When managed services emerged as a new IT business model several years ago, the driving force behind adoption was the realization that margins on commoditized hardware and software offerings were shrinking, and solution providers needed a new plan for success. Fast forward to today, when many MSPs continue to struggle with margins and running a profitable IT business, even under the managed services model.
When I talk with our partners, I often ask how they package our cloud backup offering with other solutions to create a standard managed services offering. Unfortunately, many MSPs admit they don’t have a standard plan – they adjust for what their customers have in-house, supporting and maintaining less than ideal IT environments.
Standardized, Bundled Services - The Best Way to Higher MarginsI struggle to understand that decision, because it leads to so much more work and less margin for the partner and really diminishes the value of the MSP. In my experience and what I’ve seen from our partner base, the best way to run a profitable MSP business is to standardize your IT offerings and create a bundled set of core solutions that together create your managed services solution. When I pitch this idea to our partners, I offer three reasons behind my advice.
Three Reasons WhyFirst, there is the value to your business. With a set menu of IT solutions, you can create a set of procedures and processes that empower your team to efficiently deploy, configure, provision and support those solutions. And with those standardized processes comes profitability. No longer are your techs challenged to sniff out the best route for deployment or support around a dozen different products, instead they can build a runbook around your key solutions and that increases utilization rates and productivity – both essential to profitability.
Second, building efficiencies around your standard managed services offering also yields increased margins because you are using fewer resources to support your offering. You can further enhance those margins by bundling your management and support around products – the gist of managed services. When you talk with a customer about managed services, you aren’t selling individual products; you are selling peace of mind and reliable, proactive service, which allows you to charge more for your expertise than if you were presenting an itemized bill.
Lastly, with a standardized managed services offering, you not only service your bottom line, you provide enhance customer service by developing a set of best practices for monitoring and managing your set offering. That allows you to provide the same standard experience for your customers as your staff. And it also empowers more uptime, fewer glitches, and happy customers. All of these elements lead back to profitability because happy customers sign long-term contracts and are more than willing to accept additional advice on improving their IT environment, opening the door to future sales by your team.
So while adopting the managed service model is a good first step toward building a recurring revenue stream that evens out the ebb and flow of project work, true success comes with the development and refinement of a standardized offering that enables you to deliver reliable, efficient IT environments with the least stress on your team.
Neal Bradbury as VP of channel development at Intronis. Find out more about Intronis’ partner program here. Guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship.