EP275 - When Fear Drives Strategy - The Real Risk for MSPs and AI with Ian Luckett and Stuart Warwick

IAN: In this episode of The IT Experts Podcast, we talk about if fear is driving your MSP strategy in particular regards to AI.

INTRO: Welcome to The IT Experts Podcast, the only podcast to help MSPs scale to 1 million, and if already there, get to five and go faster. At the end of the day, isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN: Good morning, good afternoon, good evening. Welcome to The IT Experts Podcast. Good afternoon, Stuart. How you doing?

STUART: Afternoon, Ian. Good to be back. Hello everybody.

IAN: Right. We've got an AI podcast here because we're obviously AI experts. But what we're not, what we are not going to do today is talk about the technicalities of AI. But we are seeing this shiny ball of AI coming in and having quite an effect on MSP's progress.

STUART: Well, as you said earlier, it's shiny ball syndrome central.

IAN: It is. It really is. It's everywhere. Left, right, up, down, in out. You can't go anywhere without talking about AI. And today we are going to talk about if you're in shiny ball syndrome because of AI, I've got to have this tool, got to have that tool. We're going to talk about what we are seeing in the channel, and more importantly, how we're seeing it actually slow down MSPs and their progress and their thinking, either because they think it's a quick win or it's just kind of like they're not ready for it yet, are they? So what are we seeing at the minute, Stuart?

STUART: Well, we've been here before.

IAN: We have.

STUART: We've been here before. The industry's been here before, and it will be here again because we, you know, if you just drop the word AI and put cybersecurity in there or go back a few more years and you put cloud, it was the, it's the new latest thing. Now that doesn't detract from the fact that it's not going to be here and it's not the, you know, a fundamental driving force of the industry in the marketplace, because it absolutely is. So you cannot ignore it. But what is very clear for us because of what we've seen over the years, is that you can't just define your whole business around AI because everyone's talking about AI. Because AI, when you boil it down is good old automation. It's just the latest version iteration of how automation has evolved and so the need for an MSP to understand how automation can help their clients run a better business is vital. It's currently packaged up as AI because there is an interactive element of it now that is so much more powerful. So I think the important thing is the fear of missing out and the fear of jumping on the AI bandwagon, I think can derail many MSPs because they're not quite ready for it. And so there's an adoption curve for everything and you know, when it's on everybody's lips, it's on everybody's lips, but it's not actually in the market yet fully. An enterprise is fully adopted or getting fully adopted on the a I think because as consumers we are, I interacted with the a chat bot the other day, and it was an amazingly positive experience compared to normally four seconds in, you're going, give me a human, gimme a human. So you know, the value add is immense. But for the SME market, which is where most MSPs are working, it's they're curious about it and you have to be able to talk about it. But I think this comes back to fundamentals of building a great MSP is if you are not on the front foot talking to your clients, and if you are not, if you haven't got a relationship with them where they value your expertise as opposed to. You know, they just ring you up or they email you when they've got a problem. That's when you are behind the curve on being able to adopt AI, because it's all about the conversation you have with your clients and the understanding you have of their business such that you can recommend or you are asked to recommend the right tools to protect and empower their business. So the a I think we talked about this in the past is that, you know, there's this fear of like, ah, if I'm, if I don't fully adopt AI, my business is going to be obsolete you know, do I need to adopt it tomorrow? It's like, well, not really, but you can't ignore it. So perhaps you need to educate yourself, but for many MSPs, and the majority don't have the scale or the confidence to invest in either, you know, somebody in the team to be that automation expert. So it happens to be them, and they're already busy enough, they're already working 60 hours a week just servicing existing clients. So whilst the AI thing is keeping them awake at night, like cybersecurity was, like COVID was like on-prem to cloud and eventually they've probably adopted, although you and I are talking to MSPs all the time, are still running break fix model. And the break fix model when managed services, probably 20 years ago now, certainly 15, 16 years ago, it was like what AI is now.

IAN: Yeah. Yeah.

STUART: Well, if you are not managed services, you will be dead.

IAN: Yeah. And I think one of the things that, that makes it quite scary, I think for, well, for most people is the speed that it's, you know, the absolute speed. That it's, that it's happening. And what we are seeing right now is probably at I don't know. I'm not even going to say a 10th, you know, 5% of what we think it's actually capable of doing. And it's so far in advance, there was something from Elon Musk, I was watching the other day and he was sort of saying that this, how quickly this is now going to gain momentum now to starting and you can see, you know, ChatGPT in the last 12 months, last 18 months, 24 months, how much it's just improved itself so much better. And I think this is not, I'm just not helping. It's an amazing technology, you know, advancement, right? But the speed that is working makes the MSPs panic, doesn't it? Even more that I need to get in touch, you know, in embedded into the business. But what you just said a minute ago is, you know, do I need to bring somebody in? Well, who, you know, let's just bowl this back to basics. You know, the structure of the MSP, you've got your service desk, you've got your account management, your tech support, and all of that kind of great stuff. They, well, where does it fit? Are you going to start being a developer? Do you know how I need to, no, you don't need to start being a developer. You just need to understand how it's going to, how you can work it. But it does start with holding the mirror up, doesn't it? And looking at yourself to start with before you educate others.

STUART: Yeah, it does. It, starts with the how and the what you know, the how is or the who and the what. You know, the who is like, is it going to be you? Are you going to be the expert? Which you probably are because most MSPs listening to this are the salesmen in their business and they're the sales lead. So yeah, you need to know about it. But actually, do you, does your team have the capability to deploy? And again, if you say automation tools, automation solutions to help your clients, then it's perhaps less triggering than saying AI. You know, it's got to, it's got to be an autonomous agent that does it. Well, maybe, yes, because it's possible as you learn about the tools and how to use them but actually, does it have to be you? I think of one thing, and also secondly is have you got the systems to actually integrate with it, which boils us down to, if you want to not be left behind by the AI bubble, or if you want to embrace the opportunity that automation offers you to offer more value and make more revenue and profit from your existing clients, is you need the right systems and SOPs and processes in place.

IAN: To start with.

STUART: Because otherwise the stuff won't work anyway. Which brings us back to how mature is your PSA set up? Yeah. How mature is your organisation? How mature is your documentation and your SOPs and your processes internally, because you can't, if you're going to take advantage of the opportunity that area is, and scale with it or grow with it, if your business can't grow with it, then you're just going to stay busy and stuck and spinning your wheels and it's just be another shiny thing that people are asking you for. And this is the real risk, is that you pretending that you know about it and you can talk a good game.

IAN: Yeah.

STUART: But you can't deliver it at scale. And that's when clients start to go, Hmm, maybe we've outgrown them.

IAN: Yeah.

STUART: And because they, there's so much hype out there and there's noise out there that they start to feel like actually maybe there's somebody that better fits what they need and can answer their questions better. So it is a bit of a double-edged sword, is you've got to be fit to, to grow with the opportunity that AI represented. And it's the same back with the move from on-prem to cloud, same when cybersecurity was, there's still MSPs out there that don't even have cyber essentials.

IAN: Yes, it is.

STUART: Let alone cyber essentials plus.

IAN: And that is frightening, isn't it?

STUART: And they're missing out on the commercial opportunity there. But also from a governance point of view, there's a risk to their own business, because businesses are getting hacked all the time.

IAN: Absolutely. And the, you know, and the things that we see when we boil this down to, you know, you say the automation and then the AI is making the automation, you know, a bit more intelligent, a bit of a better experience, et cetera, et cetera. But, you know, how many MSPs do we talk to who have very low level of operational maturity, very low level of account management themselves, and very low level of kind of like some of the, you know, their SOPs and the technical specifications within their businesses themselves. So originally it was like, let's go and sell some copilot licenses. I'm sure that'll make us a few, but well, don't worry about it, because Microsoft will just change the model and then you won't be earning any, it's just like they did with it, you know, a couple of years ago. But it just does boil down to, you know, you, you're not going to get left behind if you've adopted it properly in your business and your business is operating because you know the team structure's going to change, isn't it? You know, there's a good chance, you know, that first line, the dynamics of first line support, triage, whatever you want to call it. Many of our clients actually use a non-technical person to do that, don't they?

STUART: They do.

IAN: So if you, if they're using a non-technical person and you're getting some success with that is first line.

STUART: Well, you make a really good point because the AI opportunity is coming at you from the vendors. The vendors have got AI increasingly integrated into their tools. And so, you know, before we got to the AI question, we were having, remote monitoring was really the early doors of remote, well, it is remote monitoring. That was AI, if you want to call it, 15 years ago, 10 years ago. So it's only just an evolution of it and we hear of clients that are really optimising AI. But when you talk about it, it's been like a six year journey of, well, first of all, we documented in Word some of our SOPs and our processes. Then we moved it into some scripts. Then we are into PowerShell scripts along that, alongside that, and now they're embracing it. And this isn't easy either, as a next step is embracing it in some of the automation driven tools out there. We could name some, but we won't that aren't easy to set up, they sound amazing. But you know, we know that it can take five or six months of a, you know, 50% time of a you know, a high level dev to actually integrate your SOPs into these tools to really take advantage of them. A lot of them have templates that come out of the box, but, you know, again, they need configuring and if you are, an owner run business with a couple of, you know, junior techs, you're, you're not going to have the bandwidth to do that unless you continue working 60, 70 hours a week. So, I think the point of this podcast is, you know, is FOMO driving Is fear of missing out driving? You know, your view of the future of, of what you do as, as an MSP is, yeah, it probably is. And, but what do you need to do about it? I think first of all. You've got to fix your business to cope with AI.

IAN: Yeah.

STUART: And be able to integrate it.

IAN: Into your yourself.

STUART: Business. Start with your own tools.

IAN: Yeah.

STUART: But also look at, take a really long, hard look at yourself and say, do I have the type of relationship with my clients that allows me to be that business improvement expert? And I think that's the opportunity that the AI tools, and they aren't new, because we've had scripts and scripting that could run automation, you know? Protocols for years is the opportunity has always been there. If you are only thinking it's now an opportunity, then it's because you haven't been talking to your clients and you haven't got the right partnership relationship to take advantage of it. Why would they listen to you other than it's a buzzword.

IAN: Exactly. Exactly. And I think, you know, one of the, if we look at three areas. So you go to any of these events now, you know, any of the MSP channel events, they're full of people with AI.

STUART: Yep.

IAN: It's all AI. AI. Like it was you know, a few years ago with cyber and it was like, well, surely this is about, you know, fundamentally locking the door. How many different types of locks or keys do you want to have and what do they work? And yes, you've got some that aggregate and that's all quite exciting. But, you know, I think from my point of view, if you look at, there's three things really isn't there that an MSP needs to consider in terms of building transferable value that's going to be there when they kind of want to sell and increasing profitability, you know, and they are your own SOPs. Is this tool going to help me operate my SOPs properly? Yes or no? Are my SOPs in place that I could actually plug it in anyway? You know, is it going to help me service new existing clients? So your account management process. It is my process already up and running already? There's another question there, or is it going to help me deliver new leads? And I think it, it's, I think it's as simple as that because a lot of it is all tech talking to tech. But remember that when you go out to your clients and when you go out to the marketplace in regards to lead generation, it's not a technical conversation. And there's so much going on at the moment, isn't there, with this noise and fog around AI - AI - AI, well, is AI running you or are you running it?

STUART: I agree. And whilst with the client level, it's not a technical conversation. The technical competence has to lie within your business to be able to take advantage of it. And I think this is the big issue for most MSPs, you know the bigger ones here who have got teams and they can put a small team together on this. Because they got the resource is my fear is that it burns, it leads to burnout of the owner led MSP, who is the senior dev, the senior tech. And whilst they may be excited about the technical side of and the new shiny ball all, are they able to commercially take advantage of it?

IAN: Yeah.

STUART: In a scalable way that allows them to build. Lasting value, which is ultimately going to look after them and their family, and ultimately build something that is valuable sufficiently to exit one day.

IAN: So this is, I mean, you know, when we break it down, it's a tool, isn't it? It's a tool, it's an enablement tool to help you operate the business faster you know, more efficiently. And unless you've got your house in order to start with, then this tool is going to be they put it into a motoring analogy. It's going to be like putting a Ferrari engine in a mini metro and expecting it to perform well, isn't it?

STUART: Yeah.

IAN: It's just not going to work. No, it's just going to break. So let's just talk a minute about, you know, where MSPs have said, oh, we partner with our clients, we help our clients, and all of this kind of great stuff. You know, we really embed ourselves in, within, within the clients. Well, there's different levels of that isn't there? And if we're not careful and we don't truly understand their business and their SOPs, and more importantly their risk, which is what Peter did a session at our last intensive about let's just talk about the whole risk conversation with existing clients and prospects because when you are assigning risks to different people within an organisation, you know, is AI going to help you with that, or is it, is it, you know, it's kind of like there needs to be this filter on what's important to get set up and then what can we help them and put petrol in the metro, there you go. There's a, there's a phrase for another podcast.

STUART: What's a metro?

IAN: A me, a mini metro. I look to driving a mini metro.

STUART: I'm helping the clients here understand the list.

IAN: Do you think they might be younger than this?

STUART: Some of the listeners might not understand what a metro is.

IAN: Okay. I'll put a picture up.

STUART: Yeah, you've raised a really good point there on the risk side of things, because it. It if you flip it, that risk thing creates a great sales opportunity. But again, it depends on the, the ability of you to have those kind of conversations. If you've only been going in and talking to your clients about, you know, what do you need fixed? You know, is there some cabling we can do? Do you, you know, do you need a new this or a knew that to suddenly go in, and why would they take you seriously about suddenly? But if you are able to have those conversations, you're able to say, well, who's using AI in your business? You know, who's on ChatGPT? What are they putting? So it's as much about risk management in terms of policies and internal process mapping, which actually links back to cybersecurity. So all of this is actually interlinked. So the opportunity is really just building on the cybersecurity one in terms of risk management and protection. The switch there is around actually, what's the opportunity for automation AI to actually add some real value in terms of saving clients money? Increasing efficiency, reducing headcount in the same way that you as an MSP absolutely have to be considering how AI can decrease your overhead bill you know, your salary bill, because if you can, to as much as an extent as possible allow first line triaging to be led by automation, then that just frees up your staff, your engineering, to focus on more advanced problems, if not adding value by suggesting new solutions and making more money.

IAN: Exactly. Exactly. So in summary then, what's the things, you know, if MSPs are getting caught up with the AI hype, and should I be using this and they're jumping on a demo for an hour with this and they're jumping on a demo for an hour with that, you know, what, what do they need to do to kind of make sure they bring this back to their own growth strategy, their own business and their own operations?

STUART: Exactly what just said. I think it comes back to them. You know, how fit for purpose are you in terms of embracing automation in your own businesses? The AI piece, because if you've embraced it and you've got the setup internally, then you can offer that then to clients more confidently. Look at your own capacity, is it just, are you going to be a bottleneck on this whole thing and you are going to end up having to work another 20 hours a week on top of the 60 or 70? You are already working. And remember also it's that if you are not, if you are not moving forward in terms of your readiness for compliance, and it's, the readiness with AI is, are you ready for AI? But are you ready from the cybersecurity point of view, are you ready from an AI point of view, because we've got compliance formally coming down the highway towards us in 2027, and the levels of standards that are going to be expected from the industry for MSPs isn't going away it's increasing. So I think this AI hype piece is, it's here to stay. Remember it's good old automation, but on steroids. You're not going to go out of business overnight because of it. However, the market is going to evolve and it's going to evolve quicker than it did back in 15 years ago when we moved to Vanish services and when cloud came on. Because and when cybersecurity became a bigger thing, because we have now more automation and more tools in our life, and that speeds things up. So the market is going to move quicker. It's not going to leave you behind as long as you do build it into your plans, build it into your strategy, build it into your team and your resourcing. And most importantly, build it into your conversations with your clients.

IAN: Love it. Absolutely love it. And I guess the one thing that I just want to add to the end of this is I suppose something that's just popped into my head is just be careful because the one thing that we are hearing all the time is just that people are opening up all these copilot licenses, they're letting all their employees in, and they're basically just open up all the bond doors for the bad guys to get in. Before you go and plug in an API from China or this or that, or whatever it might be, you spent so much time on your MSP making it safe and secure. Don't just plug something in on the AI hype that's going to open up, leave all the back doors open. It's just such a, you can just see such a vulnerability for it.

STUART: Well, it's overnight. You can wipe yourself out.

IAN: Yeah. Yeah. You could. You could.

STUART: And there's many a story on that.

IAN: There is. And that is for another podcast. Well, that's it for today. Thank you, Stuart. Hopefully you found that one useful a little bit of a, an interesting. Discussion around AI and shiny ball syndrome. We will catch up with you on the next one.

STUART: We will indeed take care. Till then, bye now. Bye.

TEASER:   In next week's episode of The IT Experts Podcast, you are going to love this one. It's a break fix edition, short, sharp shock, 10 minutes, no more why MSPs are sitting on easy money and the 10 steps you need to follow to make sure that you extract as much money and value and relationship and revenue from your existing clients. Go get it. Catch up with you next week.

OUTRO: Just before you go, and if you're curious about how this episode links with the ability to scale your MSP to a million or, or if you are already there, accelerate to five, then we want to invite you to come and take the MSP Mastery quiz, and in just three minutes, you're going to get a 360 degrees scan of your business where you can identify the one or two tactics that can help you find more time, engage in, align your people and help generate more leads in your MSP. It's really simple. Just click on the link in the show notes and if you have enjoyed this episode, we'd love to get some feedback from you by means of a rating review on Spotify or iTunes, or your podcast platform of choice. We really appreciate every single one of them. Now, you can go and enjoy the rest of your day and we look forward to catching up and connecting with you soon. All the best.