How Businesses Can Benchmark Their Managed Services Provider and Confirm They Are Receiving Value in the Delivery

If you think your client is not benchmarking you, think again! If they haven’t already moved to a level of detail including comparison scorecards and adherence to Key Performance Indicators, they’re thinking about it. Most clients have multiple infrastructure providers and seek ways to compare them with one another via benchmarking to ensure they are receiving value from each provider.

Your client is often benchmarking your pricing against the market. We all hope it’s not price alone but rather a combination of demonstrated value, service offering and price. If you have haven’t flexed in your managed service pricing structure, you may want to consider if your pricing models still align to your client’s needs.

Pricing

  1. Are you rigid in your structure? Are you fixated on a per user or per device/end point/server (consumption) model? The latter is a pure commodity play and I would argue your client does not see value in this.
  2. How progressive is your client? What would they value more – a per user or a consumption model? In a client who allows BYOD, the per user approach is transparent and easy to measure. However, this represents risk for the MSP in that one user could have multiple devices for you to manage and support.
  3. Have you considered a pricing structure on a per support agreement basis – such as a block of hours or average amount of tickets consumed? Whilst you can turn this up or down per quarter and mitigate your risk, bear in mind it can make budgeting difficult for your client if they have a high demand in a given month.
  4. Are you flexible in your structure? Do you provide a flat fee service under which you deliver end to end? Clients usually value this approach as it makes budgeting simple and often fosters a true partnership between the MSP and client. However, the MSP must ensure their risk is mitigated and scope tightly defined. Additionally, the client must know what they are paying for which requires mutual transparency and trust as there is a danger the client can assume everything is bundled into the support agreement.

As you can see, option 1 is most rigid and 4 is most flexible.  There is no right or wrong and it needs to be what works for you as the MSP and your overall objectives.

I’ve noticed a big misalignment between the way clients and MSP’s benchmark services. Clients typically focus on value for money, partnership, relevancy of skills, mean time to resolve incidents and percentage of incidents resolved on the first contact. MSP’s measure themselves on revenue growth, operating margin, renewal rates, client satisfaction, and crew retention.

This misalignment in scorecard reporting typically adversely impacts the client/MSP relationship and often results in a poor client perception of delivered value.  At this point the client will be unlikely to leverage the MSP to perform the more transformative and advisory IT needs and limit the MSP to being reactive and transactional, which, whilst this has its place, is arguably significantly less valuable.

Scorecards need to be agreed and consistent between the client and the MSP. Here’s my view on a scorecard that resonates with both sides of the boardroom table – both objective and subjective measures. If you can get your client to agree to these measures, you will move your client from transactional SLA based thinking and management towards a transformative and partnership-based relationship. None of this can happen if the initial transition isn’t well orchestrated and delivered – hard to start on the back foot!

  • Mutually agreed reporting and analytics representing value to both parties (the rear-view mirror)
  • Provision of agreed predictive and insightful leading indicators (anticipating the future)
  • Defined measures of the MSP being proactive versus reactive and empirical ways to demonstrate an improvement in end-user experience
  • Measurements to define the degree of efficiency as a result of the partnership
  • Scheduled, regular business direction and strategic initiatives/roadmap updates from client to MSP to facilitate MSP ability to add value to the business
  • Agreement of client expectations of the “strategic value add” from the MSP.
  • Agreed measures to define “easy to do business with” – for BOTH parties. Clients must be easy as much as the MSP is!

When the partnership can align the business strategy with a supportive action plan and continuous service improvement framework in place, true value is delivered, received and welcomed.  Every client wants value!

In my next blog, I will be looking at the top trends for 2019 and where I see the channel going.

Get in touch if you can, and let me know your thoughts.

Cheers for now,

Matt

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