MSP Blog Logo

BDR

Business Growth

Cybersecurity

Help Desk

MDM

RMM

Sales & Marketing

Subscribe

Empowering Your MSP Business to Grow and Prosper—One Post at a Time

5 Ways to Improve Your MSP Service Level Agreement (SLA)

Featured Post

5 Ways to Improve Your MSP Service Level Agreements (SLAs)

SLAs are the foundation of your MSP business. They are essential to building strong client relationships and must be clear, reasonable and well-constructed.

Read Now

5 Stats-Based Arguments for Managed IT Services in 2015

Posted January 17, 2015by Nate Teplow

5_stat-based_arguments_for_managed_services


Business Solutions Magazine recently released the results from a survey they did with their IT Solution Provider reader audience, and the results were very interesting. We've seen the IT channel progress over the past 10-15 years from hardware resellers, to break-fix shops and now, the industry is moving towards the managed IT services model. If you don't think managed services offer a big opportunity for IT solution providers and/or haven't changed your business model yet, perhaps these numbers will help persuade you. 

2015 is the year of Managed IT Services. 

 

5 Key Takeaways from Survey

1. Managed Services Shows Huge Growth Potential

Overall, the survey demonstrated the huge opportunity there is when it comes to managed services. Only 5% of survey respondents saw a decline in managed services revenue, yet 30% of respondents saw an increase in managed services revenue between 25-100%!

Additionally, 7% of respondents saw an increase in managed services revenue over 100%. That's huge growth potential for any industry. 

 

2. IT Solution Providers Have Room To Grow

Survey respondents indicated that only 50% of their clients use some form of managed services. That means the other half of your client base is untapped potential. It's much easier to expand your service offering among current clients than trying to find new managed services clients. Take advantage of the clients you already have relationships with and teach them the benefits of managed IT services. 

Respondents also said that only 44% of their revenue comes from managed services, meaning the majority of their revenue still comes from hardware sales and break/fix engagements. Managed services contracts offer predictable revenue each month. You have the opportunity to proactively resolve client issues, rather than reactively fix issues and worry about fluctuating revenues each month.

Here are some of the comments respondents said about the benefits of switching to the managed services business model.

“MRR allows us to think about the long term rather than always wondering where our next meal will come from.”

“My focus is now on client satisfaction and not hunting the next project. This has allowed me to take some time off and to focus on working ON the business and not IN the business. I no longer have any operational responsibilities.”

“A book of managed services business means my business is worth more than a break-fix company. Long term, I know that I can retire in style,”

 

3. BDR and RMM Show Most Promise

There are a number of service offerings that are included in "managed services"; however, the services that show the most promise for those looking to make the switch are Backup & Disaster Recovery (BDR) and Remote Monitoring and Management (RMM). See below for a list of the top services provided by MSPs:

1. Backup & Disaster Recovery 76.8%
2. Remote Monitoring & Management    75.8%
3. Managed Network Security 56.6%
4. Hardware-as-a-service 43.4%
5. Software-as-a-service 41.4%
6. Office365 41.4%
7. Managed Communications (VoIP etc.)   39.4%
8. Mobile Device Management 36.4%
9. Payment Processing 17.2%
10. Hosted Cloud/Video Surveillance 14.1%
11. Managed Print 13.1%

 

Security and cloud are growing needs in the SMB market, so expect services like Managed Network Security, Mobile Device Management and File Sync & Share solutions to increase in the coming years. Still, BDR & RMM are head and shoulders above the rest in terms of market needs. 

Additionally, there are certain verticals that provide more promise than others. If you're looking to break in to managed services (or expand your offering), Healthcare and Manufacturing both have a strong need for managed services. See below for the top verticals served by MSPs.

1. Healthcare 68.7%
2. Manufacturing    63.6%
3. Financial 56.6%
4. Retail 52.5%
5. Legal 48.5%
6. Restaurant 45.5%
7. Warehousing/Distribution    44.4%
8. Education 42.4%
9. Government 40.4%
10. Transportation 32.3%

 

When looking to attack a market, make sure to pick a specific segment. It's very difficult to be everything to everyone. Find your specialty and identify what makes you unique as a solution provider.

Start with your current customers. If the majority of your clients are restaurants, it's probably better for you to offer them managed services than trying to go after the healthcare vertical. 

 

4. Sales and Marketing are Biggest Barriers to Growth for MSPs

When asked what is preventing them from moving to a recurring revenue model, 37.2% of respondents indicated a lack of marketing to customers. Additionally, 25.6% cited a lack of internal sales skills to support their growth. 

We've written about these topics a lot and hear this frequently from our partners. It's hard enough to find technical talent, where are you going to find the time attract sales & marketing talent?

Here are some resources that may be helpful if you're suffering from a lack of sales and/or marketing support:

 

5. Using Peer Groups, PSAs and Tracking Metrics Make a More Profitable MSP

MSPs are often accused of not taking advantage of the tools around them. As an MSP, you're frequently dealing with client issues, and you don't have time to take full advantage of these resources. However, this study showed just how valuable peer groups, PSAs and metrics are to MSPs. Take a look at the below table.

PSA-PeerGroup-Metrics
Source: http://www.bsminfo.com/doc/how-good-is-the-managed-services-business-damn-good-0001 

 

MSPs who fully use a PSA have a median annual revenue 4 times higher than those that don't. Now, this may be a result of size (not cause of size), as in larger MSPs with more revenue have the staff to fully manage a PSA. However, PSAs give you strong data that you can use to improve your business and find more profitable customers.

Additionally, MSPs who participate in peer groups have double the revenue as those that don't. Take advantage of peer networking and industry events in order to grow your business. 

Tracking Key Performance Indicators (KPIs) is another key step to increasing your revenues. It's hard to know what to fix if you don't know what's going wrong. If you need help identifying a few KPIs to start tracking, check out the blog posts below:

Lastly, make sure you have a business plan. MSPs with business plans have 3 times more revenue than those that don't. You can adjust your business plan as you go, but you need to make sure you're charting your course to success. 

 

Conclusion

The numbers don't lie. It's clear there are many benefits of switching to a managed services model, yet many IT Solution Providers don't take full advantage of the opportunity. It's an opportunity to make your business more stable and profitable, while also making your clients more successful.

As we move into 2015, this is the year to accelerate your business by moving further towards a managed services model. 

 

Not sure what to look for in your RMM vendor? 

Nate Teplow is a Sr. Product Marketing Manager at Continuum, currently managing the company's RMM marketing initiatives. Nate's experience spans inbound marketing, content strategy, marketing communications and B2B lead generation. A proud Miami Hurricane alumni, Nate enjoys staying active, traveling to new places and performing A/B tests.

RMM 101: Must-haves for Your IT Management Solution
MSP Guide to Managed Services SLAs  [white paper]
comments powered by Disqus