I think that Bob’s concerns are definitely valid. We have too many people in our industry lowering their prices because they think it will give them an advantage, when really this will only put them at a disadvantage over time. This is an education issue, and one our industry needs to address (more business skills; less tech skills).

On the other hand, the fact that our industry is finally getting some standards of performance and price in place is the best thing that could possibly happen. Up until a couple of years ago, we were looked upon like plumbers or lawyers - as a customer you just hoped that things got done with as little damage as possible. We are moving past that as an industry thanks to the standardization (and possibly commiditization?) of pricing, plans, and tools.

Is this good or bad?

Well, I offer one industry as a comparison: payroll processing. This is a very competitive industry with cut-throat pricing. But I can tell you with certainty that more people have become millionaires in that industry than in ours.

Why?

Because that industry knows one of the most important lessons an entrepreneur can learn: selling companies is more valuable than selling services. In other words, they have a very standardized model, they build the companies to sell, and they have acquirers happy to buy them at multiples that make sense because they have a very good understanding of the business they are buying.

This is something that is only recently happening in our industry, and hopefully will continue and even pick up pace!

I am certainly not arguing against finding ways of adding additional value to your services! What I am suggesting is that you shouldn’t do this by offering lots of customized consulting engagements or non-standardized offerings that can’t be packaged. Why? Because that makes for a hard business to sell!

I also disagree about it becoming more difficult to make a profit…but more on that later. This comment is already to long!

MRC

We add value by partnering with companies in our space that provide software and systems that our clients might use, like medical device companies, medical billing companies, and medical software companies. We want to be able to offer our clients a best of breed approach when choosing the technology to run their practices. It’s about helping them choose the technology that enables efficiency and high quality health care.

Not only do we train our staff on Microsoft technologies, but we’ll send them to software specific EMR training to get certified. This allows us to really add value and our customers appreciate that “skin in the game’ approach to their business.

I also want to point out that we started as a pure play MSP in 2005. As time goes on we are doing more and more project work for our clients that’s directly related to the medical record software they purchase like writing custom reports.

We are certain that anyone could create recurring revenue and be an MSP in a matter of a few week (if you don’t believe me give me a call and I will give you the play book), but the reason this does not keep us awake at night is because we are also certain that 99% of organizations will not provide the level of service we provide our customers or be able to position themselves as anything more to the client.

I am curious what others are doing / planning to stay ahead of this change? You don’t have to share your trade secrets - although most would not be able to put them to use anyway - but it would be great to know how people are looking at the future of the market and planning for it.

JC

I couldn’t agree more that offering SaaS and hosted services is becoming more and more important to MSPs. Even if it is a resell play, becoming the aggregator of services for your clients will put you in a position of value.

JC