Many MSPs sell Microsoft 365 licenses, and although this can help get your foot in the door to attract new prospects, the margins are tiny. However, there are other ways MSPs can leverage Microsoft’s brand that are more beneficial to clients and profitable for MSPs. Building a path for clients to add security layers to protect their Microsoft environments can accelerate annual recurring revenue (ARR) — all while reducing complexity.

Understand Microsoft’s dedication to selling licenses

Microsoft is selling licenses and seats as a prime source of revenue. In its 2023 financial year, Microsoft generated over 69 billion dollars from its productivity and business processes product segment. It is safe to say that the tech giant vigorously prioritizes licensing, and perhaps more so than its security services. In fact, the company’s service agreement recommends that customers should regularly back up content and data with a third-party application and service. 

Microsoft’s shared responsibility model clearly states the division of responsibilities between Microsoft and its customers. Ultimately, the responsibility for information and data falls on clients and MSP businesses to ensure data is protected.

Recognize upsell opportunities

At the beginning of 2024, there were over 400 million paid Microsoft seats. This is a key opportunity for MSPs to accelerate their recurrent revenue from additional services. Every time Microsoft sells a Microsoft 365 seat or Azure instance, it is an upsell opportunity for MSPs to weave into protection services. With Microsoft 365 and Azure instances growing rapidly, there is a high demand for Microsoft-focused protection services, which can be a competitive differentiator for MSPs in the marketplace. Microsoft licenses are a commodity, but what will set MSPs apart are their services on top of those licenses.

Establish a path for clients to layer Microsoft 365 protection services

Starting with clients who are new or existing Microsoft users, MSPs can build layers of security services onto those Microsoft licenses and services. Tailoring protection based on client needs and their Microsoft environment is a profitable and strategic way to level up their protection across different planes. For example, it is an opening for MSPs to provide Microsoft 365 backup, email security and collaboration application security services. From there, MSPs can even introduce endpoint protection, such as endpoint detection and response (EDR), to counter advanced cyber threats like advanced persistent threats, or malware that stays hidden for weeks and months before activation.

The beauty of this strategy is that it both reinforces client security and drives revenue for the MSP. That being said, there are challenges. 

MSPs who use multiple tools to manage Microsoft 365 backup, email security, app security and more could find themselves burdened by complexity and tool sprawl. To manage a profitable Microsoft 365 security service, MSPs need tools designed for MSPs that integrate multiple protection capabilities into a single platform. They also need to simplify operations, meaning more integrations and automation.

With cyberattacks growing more sophisticated through artificial intelligence, integrated advanced security is vital to ensuring business continuity for clients. Service providers who are resource-conscientious extract value from integrated protection designed for MSPs because it enhances security management and IT efficiency.  

Microsoft’s might: A win for MSPs

Microsoft’s dominance in the email collaboration market and beyond can be neither understated nor overlooked. As protecting Microsoft data becomes increasingly important in the eyes of compliance regulators and insurance underwriters, it is a valuable moment for MSPs to help clients better protect their IT environments.

Additionally, the threat landscape continues to reach new levels of complexity with attacks spanning Microsoft environments. Keeping the clients who use Microsoft services and products secure is critical, given Microsoft’s shared responsibility model. But more than checking boxes, this is a pivotal opportunity for MSPs to step in, deliver more value to clients with multilayered security services and grow their business.