Managed Services Best Practice #5 – Spending Money to Make Money

Note: This is the sixth of eight blog entries in which I examine managed services best practices identified in the CompTIA MSP Partners 2010 market research.

We’ve all heard the expression “it takes money to take money” and tacitly nod our head in agreement; best in class MSPs don’t simply concur, they pull out their wallets and invest in building a world class services practice. Our 2010 research clearly shows that the most successful MSPs spend more of their top line revenue (as a percentage) on improvements to their services practice than average MSPs. Those that invest in that part of their business drive not only higher revenue, but higher profit. At first this appears to be an anomaly; we don’t often equate greater spending with larger profits. So how does this happen? The answer is repeatability, scalability and automation.

When an MSP invests in its people, process and tools (particularly employees dedicated to process design), it enables the business to provide a more consistent quality of service. How is that accomplished? With well established processes in place, ensuring that each customer situation is handled the same way irrespective of employee, customer, and time of day (I.e. repeatability). This duplication of a superior process ensures that a customer has the same experience each time they interact with an MSP. This increase in quality will translate into higher revenue through greater customer satisfaction and repeat business. Repeatability also reduces cost by decreasing an MSP’s dependence on high priced labor and reducing time and resources spent resolving problems.

When an MSP invests in its services practice, it also enables that company to expand and accommodate new business opportunities (i.e. scalability). Process improvement leads to greater business efficiency. That organizational improvement enables a provider to scale to meet demand and growth needs. The most important processes required to improve scalability include new customer on-boarding, issue resolution, and change management. True scalability means an MSP can do more with less; increasing revenue, decreasing costs and ultimately increasing profits.

Once an organization has its processes finely tuned, it’s ready to invest in automation. A word of caution; automation enables a business to do the same thing over and over again very quickly. If an MSP automates broken processes, it will compound problems, not reduce them. Once the company has established proper processes, there are a large range of choices to further automate the business. RMM (remote monitoring and management) and CRM (customer relationship management) tools have greatly improved over the last few years and the combination enables an MSP to take advantage of advanced asset management, software license tracking, scripting, integration, reporting and analytic tools, and even cloud services. Furthermore, many hardware and software vendors have built RMM capabilities into their products, allowing providers to greatly improve the effectiveness of those tools.

Repeatability, scalability and automation are the “secret sauce” of a successful MSP. How well the organization drives these three principles into their business has a direct bearing on how profitable the managed services practice will be. Investment in these areas is critical to reaping the rewards managed services offers. For more information on best practices related to managed services, please visit CompTIA’s MSP Partners website at www.msppartners.com.