Can MSPs find profit in the public sector?

States, cities, counties, and other government entities are increasingly turning to cloud-based services to help reign in their IT spending and increase their flexibility. That presents an opportunity for MSPs looking to expand their client base, but are these public sector customers worth the effort (and bureaucratic hoops) that come along with these contracts?

State and local governments are indeed willing to spend some money on services. According to Gartner, government use of public cloud services will grow 17.1 percent annually, on average, through 2021. Further, local governments currently spend 20.6 percent of their IT budgets on the cloud, which is roughly equal to the private sector.

There is a need in the market for better IT service, security, and storage options. Many municipalities, particularly smaller ones, suffer from the same lack of IT resources that small and midsize businesses face. That means the IT staff they do have are stretched thin, and they are often vulnerable to cyberattacks that can have far-reaching consequences.

Back to Typewriters

Consider the recent BitPaymer ransomware attack in Matanuska-Susitna, Alaska. The computer systems (including all Windows-based servers) affected everything from the local libraries and fee collections to animal care, the landfill, and municipal e-commerce activities. The phone system even stopped working, and employees resorted to working with typewriters.

The city of Atlanta suffered a similar fate earlier in 2018 when its networks were affected by the SamSam ransomware, disrupting utility billing systems, police and city worker reporting, parking ticket systems, and sewer infrastructure systems.

The attackers demanded six bitcoins (approximately $39,300) to release their servers (no word if they paid it), and the collateral damage reached into the millions.

Municipalities Need to Evaluate Their Security Infrastructure

Cities and states should evaluate their security infrastructure and consider seeking help from an MSP. Even small communities can be slow to respond when security needs change — there may be too much bureaucracy in place to move quickly.

By using an MSP, these governmental organizations can leave the details to a third-party that can help secure their networks, establish a robust disaster recovery and back-up regimen, and educate end users.

It’s not hard for MSPs to make a good business case for these clients. Cities and towns have to think about the cost of the time lost when they can’t access their data and applications. Disruption of government networks can affect everything from finance/accounting functions to critical infrastructure. In an emergency, it’s important to make sure those systems are up and running as quickly as possible; in the case of a cyberattack, downtime can cripple a smaller community’s finances. The risks and costs are just as high as in the case of a small business, but with more far-reaching ramifications for the community at large.

Prepare to Navigate the Government Bidding Process

These state and municipal clients have a lot on the line, so providing relevant examples of the risks and costs involved can go a long way toward sealing the deal. These are more complex contracts to win and maintain, and most government clients are likely to have a bid process in place with specific vendor requirements. Approvals can take longer, and the MSPs are likely to be thrust into an unfamiliar spotlight if there is a problem that affects public services.

Related:  Ask an MSP Expert: Navigating the bid process for government clients

Navigating the bidding process requires that MSPs clearly explain their value. This includes crafting a bid that will help decision-makers better recognize their pain points, and how the proposed solution will help them. Keep in mind that most of the people weighing in on bid selections don't have a strong technical background, so the bid should be written for that audience.

MSPs can offer significant value to government clients, including a reduction in capital expenditures and increased agility to address security threats and disaster recovery. MSPs can also provide higher quality service with a lower investment in hardware and staff for a city or state agency.

With more communities focused on the bottom line and cyberattacks increasing, the public sector could be a valuable new market for many MSPs, provided they can do the work required for the bidding process and are open to the potential risks. The upside is MSPs could gain valuable, ongoing contracts in addition to access to other potential business with other agencies.