Jeremy Balius: Hi, welcome to our newly branded podcast, Go To Market Playmakers, where we engage with leading tech industry leaders to get fresh perspectives and practical advice on the latest trends, effective strategies, and best practices for all things go to market. I’m your host, Jeremy Balius. Today’s theme is MSP strategy.

I’m very excited because I’m joined by James Davis from the TSP advisory. James was the guest on our first podcast episode some time ago. He’s joined us again now that he’s the founder and chief strategy officer at the TSP Advisory. He’s on a mission to make the technology services industry more cohesive and to help partners transform their businesses into modern technology solutions partners to meet the needs of current and future clients in the decades ahead.

He’s got 15 years of experience in various roles across tech industry both in partner land, as well as for Pax8.

He brings extensive experience in helping partners articulate their vision, develop strategy and guide execution. While. understanding how the wider ecosystem and the landscape is playing and shifting. This was such a good conversation. We cover a lot of ground. It’s really about understanding where things are headed, how MSPs and in the way that they’re formulating their strategy can address the current landscape, the current risks and challenges and grow into the future.

I hope you get as much from this as I did. Let’s get straight into it.

Hey, James, I am so stoked. you’re back on the show.

James Davis: I’m happy that you wanted to have me actually back again. That’s a win in itself, isn’t it?

Jeremy Balius: It is a huge win. Just for the sake of the audience, you were the first guest , episode number one I think a year and a half ago.

So here we are. I look 10 years older already. So here we go. It does feel like that a bit with what’s been happening and probably a good segue into what’s been happening with you since we last spoke. You’re you’re off doing your own thing. You’re in the media a lot. You’re juggling a lot of inquiries and a lot of opportunities to speak and you’re winning awards.

So congratulations on everything that’s been happening for you in the last couple of months.

James Davis: Thank you. I feel like I’ve reached one of my life goals of being a minor local celebrity, so I’ll take that. It’s nice to be back out on doing what I love and working in small business and working with direct partners.

I’ve achieved a lot at Pax8. With the Academy in APAC and it’s just the right time to step away from global corporate and go back to my cowboy self in in small business land. So it’s great to be back.

Jeremy Balius: back in the wild west. Hey, we’re here talking about. MSP strategy. And I know this is something that is very near and dear to you and you spend a lot of time talking about.

I want to jump straight into the deep end. You recently published, “support services are dead”. What do you even mean by that? Let’s get into that first.

James Davis: I love to say that because it gets a lot of people riled up very quickly and gets their back up. What I actually mean by support’s dead is the traditional offerings that we’ve been delivering for many years, it’s tanking.

The the end user support, the infrastructure management that an MSP would do is running its course. The margins are getting tighter. Prices are reducing. We’ve always battled, cheaper prices and not being able to deliver. But the technology out there, the resourcing offshore, it’s commoditizing.

So if I’m running a modern technology business. I’m not really want, wanting to chase after a commoditized good for how much risk and how much effort it is to deliver. But more importantly, clients are needing less and less of it as technologies evolve. So we need to transform our approach and our focuses in a different way.

Jeremy Balius: It’s interesting because I follow your content very closely, no matter how prolific you are. I do keep up with everything you put out and You often talk about how services increasingly have become depersonalized, that there is a lessening of an ability to differentiate in the market for IT services.

Let’s add there. We’re not just talking about MSPs, right? We’re talking about any IT service providers, whether they’re SIs or value added resellers or anyone else in, in support land or partner land. What is the impetus or what is driving? Depersonalization in your view?

James Davis: If I stick with the MSP side for the moment as a sort of a construct of this.

Jeremy Balius: Yeah.

James Davis: We were, we, the founding generation is still the predominant owners of technology businesses out there. Been around 20 30 years at this point. They were the local expert for small business technology at the time. The value was They were local, they could solve most problems with technology and they were there on Johnny on the spot to do it.

There wasn’t that many of those guys around at the time and so that was their differentiator in and of itself. And as it became more and more needed, more and more people started those businesses up and we saw those waves like 10 years ago where there was a sort of that wouldn’t call them quite next generation but they were The next wave of businesses being opened up for this particular need.

We realized time and materials wasn’t the best business model to build business value and drive consistency. So we ended up doing managed services, which Really, what we did was fixed price that support, and then we wrapped around some infrastructure management because we knew we needed to maintain these environments and standardize them so that our clients would get better outcomes.

As we did that, we all followed the same thought leadership. It was the same pricing models, it was the same tools that we used, the same things that we delivered. And 10 years later, as everyone’s moved to the cloud over the last 5 to 7 years, all of a sudden they’re all standardized on like M365 and we’ve gotten very homogenous environments in SMB world.

So we’ve ended up creating this better outcomes for our clients, but in the way that we’ve gone about it, we’ve tried to take it as a scaled approach, but most of us haven’t actually scaled. So we don’t have a large volume of clients. We don’t have the margin by volume and we’re acting like a commodity.

We’ve never really generated an identity. Around our business we’ve, and we’ve ended up just copying everyone else’s website. And this is how we’ve just homogenized over time and our purpose and our value has shifted as the market’s shifted, but we haven’t ever repositioned ourselves.

Jeremy Balius: It’s really interesting to hear you talk about this in the context of demographics or the actual people behind some of these businesses. And I think that’s something that’s lacking in general industry landscape commentary is, really looking into the motivations, behaviors of the leaders behind these businesses.

And I think that’s. Something that really jumps out at me in what you just said, there is a cohort or there is a a wave of founders. Or owners, shall we say who are no longer motivated or necessarily don’t have the motivation to address the challenges because they’re in a time of their lives or in a time of their business where it may not even make financial sense to go through what they need to adjust.

Is that what I’m hearing? Is that?

James Davis: Yeah. Yeah, it is. It’s if you look at the majority of owners of technology services businesses, they’ve They’re 50 plus. They’re typically in their mid 50s now, heading to their 60s, already in their early 60s, and they’ve been doing this 20, 30 years. And they’ve been through some waves of technology change.

They’ve been through a wave of, at least two business model changes and probably a tweak in recent times put a lot of effort in. They’ve had a lot of sleepless nights and carried a lot of risk for their clients and the burden that they carry and the responsibility. So they’re worn out. Sps the founding generation in this industry, we’re not a mature industry, and they’re pave they’re pioneers that paved the way.

And so a lot of them are getting to, naturally, to that age of retirement. But also they’ve lost touch with the market because they’ve had to focus on building their businesses and focusing on that. They might, they. are likely not talking to their clients as much as they used to. They’ve got internal challenges with their people and staff.

They’ve had to build these operational practices to generate revenue and profit. And as I have been talking about this transformation, they’ve been quite some time. They’re looking for, can we just get to a plateau so I can rest and so I can potentially work towards my exit. Whether deliberately or not, I’d say the majority of the industry is one foot out the door to exit and that’s affecting their mindsets and their and their focuses.

And like you said, it can be very difficult financially to invest in transformation when you’ve already got an operating business. Especially when The majority of the industry average is 6 percent EBITDA and at least 20 percent of the industry is operating at break even or at a loss.

We don’t even have our own business, like those traditional business models optimized enough to have enough profit to, To invest in that future. So we’re in a bit of a precarious position, I think.

Jeremy Balius: Yeah it’s really interesting to me to think about this and the fact that the pioneers are.

Still running these businesses we’ve worked with many of these types as well and continue to, and one of the things that I think is important is recognizing the fact that they’ve built the businesses and have survived alone is phenomenal, right? Just what they must have gone through over the last few decades.

To get through and get by and service their clients and survive vendors coming and going, or vendors doing things to them and cutting, pulling the rug as they often do just. Still existing is incredible, I take that and wonder if there is a level of exhaustion or a level of being at the point where they, something is deserved and meanwhile, the landscape shifted at the same time.

Potentially creating some conundrums for some of them as to how do I elegantly exit? Or how do I get the best valuation for where I’m at? Or what are my options for moving on? And that’s probably not very straightforward.

James Davis: No, it’s it’s probably more complicated than it’s ever been. Even, Small business is hard in general, like as we’re both business owners, we’re not right in the head.

Like anyone that starts a small business themselves we’re just not right in the head. If we were, we’d think through the logic and the amount of work and what’s the reward in it. We wouldn’t dive into this. So

Jeremy Balius: yeah,

James Davis: we’ve got to acknowledge that.

But. Most small businesses, if you’ve lasted 10, 15, 20 years you’re often going to reap the rewards after 20 years of having a very solid business that’s worth quite a bit, generating good money.

The problem is we’re an immature industry. It’s shifting all the time from just a technology standpoint. We’ve got a whole bunch of other dynamics that have all happened to us at once. We’ve had COVID, which for a lot of technology services, businesses was a boom time.

Jeremy Balius: Yes.

James Davis: I, and I think it’s it You could say it plastered over some of the cracks that were starting to appear in the models.

Because we got some profitability out of that by default, but also it sped up a lot of change on our client side in their adoption of different technologies. Just think how back in 2020, I’ve been working virtually for quite some time, but that wasn’t normal. Like it was odd for people to jump on a zoom or teams meeting that immediately changed everyone.

overnight that they needed to do this. And there was that technology was adopted really quick. So all of a sudden we’ve got these different dynamics there. Since COVID we’ve had massive wage inflation in our industry. So that’s put huge pressure on our margins because we’re still predominantly time based business.

We’re relying on those resources to deliver time in front of the clients for us to actually generate revenue. We’ve got clients that are, their industries are being disrupted by technology and they’re needing to change and adapt. The traditional clients of our businesses have typically been baby boomer owners.

who are all starting to exit because of, they typically mid sixties and above and then they’re exiting their businesses. We’ve had the millennials grow up and start to own their own businesses, become the leaders in businesses and consume and purchase technology in much different ways than what we’re, And now we’ve got Gen Zed coming through.

Also then got whole flood of private equity money into the industry. Acquiring vendors, which you eloquently said that disrupts partners all the time. There’s private equity in acquisitions of partners and we’re getting those large scale technology companies that are are leveraging the volume based margins in an effective way that are starting to impact things.

I could go on and on. So it’s not just we’re not just dealing with one problem. There’s so many things that we need to juggle to make our decisions in what we’re doing with our business. And for most, I go back to, I don’t think most owners are aware that all of this is happening at once. They might feel like they’re all over the place, but I don’t think they can articulate.

All of these challenges well enough to then decide on what they’re going to do, where they’re focusing, what do they need to improve on? How are they going to grow? What’s their strategy? They’re just not, they just don’t have the time because they’re running their business day to day.

Jeremy Balius: Exactly right. And amidst all of the compounding challenges that are simultaneously being faced day to day that you just mentioned, bringing it back to what do you mean to your end user client and how are you growing that either?

through expansion of services within clients or products or solutions or growing net new new clients, how does, how should a service provider. Be thinking about what they mean. You alluded to their positioning earlier but if we take that even down to the DNA of their business what is the future what do they need to be for their end user to, in order to not just differentiate themselves to the end user client but help them survive all of these other compounding challenges.

James Davis: So this is a really interesting conversation. And what I might do is frame this up around the SI and VAR to to show some differences. I’ve come across a lot of VARs, their DNA is that product led sales. They’re the sales led organization. They were built off the back of selling hardware, and then they ended up wrapping some services around it.

A lot of them haven’t really fully adapted to the whole cloud world driven world. The couple last couple of years, they’ve been starting to sell more and more licenses, but they haven’t quite twigged on how to wrap services around them. And when you start looking at the modern world, what that sort of space.

Most of the generic thought leadership out there is like the bar. The bar is dead. That whole model of just reselling some stuff with only a little bit of added value isn’t the right, isn’t right business model. And I’ll come back to what modern one looks like after I talk about this. I who’s that professional services driven business that has a speciality in specific technology that work that typically they end up typically working with the mid market and enterprise and government.

Because they’re the ones that have the IT staff on one side, they know what they’re looking for, and they’ll bring these sort of specialists in to develop a project. Both of these business models A tanking, the traditional models, there is a whole new way to transform it. And this is core to their DNA.

And this is where I think the generic MSP name is hurting the industry a lot. Like a lot of vendors, a lot of disties, they just call all their partners, their MSPs.

Jeremy Balius: Yes.

James Davis: There’s more of these SIs, VARs, telcos, and other types of technology services businesses than there are MSPs. And so why I’m highlighting that, it’ll become fairly obvious pretty quick.

The DNA of a VAR that’s selling products, sales led, they don’t deliver end user support. They’re never going to do infrastructure management. That’s not core to their DNA. They’re not highly technical. They’re very good at brokering. Deals and relationships. That’s what they do. They’re really a technology procurement partner and the modern evolution, like in my technology solutions partner concept, I label them a technology broker and what they really are is a, modern, a modern partner that focuses on procuring technology.

And that means hardware. That means SAS solutions. That means services from different partners that can mean subject matter expertise. It doesn’t really matter, but that, that engagement with the client and understanding what they’ve got and proactively bringing them solutions to help their business is still very much needed.

And SI, that specialist. They typically work direct, they’re trying to do large projects, the future for them is a channel model as a technology specialist, a specialist TSP, that works with the brokers, the modern MSPs that I’ll talk about later, the scale providers, the speciality is very much needed, so when they can productize solutions and they can scale down from the mid market enterprise and all of a sudden grow their businesses through it.

That volume through a partner channel model, while they’re the same DNA. They’re a model, they’re a different business and operating model, but they’re a logical step. Whereas when you look at a VAR or an SI transitioning into that traditional MSP model, neither of them operate a help desk.

Neither of them have that day-to-day interaction with a client like a, like an traditional MSP does. So when we. Make these vague, broad statements and try and lump everyone together. It’s just not realistic. Let alone when you start bringing in telcos and the office technology and all of those types of guys, there’s such a wide wide market there that.

Using a ubiquitous term, just, I think the values, these part of business models that have served clients for decades now successfully and we need to treat them as different business models into the future as well.

Jeremy Balius: Yeah it’s interesting to think about the chronological. Usage of the word managed services or the term and how everything just gets bucketed in particularly around the way that vendors likely miscategorize how they do incentivization and enablement and education and support either pre or post sale or post transaction.

I think a lot of it probably falls over because they’re not thinking about organization types and the way that they’re operating and the way that they’re supporting their end user clients, unless you’ve got maybe a really great channel sales manager who understands it and individually can support his patch.

But at channel program level it’s probably falling short for guys.

James Davis: I haven’t seen a channel program that takes into that level of segmentation ever to be honest, I think there’s vendors and disties that understand. A single segment, quite well. They might not, the hardware disses really understand the VARs very well, and they don’t typically understand the MSPs.

I’ve seen disses and vendors understand the MSPs, but don’t realize they They cut out other potential markets. And this is a conversation I’ve been having a lot recently with vendors that are bringing more modern solutions out and they’re finding that they’re advertising to MSPs and they’re not getting a whole lot of traction.

So I’ve spoken to an RPA. SAS solution as an example they’ve been sucked into thinking MSPs are the growth area and MSP being end user support and infrastructure managers. They have no idea how to have a conversation around business workflow. And then how do we do DevOps to integrate the systems and then leverage RPA technology to solve business problems.

Completely different mindset. So if you’re not understanding that segmentation and the monetization of how those business models make money, what how they engage their clients, it’s going to be very hard to just market broadly and get the right sort of people as compared to that RPA if they advertise them or the boutique technology solution partners that are advisory led.

that are coming from a business focus first, or a technology consultant or something like that, they get this stuff naturally. And I think that’s what’s harming our industry is just that lack of clarity. Partners know who they are, they know their business models, their traditional business models.

They might not be able to articulate what’s next, but they know, the ones that are that next generation can sense that change. And the traditional models will just operate how they always have. But the vendors and the disties just haven’t tweaked on to what’s going on in the partners is it’s really showing that they don’t understand the market well enough which I think is quite dangerous.

And I know you said it before, but I’ll call it out again, the amount of partner program changes and the pulling the rug from partners, it’s, It doesn’t help, and it really impacts the partners far more than the vendors and that take take into account. But they’re making, they’re playing a different game, and I think this is that this mismatch.

The vendors and disties are going, they’re focusing quarter on quarter. The partners are playing like, five, 10, 20, 30 plus year games. They might not be able to articulate it and be very deliberate about it, but they’re in it for the long haul. They’ve proved it time and time again. They’re the constant.

They’re the only constant in our industry. Everyone else is moving around them and disrupting them, but they’re the key. They’re the key to the industry. And I don’t think. Enough people truly understand that. And probably what frustrates me the most coming out of part in the land and having gone, spent more time with vendors and this is there’s not enough people that want to understand.

It’s not even that there’s ignorance for, if I haven’t worked in one, I won’t understand, but not enough people ask enough questions. So they already assume they know and they don’t. Yeah. You’re so right.

Jeremy Balius: I’ve heard it said recently that. The inability for the vendor partner program let’s call it the vendor who has the program and the people within that the inability to understand that means that there is no empathy for the fact that they have dumped all the risk onto the partner.

And. And the lack of empathy means that the partner carries the risk and the very foundation of the relationship is adversarial as a result, and nothing can change until that risk is addressed. And because it, as you said, Can’t be because there’s no asking of the questions. It will just continue on as it does.

With lots of people talking about what should or could be done, but no meaningful change able to occur until until that risk is addressed.

James Davis: It’s a good call out for the risk. And I don’t, it’s always going to be hard to understand partners when you’ve never been a small business owner.

Jeremy Balius: Okay.

James Davis: I’ve done it to a few people. I did impact site with the sales people when I first met them. I was like, put your hand up if you’ve ever owned a business. No, I did. And that’s okay. That’s normal, right? There’s less business owners than there are employees. You’ll never truly understand stress.

Unless you’re waking up one morning, wondering if you’re going to make payroll the next day. Yes.

And right there, what you said around the risk and then that empathy, and until you understand that, all small business owners have gone through that. There’s never going to be a true connection. And I know obviously in a vendor and a disti, you’re working with thousands of partners.

It’s a, you’re not going to be able to directly connect with every individual. And I think partners need to understand that too, is that you’re not going to, it’s not like having a relationship with a client where you’re going to, You know the business owner on the other side, you’re going to work together for 5 10 years, and you’re going to deeply know that, and that’s the identity of the relationship.

You don’t get that from a vendor or a disti, and you’re never going to get that because of the scale. And but that’s where the partnership aspect comes in. The partners need to take responsibility to be better at articulating what they need. And here’s my business plan. And this is what I need from you to, to succeed.

But also the call out that you’ve made the vendors and distis need to get a lot better at having empathy. For the partners and that doesn’t necessarily need to go right down to the individual, but that needs to be a genuine intent and genuine actions to understand the partner so that you can be a true partner to them when you’re just selling a product, that whole adversarial Relationship is going to happen because a partner is looking out for their clients.

They don’t care about you. There’s no brand loyalty. They’re never going to be loyal to you if you don’t show them the same respect. Exactly.

Jeremy Balius: You have touched on this a couple of times. I want to pull it all together. It being core to the new brand that you launched around TSP advisory. Can you give me the 50, 000 foot view of what a technology solutions provider is?

Yeah.

James Davis: So technology solutions partner,

Jeremy Balius: sorry, partner.

James Davis: Yeah. So I’m pedantic about this. It’s the reason, it’s the reason why I created this concept. It started off by us talking to a lot of partners about the changes in the market that those next generations, either they’re founding and they’re starting and trying to do something different, or they’ve been around for 10 years or so, typically, and they’re trying, they know they need to transform, but couldn’t quite articulate it.

So as I had more of these conversations, I thought, one of the best things I could do is actually just So create a framework and a guide to give people guiding light. That’s where technology solutions partner came out. And I basically my thought process behind it, obviously we’re dealing with technology.

Let’s just own it, own that from straight up. And the reason why I didn’t go service provider, like what’s the default in our industry is some language differences. So a service is just a transaction. It’s as often very clear to people what they get. We all know that our clients don’t actually understand what we do.

They just trust us. So selling a service is really actually difficult in our world. I’ve done it. It’s really hard. But if we elevate ourselves to providing business solutions, it’s very easy to talk about a solution. What problems is someone having? Here’s the outcome. You don’t do that with a service.

That’s not how a service works. That’s where I started with solutions. And then you go on to provider. A provider, again, is a transaction. You’ve got electricity providers. They don’t know your business. They don’t care about you. They just provide your commodity compared to a partner, which is actually what all of us, a small business owners want to do.

We want to have a partnership with who we work with. We want those tight relationships, not just from a client side, but the other technology companies that are around us, subject matter experts, we want to create this ecosystem where we’re, we all know each other very well. We culturally align, and then we create solutions together.

And that’s where the partnership side has come from. While it’s pedantic, it’s actually mainly to drive that different mindset. Because if we’re, stuck doing what we’ve always done, then we’re always going to do that. And we can’t keep doing that when success is different in the modern world.

It’s taking a transformation to do a completely different approach. And so that’s, that was the catalyst to start with. And then I got super lucky because not long after that, Microsoft changed their partner program. And now everyone that gets designated is a solutions partner. So I don’t know if they were listening in to me, but this is like just one of those magical coincidences, which I think is awesome.

And then under that there’s the different modern business models. It’s the technology broker that I spoke about where we’re technology procurement partner and being able to do services and solutions and SAS and hardware, and we’re really a sales led organization. There’s the boutique TSP, which is that advisory led organization.

And I’ll call that one out because I haven’t touched on it too much, but I’m already seeing financial firms trying to get into technology advisory as an example. They’re leading from a business first lens of what are the business challenges, what are the finance, financials, all that kind of perspective.

And then they’re leveraging technology to solve business problems. They’re getting into CRMs and ERPs and automation and things like that. The technology specialist I or tech specialist TSP had touched on. That’s the sort of modern si that’s a, got productized solutions. That’s going through a channel model.

And then there’s the scaled TSPs, which are really those large behemoth MSPs that are going up and acquiring a bunch of a bunch of companies, and what they’re doing is consolidating down their offerings to generic, which I don’t mean generic in a bad way, they’re just clear this is what we deliver.

standardized packages, but they can deliver at scale and volume at a cheaper cost effective rate and generate margin of volume. They’re not trying to be a white club service. So when you start looking at that and you might start looking around the ecosystem, sorry partners doing all these sort of business models and being deliberate about it.

And they, I’m saying they’re the ones that are growing faster than others. So that’s it at a 50, 000.

Jeremy Balius: If we are thinking about the state of the TSP and the ability to absorb the compounding changes and the needs are being met of the changing the changing needs are being met of their end user clients. And we look at the reality of businesses today who have built themselves on the blueprint of what has worked in the past.

And if we’re thinking about it in the context of strategy for 2025 and beyond. Where do I start? How do I, how do I start looking at my business and looking beyond what we’ve been doing to either get to where I need to be or start a journey to to initiate the process? Because I don’t know how we’re going to, or when we’re going to get there, but I need to start now.

How does that strategy start of transformation is what I mean.

James Davis: Yeah, that I think I think it’s a great question. A lot of people are lost. They, and I say that they don’t even have business plans and they don’t have accountability rhythms in, in what they’re doing today. So it’s very difficult to then grab that and pivot. The challenge here is you need to work out first is do you have the energy to transform? Do you want to be around in 10 years time? When we’re talking about the founding generation of owners here, if you’re looking towards exit and you’re likely to exit in the next two to three years.

And you’re actually going to work towards that. I’m very deliberate about saying that, like you’re making a deliberate decision to exit, then I wouldn’t even worry about transformation to be brutally frank, it’s going to distract you from that journey to exit. But you need to be deliberate about it.

So if you’ve decided, no, I am going to stay here, saying it for the long term. Let’s say it’s a decade horizon. That’s the first step from there. It’s then understanding what’s your identity. Something that we touched on earlier that we don’t, we haven’t really repositioned our business. We don’t we had we had a brand and stuff from back in the day, but who are we?

Now, and who do we want to be? I gave you some examples of the business, potential business models around what we could be, and what, sucks us in what makes us most passionate? Where does, where’s our current DNA? What makes the most sense to transform into? That then sets a guiding light to of direction that we can head in.

So if I’ll be biased. If I was out there, I’d want to be a boutique a business advisor. That’s what I love and do. And if I can leverage technology to solve problems, there’s a big market out there for it. So maybe I’m running an MSP and I’m like. That’s where I want to head. The next steps are what are the gaps in terms of capability?

Do we even have the capability to deliver those services at the moment and solutions? Do we, do the clients fit for that particular direction? Do, what do we need to invest to go there? And then is it realistic? Maybe I do that and go, no, the current clients I have, it’s going to be too difficult.

I have no staff outside of me that could do that. Actually, maybe I need to pivot to technology broker instead. Maybe that makes more sense. And then, all right, I’ve, Got that. Now, what does that model actually look like? And then what are my steps to get there? In all of this transformation, apart from the fact it takes a long time, like I always talk about transformation is going to take you three to five years to actually transform.

But even if you could, it’s not going to be like a light switch because you need to reposition yourself with your clients. You’re not going to just wake up the next morning and flick a switch and go we’re a technology broker. This is all implemented done. There, there is a journey there to reposition with your clients, reposition in the market change your operating model, change your org design and your structure, retrain staff.

There’s all these activities. But if you know where you’re heading and then you’ve got this action long list, you don’t need to know all the steps from, You only need to know A to B, then B to C, and then work on it incrementally. It’s not a program of work that you’re going to get done in three to six months and it’s done and one and done.

It’s a change of mindset. It’s a change of approach. So you don’t need to be overwhelmed by All the things that you need to get to the end of the vision, you need to know what your vision is and then what are the key first steps that you need to take and then focusing on them.

Jeremy Balius: Yeah, similar to you, I’m very careful around language and When you’re talking about repositioning, you’re not just talking about, we’ve got a new hero statement on the website, right?

Like we’re not we just refreshed our sales collateral. And now we’re this, you’re talking about a fundamental. Core transformation that, that requires a cultural journey. I would imagine it would probably require a a re skilling and potentially even a shift in capability and capacity focus, and potentially even a shift in staffing structures.

This is. This is repositioning here is, it’s a whole new business effectively coming out of it, right?

James Davis: Yes it’s an important call out. It’s a big transformation. It’s that whole new business model. Like I just, I’ll pick on the technology broker example. If I was an MSP, I’ve got to, I’ve got to, My predominant staff are all helpdesk.

A technology broker is sales led. So our, even just simple ratios, we need more salespeople than technical people straight away. That’s a pivot in and of itself, how we engage with our clients is going to be slightly different. The similarities, but if we’re not, If we’re not having all those touch points on the help desk day to day, and that’s not our value anymore, all of a sudden we need our sales people to engage on roadmapping processes and we need more technical pre sales to uncover different opportunities for the client.

Those are very different motions. How we make our money could be quite different than, my traditional MSP. I’ve made my money on my managed service, my vague managed services bundle. Maybe I’m going to have to split that up into help, help desk and end user support component infrastructure management component.

And then. Maybe I need to give up the end user support to shift that into a different budget. If I’m reselling someone else’s helpdesk, I’ve got to maybe realize that I’ll make 10 points of margin on that instead of what should be 50, even though the industry average is 40. So I’m going to make less margin, but that allows me to scale better with less risk.

There’s so much of a different mindset and approach we need to take. And this is where a lot of those founding generation or business owners in the industry are going to struggle with that change. Not necessarily because they’re not we’re not as business savvy as we should be. It’s a completely different model.

And we’ve got to have the energy to invest and understand in it. And if our core identity is still wrapped around that reactive IT support, it might be a bridge too far.

Jeremy Balius: And

James Davis: that’s okay. Like I don’t mean any of this in a negative way, but that’s where you think about this in a mature way and go, I’m not going to be able to do that.

I’ll exit out. That’s the time to deliberately work towards exit and cash out, get the value. And there’s still be positions and roles and opportunities in the industry with all the experience that you’ve got. It just might, it’s just not necessarily the business model that you’ve got. work so hard to build.

And that it’s easy for me to say that I, I’m not running that business for 20, 25 years with blood, sweat and tears. But if people don’t do that, where I’m already starting to see so much client churn in the industry, like I’ve never seen before. There is a massive risk you’re going to lose your clients because you’re not providing the value that they want and need.

And that this is, we, I don’t want to see people gamble. We’ve already spoken about how much risk and burden they’ve carried, how many, how much good things they’ve done. I’d much rather see a lot more people exit with great outcomes than what’s likely to happen. There’s going to be a lot of tears and a lot of a lot of lost business value, a lot of fire sales.

I don’t want to see that.

Jeremy Balius: Yeah, agree. Agree. The I think we know that there is a cohort of businesses that have come up and are flourishing in that next gen solutions partner model. And you’ve provided a lot of practical advice for those businesses that have been around however mature or at whatever stage they’re at to, to start thinking about how to transition in order to not just remain relevant, but to grow sustainably and and minimize risk through that process.

What would you advise business leaders, owners, and execs as they’re thinking about this strategy? Cause let’s face it. A lot of these guys are thinking about 2025 strategy right now, even though we’re halfway through Feb and it’ll be back into Feb by the time this Publishes and I partially chalk this up to the fact that nobody even starts working until after Australia day in this region.

And it drives me crazy, but let’s leave that for a different conversation. As they’re thinking about strategy, a lot of the strategy that we’re exposed to is relating to taking new products and services to market, they’re expanding their catalog for the most part, a lot of these guys are pushing out more security offers, whether they’re taking their.

I don’t know, endpoint monitoring and they’re launching an XDR type solution, whatever it is, right? A lot of cyber securities in market but other people are deploying co pilot services and they’re figuring out how to monetize their Microsoft offering on co pilot and creating a a future offer there.

But they’re expanding their catalog, right? And they’re launching new things that they can sell into their existing captive audience. And maybe in some ways pick up net new along the way. How do guys like this in a very pragmatic and practical way think about strategy and their core business?

In 2025, that is more than just bolting on more products and services to their business and their catalog.

James Davis: I’m glad you called that bolt on. I’ll come back to that. Okay. There used to be a top down approach. That’s the problem. We’re just bolting on stuff to what we’ve always done and how we’ve always done it.

And I could go on a whole podcast rant around how. We’re completely stuffing up cyber security, but that we’ve treated that as a bolt on to what we’ve always done. And it’s a great example of we can get some products from some vendors. We’ve been smashed by the vendor agenda with cyber security.

So we buy all these tools, never elevated the majority partners. have no framework or frame of reference to what they’re actually solving. They’re just going, there’s an XDR tool. How do I sell that into my clients?

So that’s the approach that you described and that’s how majority of the industry works.

And I know that apart from my experience, you only need to go to the forums anywhere, and you’ll see daily conversations of people going, what’s in your stack.

Jeremy Balius: Yeah.

James Davis: And. Straight there that, that word triggers me because that’s a stack is traditional MSP. We’re trying to force people into a rigid standardized environment so that we can deliver things efficiently.

And that made sense when small business technology was a sprawl of all this random stuff. It would fall over with a light breeze, but most technology infrastructure just works. We need to maintain it. That’s fine. Clients want, needing us to understand their businesses to provide solutions for them.

And when we start looking from a top down approach we do things very differently. Firstly, we need to understand our clients. Who are they? What size are they? What are their needs? What’s going on in their industry? So then we can apply technology categories against it. I always talk about this 12 major technology categories.

I won’t list them all now. And then there’s a whole bunch of sub category. And so all of a sudden there’s this broad space of how do we help our clients? And that helps us frame what’s our current capabilities in these categories. Do we need to put part, do we need to leverage partners? Where do we invest to develop new capabilities?

And that’s where a strategy starts. But then you start positioning things. So we go back to cyber security. We’re coming from a vendor technical control product lens. The majority of us, the ones that are really succeeding from this are coming from a GRC perspective. It’s a top down advisory. What do our clients need?

What frameworks are we aligning to? How are we going to keep them compliant? How are we going to take them on a journey? Then all of a sudden, you’ve got a longer term view of how you need to interact. Now, whether that’s you actually develop a GRC practice and provide consulting, or it’s simply that you’ve just got a frame of reference internally from a G, GRC perspective and understand your majority of clients are at this sort of risk profile.

We need to get them to a baseline. Here’s the baseline we’ve set. It’s a very different approach in of itself because all of a sudden you can have business level conversations with your client. You can position it. You’re out of the weeds of the technology and that applies to every single sort of area.

The clients are looking for us to provide them advice and direction. Yeah. And if we’re simply just bolting stuff on, apart from the fact that it does appear that all we’re doing is bolting stuff on, there’s not really a strategy, we haven’t thought about the positioning. We might add a new product, let’s keep focusing on the XDR.

How are we driving the sales? Like, how are we going to, how are we going to market with this? How are we leveraging our demand generation through digital marketing and stuff to educate our clients that this is a need, and this is what business problems that solve, but how’s that position with our account managers, are they just.

Focusing on this on a product lead campaign basis. Are they are they facilitating conversations through a business technology review perspective? Are they leveraging, are they just getting meetings? So an expert inside the company can come and actually talk to them from a business perspective and provide them advice.

There’s many different things that go into this and that’s what develops a strategy as opposed to. This is what the vendors are telling me. Everyone else is doing this, so I better have XDR. How do I bolt that on? Do I just sell it as a standalone product? Do I need to create a new standalone cyber bundle?

Do I chuck it into my vague managed services package that I don’t even know what we provide anymore and my margins are shrinking? That’s the bottom up bolt on approach compared to that top down strategic perspective. And it sounds really complicated when we use the words strategy and strategic. It’s not that complicated.

It really is as easy as understanding our clients, which is our market, our capabilities, and Joining the gaps identifying the gaps, create a plan, and then understand that there’s implications across sales and marketing, our service delivery teams, and our financial operations. And if we start from that approach it’s not actually that complicated.

There’s clear actions, there’s clear processes, and we slot it in and we mature up.

Jeremy Balius: It’s awesome. It’s, I think there’s so much value to be gained from that. So much for myself to reflect on. And I think for listeners as well, James, this has been incredible. Thank you so much for coming back on and talking so bluntly in the way that we need to hear these things.

And I can only imagine how much value is flowing into the ecosystem off the back of the way that you’re talking about where the partners need to head to with their strategies. Thank you.

James Davis: I appreciate it, mate. Hopefully it’s helped. Hopefully it’s helped someone. 100%. Awesome.