The Biggest Threats Experienced By Managed Service Providers

business threats to MSP

The business world is dynamic because of the many factors affecting and controlling it. Although you may be primarily focused on the prospective profits, it’s critically important to also factor in the losses, challenges and potential threats you may face as an individual and organization. Successful entrepreneurs acknowledge challenges and threats as one of the fundamental ingredients in a business recipe. Your finesse and tenacity in solving and evading them ultimately dictates your level of success.

Due to its dynamism, growing needs, uncertainty, and exponential growth, the managed service market is putting a lot of pressure on providers, which eventually results in business challenges, problems and threats. Some, as a matter of fact, could potentially damage an entire business, subsequently triggering a fallout. It’s therefore important to prepare yourself for them by comprehending each one, and consequently strategizing on counter measures which will ultimately boost your chances of dominating a US$117 billion market that’s still growing.

Threats Experienced by Managed Service Providers
Threats Experienced by Managed Service Providers

Here are some of the biggest threats which are already creating ripples among managed service providers:

Increasing BYOD Popularity

Carrying your own device to work or school has suddenly become a norm in most organizations. Employees can now shift tasks between their smartphones, tablets, home and workplace workstations. Of course they are all enjoying the flexibility and cost efficiency which comes with it, unfortunately, this privilege does not spread to their service providers- BYOD is creating all sorts of problems for MSPs.

If you’re wondering why, imagine a world without BYOD- of course it would be very inconvenient for customers but less difficult for MSPs. They would direct their resources only to single channel endpoint solutions development. No one would have to worry about additional complexities and security risks introduced by other networked endpoint devices.

The fact that hackers are particularly fond of leveraging such devices to infiltrate systems compels MSPs to develop multilayered security strategies to protect additional entry points. Without them, you risk severe security breaches which could potentially cripple your entire business.


To provide comprehensive packages and attract a larger market, most MSPs partner with their counterparts to provide supplementary services. Although it’s a considerably efficacious approach, it could possibly harm your business especially if you are not particularly strategic on the moves you make.

A significant number of MSPs form blind partnerships with established counterparts by failing to pay attention to the actual terms and conditions.  As you streamline your products around the established partner’s channels, they will not restrict themselves to a single partnership. Instead, they’ll proceed to build others till their platforms are saturated. They’ll consequently retain partnerships with major carriers and shave off smaller ones- a move that could possibly be detrimental to your business.

Instead of subjecting your hard-built business to such risks, you’d rather work with MSPs on a “Powered By” provision. Through it, you’ll integrate your services into their toolbox and maintain your respective, distinct images.  Such an arrangement is not only complementary and transparent, but also saves you from serious losses and damages in case you are forced out of their channel.

Channel Conflicts

Carriers occasionally employ various tricks to bypass standard procedures and hijack their partners’ prime accounts. You may enter a lead, own, convert and develop it extensively into a large profitable account, but still lose it to your carrier when their internal team develops interest in it. Unfortunately, and rather strangely, this is not illegal since partnership contracts grant carriers the right of pulling accounts in-house and managing them.

Channel conflicts are also largely created by carriers who assign the same client opportunities to different MSPs. With many MSPs assuming their rights as they log client opportunities with their respective partners, they of course, never expect them to be opened up to other third party MSP partners. Unfortunately, in some cases, management problems arise and two partners end up sharing the same client opportunity on a single carrier. The resultant conflict creates a confusion, through which the carrier bypasses both partners and grabs the client. In most cases however, clients are lost in the process.

To avoid such conflicts, your business should only partner with carriers who have the relevant preventive mechanisms. The partnership contract you commit yourself to should be explicit and protective of your accounts and client opportunities.

Outdated Infrastructure

Since each service provider relies on a set of networked infrastructure to effectively distribute their products and support general operations, it should definitely be the top priority for MSPs. Setting it up and implementing relevant architecture is considered to be the biggest hurdle in building an MSP business, due to high hardware and software costs. Unfortunately, even after executing this step, the burden doesn’t just end there- infrastructural elements need to be occasionally checked, maintained and updated. That, of course, has to be fairly frequent because of the current exceedingly volatile tech trends- old technologies are consistently phased out, for more efficient but costlier solutions.

Many MSPs however, do not have the time and resources to keep up with such trends. They continue providing poorly optimized services on outdated infrastructures. Over time, they lose a majority of their clients to larger companies with superior, optimized infrastructures.

The most reliable method of containing such a threat is hiring an architect to regularly check and update your infrastructure according to your business needs and changing tech trends.

Since each business faces its own set of unique threats and challenges, this list in not exhaustive on all the possible risks which could derail your business operations. There are many others that you will face as you continue rolling out your products and establishing your brand. To avoid being caught off-guard, you should implement a business review strategy and streamline it according to your analytical and KPI systems- for informed decision making.

 Aurthor: Davis Porter

Image Courtesy: bplanet,