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PERSPECTIVES The Truth About

Private Equity-Backed

BY THOMAS DOUGLAS MSPs

I n technology services, Managed Banks might encounter a one-size-

fits-all approach, which rarely
Service Providers (MSPs) stand as
works because your institution
isn’t a copy-and-paste enterprise.
crucial partners for banks seeking
Like you, it’s 1 of 1.
reliable IT support and solutions.
However, a rising trend has emerged, Plus, increased market
consolidation, a common
reshaping the MSP sector: the influx of aftermath of PE investments, can
limit choices for clients, pushing
private equity (PE) investments. While this them toward a generic service
landscape that lacks innovation Tom Douglas is Chief
might seem like a positive development, and personalization. And if there’s Executive Officer at JMark
bringing in fresh funds and promises of one thing that’s certain when it Business Solutions, an ACB
comes to technology, it’s this:
growth, it's vital for banks to look beneath your technology needs to grow Associate Member. You
the surface. The real question is, does a lower and evolve with you and your may connect with Tom at
customers. Because your needs Tom@JMARK.com
price tag promised by PE-backed MSPs equate are going to change, and it’s
crucial that your IT support can
to real value?
keep up to meet them.
Historical Shifts and Current Trends Navigating the Changing Landscape
Traditionally, MSPs thrived on close customer relationships,
How does a business make an informed decision in this scenario? First,
personalized services, and a deep understanding of specific business
you need to understand the role and impact of private equity in the
needs. The kind of service you’d want your grandmother to get. The
MSP sector. Identifying the trends and potential shifts in service quality
kind of service your community has loved about your bank.
is crucial to your continued satisfaction and success.
Nowadays, this has changed significantly. There’s a wave of PE firms
When selecting an IT service provider, the focus should extend beyond
investing in MSPs, drawn by the sector's steady cash flows and growth
just the financial aspects. Here’s what you need to keep in mind:
potential. This shift brings a fundamental change in how these MSPs
operate. • Commitment to service quality
• Caring customer support
Price Implications: A Double-Edged Sword
• Consistent regulatory compliance
One noticeable impact of PE involvement is on pricing. With deeper
pockets, PE-backed MSPs often offer competitive, sometimes lower, Is the MSP willing to tailor their services to your specific needs? Are
service pricing. Initially, this seems like a win for clients seeking cost- they proactive in their support and compliance audits? Do they listen
effective solutions. But the long-term effects on service quality are a to your questions without making you feel dumb? These are the
concern worth considering. questions you need to ask before signing on that bottom line.
Pros: A Surface-Level Glance Long-term, it’s important to ask: Will the PE-backed MSP still put
There are definitely clear benefits. people over profit when things take a turn? Because above all, the
right IT provider will give you confidence in your systems, not concern.
• Enhanced financial resources
• Broader range of services Conclusion
• Adopt better technology While the allure of lower prices from PE-backed MSPs is
• Expand at quicker rates understandable, you must weigh this against the potential risks to
service quality and customization. The true cost of a service isn't just in
The promise of greater market reach is also appealing. But is this the its price tag. It’s in the value it brings to your business.
whole story?
Need help choosing the right IT partner for you? We’ve got you
The Flip Side: What Lies Beneath covered. Call 844-44-JMARK and let our team members share tips on
Here's where the waters get murky. how you can build your IT budget to make sure you get the best bang
• Profit generation becomes the primary goal for your buck. From OML’s role in your business’s success to calculating
• Personalized customer service disappears and optimizing the best budget for you, you’ll get an inside look at how
• Quality of service diminishes other businesses are staying a step ahead and how you can, too.

A RKANSAS | 34 | Winter 2024
COMMUNITY BANKER