The Strategies for managed service providers: applying best business practices

Strategies for managed service providers: applying best business practices

Managed service providers (MSPs) have a large and expanding opportunity to generate revenue by assisting businesses with their changing ICT requirements, but addressing this will require investment in wide-ranging changes to their business model. MSPs should diversify their portfolios, manage the entire customer lifecycle and become KPI-driven businesses to capitalise on this growing revenue opportunity.

IN THIS REPORT, WE ANSWER THE FOLLOWING QUESTIONS.

  • What is the addressable revenue opportunity for MSPs?
  • How should MSPs best approach this opportunity?
  • What services should MSPs offer?
  • What are the examples of industry best practices in terms of sales, marketing and support?
  • How does customer satisfaction impact the underlying business and how does it help MSPs to differentiate and protect their businesses?

About this report
Executive summary
Executive summary
Research overview
Challenge: MSPs will need to invest in making wide-ranging changes to their business models and their portfolio to capitalise on this opportunity
Solution: MSPs should diversify their service portfolios, manage all aspects of the customer lifecycle and become KPI-driven businesses
Recommendations
Diversify the portfolio
Diversifying the portfolio can help an MSP to differentiate and improve its margins
MSPs should provide a set of core services to form the basis of an MSP business and add more differentiable services over time
M&A can help MSPs to diversify their portfolio and gain specific capabilities
MSPs of all sizes can enhance their portfolio; partnerships with vendors, tool providers and other MSPs can be of significant help
Manage the customer lifecycle
MSPs will need to perform at all stages of the customer lifecycle, from customer acquisition to support
MSPs need to invest in sales and marketing in order to increase their revenue
Direct face-to-face and digital campaigns are the most frequently used and the most-effective sales and marketing strategies
SLA-based pricing is the most-popular model for MSPs, providing scope to differentiate on quality of service and support and the justification to set higher prices
Acquiring and developing skilled sales and support staff is critical to the success of an MSP
MSPs’ key opportunity to differentiate lies in effective service assurance and support
Become a KPI-driven business
MSPs should be metric-based businesses, tracking and analysing business, service and satisfaction KPIs
MSPs should track customer satisfaction and retention metrics; most MSPs do not and, as a result, underestimate its impact on the business
A number of tools can help MSPs to deliver managed IT services more effectively and can provide the means to track

 

Appendix
Survey methodology and sample sizes
Descriptions of managed IT services
About the author
About the author
They consulting and research are uniquely positioned
Research
Consulting
About AMI-Partners

 


List Of Figures


Figure 1: Successful business practices that can help MSPs to capture the USD300 billion worldwide revenue opportunity by 2023
Figure 2: MSPs’ revenue by service category, worldwide, 2018–2023
Figure 3: Key factors for MSPs to be successful
Figure 4: Percentage of MSPs that want to add archiving and e-discovery services to their portfolio, by size of MSP, worldwide
Figure 5: Percentage of MSPs offering different types of managed ICT services, worldwide
Figure 6: Potential services for MSPs, by service category and potential for differentiation
Figure 7: Examples of acquisitions made by MSPs between 2017 and 2019 to gain certain capabilities
Figure 8: Top-three challenges facing small (red) and large (blue) MSPs in managing their own data centres (percentage of such MSPs that report these as key challenges), worldwide
Figure 9: The stages of a customer’s lifecycle with an MSP
Figure 10: Breakdown of a typical MSP’s managed IT services workforce, worldwide
Figure 11: Growth in managed IT services revenue according to the proportion of annual revenue spent on sales and marketing, worldwide
Figure 12: MSPs’ use of, and the impact of, different types of sales and marketing materials, worldwide
Figure 13: Example of a tiered pricing SLA model for MSPs
Figure 14: MSPs’ average annual rate of revenue growth according to the amount invested in training employees, worldwide
Figure 15: MSPs’ approach to developing and training staff
Figure 16: Key areas of service assurance and support for MSPs
Figure 17: The most important KPIs for MSPs
Figure 18: Percentage of MSPs that track various KPIs, worldwide
Figure 19: Average contract renewal rate for MSPs that do and do not track customer satisfaction metrics, worldwide
Figure 20: Percentage of MSPs using types of tools to deliver managed IT services, worldwide


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