Managed service providers (MSPs) are facing a rapidly evolving and increasingly complex world. The pressures and challenges – from increased customer expectations and internal demands to lower service delivery costs and increased margins, external demands and lower prices – make it increasingly difficult to thrive in competitive markets where the ability to attract and retain talent and provide consistent, high-quality services are key. Automation promises MSPs greater efficiency and productivity, higher quality of service, scalability, increased compliance and greater profit margins. However, many MSPs have yet to recognize and embrace the full potential that automation can bring to their business.

Automation is not something that can simply be switched on, but neither is it a task that requires complete organizational reinvention. MSPs can make immediate capex gains through establishing simple workflows and process integrations, then over time add layers of complexity where required. Automation is often associated with an engineering process, but current service engineering roles should not be seen as the default place to put this responsibility. MSPs should carefully consider recruiting workflow and process specialists – particularly those with artificial intelligence (AI), machine learning (ML) and operational integration experience – as opposed to hiring from within IT teams. Determining the business (as opposed to IT infrastructure) needs of the MSP model will help provide higher margins as automation scales the business with lower capex costs.

Increasing levels of automation can be observed across almost all parts of the technology sector. To appreciate automation's potential, take a look at auto manufacturer Tesla Motors. Part of Tesla's strategy is to focus on 'the machine that builds the machine.' In a recent press release, the company stated that its factories will receive significantly more engineering attention than the products they produce. It believes this will result in higher-quality production at lower capex costs while at the same time increasing the overall speed of production. Tesla's automation focus results in automobiles that can be custom ordered online, manufactured (and potentially) delivered to the customers with little to no direct human involvement on Tesla's behalf. Other manufacturers such as Ford Motor have enabled a 'click to buy' approach – mimicking a retail point-of-sale model that ultimately delivers the car to the customer's local dealer.

In contrast, many MSPs believe they are leveraging automation to a high degree simply because they can automatically provision a virtual machine – a procedure that usually still requires human interaction before going into production. Service providers have relied on technicians and engineers to put tools or scripts into place to reduce the efforts required for time-consuming and repetitive tasks. These automation efforts have typically focused on a few basic tasks such as provisioning or patching and often do not progress much further. While tasks such as provisioning are a good starting place for automation efforts, they are usually a one-off or infrequent event per customer. So the question is, how can the average service provider leverage automation to its full potential in its operations?

Where to start

Automation promises greater value or impact for service providers by addressing other aspects of the service lifecycle – especially those ongoing, repetitive tasks that require frequent human interaction when dealing with customers. Tasks such as service calls and helpdesk tickets, onboarding/decommissioning of customers and employees, business processes, agreement and usage reconciliation, and alert resolution are all candidates for automation.

Automation efforts often fail because they are delegated to technicians and engineers who start implementing tools or platforms before fully understanding the problem that needs to be addressed. To ensure successful automation efforts, MSPs must first identify the opportunities to automate and then fully understand the workflows, use cases, variables and inputs/outputs for each process. The skill set to execute effectively at this level of business understanding and level of detail is typically not part of an engineer's repertoire. It's also important to note that assigning support engineering staff to the automation efforts, whether they possess the correct skill sets or not, is a sure path to failure. It's inevitable that day-to-day tasks and urgent customer requests will take precedence over automation efforts. Even with the best intentions, side projects often never get completed, and if they actually do, they rarely do so on time.

Just as Tesla is focusing its efforts on the machine that builds the machine, so too must service providers focus on their 'machine' by investing in individuals with the skill sets to understand the enterprise – clearly defining and documenting service workflows, identifying steps where manual processes are required, and validating opportunities for automation. Unfortunately, this is where most MSPs are stuck; they are not willing to invest in the right personnel to move automation efforts forward, and instead focus on labor-intensive products and services.

A lesson to learn from the likes of Tesla is for MSPs to recruit the right people with the right skill sets that are focused on the task of automation. Automation efforts often fail to reach their full potential, or even get started, because many MSPs are not willing to invest in the long-term results, instead opting for short-term wins.

Roadblocks to successful automation

Complex processes and scope-creep stymie many automation efforts. Once workflows and processes have been fully understood and documented, they must be simplified. Many MSPs will be surprised to find how many unnecessary steps are part of the workflows in their business. By starting with simplified models, processes can be streamlined, reducing complexity so that automation is easier to implement.

MSPs also tend to start automation efforts by adding steps – or even completely re-architecting – existing processes, making each workflow more challenging to automate while arguably increasing the chance of failure. This does not mean that complex processes are unsuitable for automation, but by waiting until the simplified process has been automated before adding complexity, MSPs can see faster progress and an increased return on their efforts.

MSPs are also tempted to tackle the large complex workflows that everyone deems problematic first. This approach to automation also derails most efforts. To ensure a higher level of success, a good practice is to build from the bottom up, creating a solid foundation for future automation. MSPs should consider starting with the core services and business processes that support other services and processes, then within that subset, focus on areas where success is the easiest and most obvious. This approach will generate quick wins and increase momentum in the automation efforts. After this point, MSPs can leverage the successful automation of the lower-level services and processes to automate high-level complex services.

Intelligent automation

What was once considered science fiction is quickly moving into the realm of reality. In just the last couple of years, we have seen autonomous cars, devices that respond to vocal commands, holograms, augmented reality and 3D printers all become available for general consumer use. Developments in automation technology promise systems and capabilities to create advanced intelligent business solutions.

Current automation efforts for most MSPs focus on systems that 'do' – also known as robotic process automation. The systems that 'think' – artificial intelligence – and systems that 'learn' – machine learning – are now becoming prevalent. And just around the corner are systems that 'adapt' or systems that can modify themselves or optimize performance depending on changes to the environment.

One MSP already leveraging AI and ML is CHIPS Technology Group in New York. Last year, CHIPS founded CrushBank, a helpdesk application powered by IBM's Watson, to bring cognitive computing capabilities into the MSP market. CrushBank has the ability to solve complex technical support questions in seconds using rapid data analysis, natural language and dynamic learning.

Accenture is another MSP pushing automation leveraging AI and ML. As we have highlighted in a previous report, Accenture has developed an internal software package that learns by watching its employees' habits as they work each day. The software learns which activities are the most repetitive and, thus, potential candidates for automation. The purpose of this is not to eliminate jobs, but to automate less-cognitive activities and allow employees to focus on higher-value ones such as developing new services, acquiring new customers and increasing customer satisfaction.

The service provider business model is highly dependent on efficiency. When service providers can do more with less, the model can be very lucrative. Not only can automation provide a high level of efficiency to make the MSP model work when strategically implemented, but automation can also deliver tremendous business value, increasing quality of service, reducing risk of error, reducing costs and increasing the ability of the business to scale.
Rory Duncan
Research Director, European Services

Rory Duncan is the Research Director for 451 Research's Managed Services & Hosting channel. His research focuses on the global managed services and hosting market, where he tracks IT managed service providers, web and applications hosting firms and content delivery network providers. His coverage includes services, the IT distribution channel, market sizing, M&A activity, and factors that affect the business strategies of these companies.

Aaron Sherrill
Senior Analyst, Managed Services

Senior Analyst Aaron Sherrill covers the Managed Services sector, which includes disaster recovery and security services. Aaron joined 451 Research after serving as Vice President and Chief Technology Officer for two of the largest Managed Service Providers in the market. He was instrumental in developing and growing the MSP business, driving the technical strategy for the companies, developing and leading information security programs, and bringing new managed cloud and service options to the marketplace.

Dan Thompson
Senior Analyst, Multi-Tenant Datacenters

As a Senior Analyst for 451 Research, Dan Thompson provides insight into the Multi-Tenant Datacenter (MTDC) market space. Dan is particularly focused on MTDCs that are trying to move up the stack to offer additional services beyond colocation and connectivity. These services may include disaster recovery, security, various forms of cloud and other managed services. He also assists the 451 Research Information Security group when their interests overlap.

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