Data Center Star TierPoint Sees Big Managed Services Growth In 2023

TierPoint CEO Jerry Kent, who previously founded cable giant Charter Communications, said the company’s channel partners are leveraging TierPoint’s managed services and data centers for big wins.

Jerry Kent

Data center provider TierPoint is poised for massive growth this year as the company’s channel-sold managed IT services are taking off and helping customers gain efficiencies and scale by outsourcing their customers’ work to TierPoint technologists.

“Amid the challenge of finding talent, good IT talent in today‘s market -- it’s a very tight labor market -- finding the right people with expertise in a highly technical industry has caused companies to realize that instead of fighting their competitors and trying to attract and retain good IT talent, they can outsource to third parties who have staff who have that expertise,” TierPoint CEO Jerry Kent told CRN.

TierPoint, one of CRN’s MSP Elite 150 in 2022, has won broad support from customers, 85 percent of which buy more than one solution. Additionally, the company’s cloud services, built on Dell APEX, have been gaining share in the market, Kent said.

Kent has been leading technology companies for decades. As one of the founders of cable giant Charter Communications – which grew to one of the 10 largest cable providers in the country, he was inducted into the Broadcasting & Cable’s Hall of Fame in 2012, then in 2014 was named to The Cable Center Hall of Fame.

TierPoint has expanded its data center footprint, opening a new $20 million, 23,000 square-foot facility in St. Louis in August with anchor tenant World Wide Technology. Kent said 2023 is going to be a strong year for the company as macro pressures such as inflation and supply chain difficulties appear to be abating.

“I think 2023 bodes well for each of those economic headwinds,” he said. “I’m really excited for the opportunities. The fourth quarter for ‘22 was one of the best bookings quarters we have had in a couple years. In particular, it was the best channel quarter in the last two years.”

TierPoint’s annual revenue through the channel fluctuates quarter to quarter, between 40 and 60 percent, Kent said. However, the demand for their expertise is at an all-time high. TierPoint offers data center as well as managed IT services including managed security and help desk, which it sells direct and through its channel.

“TierPoint is one of the few companies in our space that can provide the full expertise and service offerings of public cloud, private cloud, disaster recovery, and colocation,” Kent told CRN. “We can provide all those services from one centralized company that provides a full level of great customer care across those services. That’s how we’re going to distinguish ourselves in 2023.”

Here is the transcript of Kent’s interview with CRN.

Where is TierPoint going to find opportunity or take market share in 2023?

So we are seeing a big movement of enterprises that own their own data centers, realizing that that‘s not very efficient. And it’s better to share cost among hundreds of customers than owning your own data center.

So we‘re seeing a lot more outsourcing, number one, from company-owned data centers to managed service providers. But even more important, amid the challenge of finding talent, good IT talent in today’s market -- it‘s a very tight labor market -- finding the right people with expertise in a highly technical industry has really caused companies to realize that instead of fighting their competitors and trying to attract and retain good IT talent, they can outsource to third parties who have staff who have that expertise.

Are you seeing any pullback from the public cloud, or a more nuanced or thoughtful approach from customers as to where they place workloads?

Really over the last few years there’s been a shift, it’s clear it’s a hybrid world. Our bookings are generally split pretty evenly between cloud, colo services and other managed services, and the public cloud. One of the things I’m excited about is the recognition that it’s a hybrid world and you put workloads in the environment where you optimize your activity and minimize the cost.

We made a concerted effort at the end of 2021, we made a $5 million-a-year investment to develop our own public cloud service. We hired a team. We brought in some cloud specialists, launched that service initially around the end of the second quarter, start of the third quarter of 2022.

We are now fully up and running. It’s resonating in the marketplace.

So customers with cloud, colocation and on-premises workloads can use TierPoint?

TierPoint is agnostic. You have a workload. We come to you, provide our expertise and we decide with the customer where the optimal workloads go. More than 85 percent of our customers take more than one service from us.

Certain workloads need to go into the public cloud. We offer that service. Colocation is still very important for other types of workloads and then private cloud. We’re seeing private cloud starting to come back pretty well too. We’re seeing larger deals in private cloud.

It really depends on the workload. If you have a consistent workload that doesn’t scale up and down very much, that’s just consistent throughout the year, then private cloud with its enhanced security features might be more appropriate than public cloud. If you have a service that scales up and down, think something that has a big seasonal impact, that might better perform in public cloud. Then, of course, colocation is a core service for many other workloads.

For customers, what’s top-of-mind for placing workloads? Is it cost or workload optimization?

Cost is always a serious consideration, but it also is how much time and effort does the company have to put forth to have their workload provide service to their customers? Do I have someone who makes it easier for us to focus on serving our own customers and really having a managed service provider like us manage their full gamut of workloads and IT services so it frees them up to serve the customer. That’s really a very important component.

And how closely aligned is the managed service provider with the customer? We really work hard at providing our customers with a superior level of customer care. We measure customer service different ways and we have outstanding customer satisfaction scores. I think that really is the key to attracting and retaining customers.

As a result with the customer care, for the last four years we have seen consistently declining churn. We had a record year last year of our lowest churn. Throughout COVID, one of the concerns was bad debt and cash collections. We are also at record levels of low bad debt and continued great cash collections.

It’s one thing to attract customers and provide the service. But you also need to make sure from a business standpoint you are taking care of them.

With so much of your revenue coming through partners, how are you going to attract and maintain that channel?

First, a channel partner, when they recommend a managed service provider, they’re really risking their reputation. They have to make sure that that service provider they recommend is going to deliver.

We have great customer sat[isfaction] scores. We have a great reputation in the marketplace. So there’s two main ways we measure customer satisfaction. One is, every time a customer enters a ticket we encourage them to rate us on a scale of 1 to 10. Ten being outstanding and one being absolutely lousy.

Consistently, the last couple years we have been in the 9.2 to 9.5 customer satisfaction score. IT was actually when COVID first hit, it was over 9.5 because we really helped our customers navigate through a really tough time.

Our customers are very satisfied with our service. Number one, is making sure we continue to invest in our back office. In our installations, our ongoing customer care, as long as we do that and we have the reputation in the market place, I think channel partners will continue to recommend us.