Every managed services provider (MSP) worth their salt has a very deep familiarity with Microsoft. With Microsoft holding one-third of the worldwide operating system market share, MSPs need to be in the know on the particulars of Microsoft products and services. Between the Microsoft New Commerce Experience (NCE), which launched in November 2019, and the Microsoft price increases that are coming into effect this month, many MSPs are working hard to wrap their heads around how these changes will impact their operations – and their bottom line. We take a deeper look at these upcoming changes and the challenges and opportunities that they present for MSPs.
How Does NCE and the Microsoft Price Increases Affect MSPs?
Both NCE and the recent price increases provide opportunities, as well as challenges, for MSPs.
Benefits of Microsoft NCE for MSPs
Microsoft licenses are now going to cost more for business customers, increasing to 25% from 9% on their Business and Enterprise plans. While any kind of price increase may seem like an inherently bad thing for an organisation that is bearing the brunt of that price increase, this is not necessarily the case here.
These price increases will provide a strong business case for IT providers to lock their clients into longer term contractual agreements that align with Microsoft licensing timelines (12, 24, or 36 months). They also provide a good opportunity for MSPs to have a broader conversation with clients about pricing and take a better look at how their client contracts are structured, what services are currently included, and what additional services should be considered.
MSPs should take this opportunity to do a full-scale review of their margins and pricing models, including contract renewal terms, add-on services, and annual rate increases, and ensure they are in the best financial place as they move forward. And given that Microsoft is driving these changes through their price increases, the reality is that all MSPs will be doing the same. An opportunity for an industry-wide reset.
Challenges That MSPs Need to Prepare For
Along with the opportunity to review and level-set on client pricing going forward, come some unknown challenges that MSPs may not yet be thinking about.
For starters, there will be an administrative burden that MSPs need to be mindful of around the various renewal points. Assuming MSPs have different clients on different packages, there will no longer be a common renewal date, so that will need to be managed accordingly. Furthermore, a staggered approach may be prudent when upgrading and increasing security to ensure the best bang for your Microsoft buck.
One of the ways to mitigate the increased administrative burden that will exist as a result of these price increases is by adding custom fields that can trigger workflows around the potential renewal and/or cancellation dates. Consideration should also be given to introducing administrative and service fees for managing the Microsoft licensing.
Call Sea-Level Operations to schedule a time to chat about how your organisation can best ensure they are prepared for, and making the most of, these Microsoft price increases.
Managing Change in a Changing Marketplace
This recent adaptation, courtesy of Microsoft, is just one of the many changes that IT solutions companies need to brace for this year and in the years to come. The managed IT marketplace is changing fast. From changes to insurance premiums and standards to increasing cloud migration to the increasing importance of cybersecurity education to ongoing talent recruitment and retention challenges, the MSPs that are going to weather these rapid and dramatic changes are those that are strategic and proactive, as opposed to reactive.
Sea-Level Operation’s 5 Phases of Operational Excellence guides MSPs into that coveted strategic and proactive territory. The 5 phases are as follows:
- Understand the best practice
- Document your way
- Train your team
- Implement your process
- Inspect what you expect
This 5-phase proven process helps organisations capitalise on the competitive advantages change brings, with fewer challenges that tend to come with project management and PSAs.
Setting the Stage for a Successful 2022
Henry Ford famously said, “Obstacles are those frightful things you see when you take your eyes off your goals.” While many choose to see these Microsoft price increases as an obstacle, we see them as an opportunity. Sea-Level Operations provides personalised, one-on-one coaching with MSPs. With a team of passionate expert coaches who understand the nuances of the MSP industry inside and out, we provide our MSP clients with an end-to-end blueprint for every stage of their evolving business journey. Including those unanticipated changes that are par for the MSP course. Let’s connect today and start that business journey together.