes & spreadsheets to review what exists on a recurring basis, however, these become stale almost immediately. By utilizing Saaslio, you are able to manage your customer’s SaaS immediately with live and up-to-date information, operational workflows, cost management reports as well as application and user lifecycle management.

Why should we help solve this problem?

As a seasoned MSP Practitioner, the services you provide are very cyclical, because the technology industry itself is extremely cyclical. The winning players every single cycle are the ones that focus on the most important problems and tackle the most challenging ones. There are three great reasons you should consider opening a SaaS Management vertical:

  1. Being a thought leader and having a competitive edge against other practices you will be bidding against is critical. We live in a sales era where people are spending less time looking at just the price and more time focusing on the value. Bring value to your clients by tackling their biggest problems.

  2. Creating a new line of revenue will help you weather the storm as other lines of business are dwindling. Managed Network services are slowing down, as well as other lines of business are starting to flatten out. With the cyclical nature of managed service businesses, it’s important to open new verticals to ensure you’re growing in different focuses while others are shrinking.

  3. Open up the sales conversation. Short and simple, this problem is not going anywhere. Ask any one of your clients how they manage their SaaS today and you’ll hear a list of problems they’re encountering: wasted money, unknown applications, duplicate applications, shadow IT, etc. (the list goes on, just ask, you’ll see!) If you’re looking for something to talk with your customers in the next QBR, talk to them about their SaaS Problems!

The three key problems to focus on with your SaaS management roadmap.

Regardless of if you want to use a solution to help you solve this problem or whether you opt to manually manage your client’s SaaS, you should focus on three key areas of SaaS Management:

  1. Cost Management: Identity and clearly manage the user lifecycle to limit unnecessary licenses. Ensure that a clear process is established for onboarding & offboarding your client’s employees in SaaS applications. Help them establish a clear strategy for expensing and adopting SaaS.

  2. Operational Management: It’s critical to establish a practice inside the client’s organization for SaaS adoption, otherwise, you’ll end up like the IT manager who guessed 20 when there were really 100 applications in your organization. Shadow IT runs rampant, but you can help thwart it by recommending they implement business processes such as routine financial reviews, clear SaaS adoption lifecycle, and helping them set the expectation that SaaS should be managed by IT and not business-leaders.

  3. Security Management: Even if your clients are not highly-compliant, it is critical that they have a clear understanding of where their data exists in the organization, and that they are using SaaS that is safe and secure. Have them start out by looking at the solutions in their portfolio that are used by the smallest number of people in your team and see if they can be consolidated. This is one of the fastest ways to reduce your footprint and limit security implications. Secondly, have them implement a process for reviewing the need for a SaaS application completely before allowing it to be introduced in the organization. Less SaaS can mean less security implications, and a thorough review process for each one introduced would introduce more assurance for your client’s IT’s security.

Ready to wrangle your clients' SaaS stacks?

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