In this dynamic tech-driven world, MSPs are essential for businesses navigating digitalization while maintaining profitability. The 2024 Datto Global State of the MSP Report reveals a positive trend: Most MSPs report annual revenue growth of over 10%, with 68% experiencing such growth in North America alone.
Despite this success, MSPs face a crucial choice: Deliver stellar service or prioritize profitability. Achieving both requires an agile strategy, strong client relationships, and a focus on the bottom line.
However, providing varying delivery models is a challenge. Take, for example, shared services, which provide a cost-effective method to resolve incidents. MSPs must cope with resource provision across multiple time zones for global customers that require diverse technology skillsets and face staff turnover. Conversely, dedicated models enable support teams to embed themselves within a client’s organization, albeit at higher costs.
Leveraging Automation and Streamlined Workflows
Raman Sapra
Improving knowledge management and first-time fixes are key to enhancing productivity, boosting end-user self-sufficiency through richer content, and ensuring faster resolution by the first-line service desk.
Additionally, AI capabilities within IT service management (ITSM) platforms like ServiceNow offer valuable insights, boosting technician productivity. Automating repetitive tasks can significantly reduce labor costs, another major factor in MSP profitability. Studies show that combining automation with the “shift-left approach” can yield over 30% efficiency gains over two-to-three years for first-generation outsourcers. AIOps, integrating monitoring and ITSM tools, further enhances efficiencies by 10% to 15% by streamlining incident management.
Additionally, generative AI can significantly improve self-service capabilities, enhance the user experience, and drive further efficiency gains. By embracing these tech-driven processes, MSPs can achieve substantial productivity improvements, streamline incident resolution, and deliver an exceptional service experience.
Building Client Relationships
Fostering strong client relationships extends beyond meeting service-level agreements (SLAs). It means understanding their unique business needs, maximizing tech investments, and evolving continuously. Sustaining engagement levels from the service management team, including onshore roles, is also crucial for MSP profitability.
Introducing tools and accelerators to drive business improvement, like industry-specific solutions or process enhancements value-based acceleration, is crucial. Moving beyond operational SLAs and focusing on business-led key performance indicators (KPIs) can effectively demonstrate the business value delivered. Integrated delivery models, such as agile and DevSecOps methodologies, increase business velocity and provide competitive advantage by using market insights for iterative development.
The foundation of a strong client relationship lies in fostering a deep understanding of the client’s business, continually driving improvement and innovation, and aligning service delivery with strategic objectives. The approach not only enhances the client’s technology investment but also positions the MSP as a trusted partner, enabling them to deliver sustainable business value.
Optimizing Resource Allocation
MSPs must strategically deploy resources and leverage offshore capabilities to optimize costs. By tapping into skilled professionals globally, MSPs ensure 24/7 support while managing expenses.
Moreover, reducing manual workloads and ticket counts through trend analysis and automation is essential. Identifying incident patterns and causes of incidents helps improve processes, streamline tasks, speed up issue resolution, and reduce operational expenses.
Embracing the shift-left approach enhances end-user experience and refines costs. By empowering end users with self-service capabilities and rich knowledge bases, we can further reduce the workload and associated costs. Equipping the first-line support teams with comprehensive knowledge and tools will also increase efficiency and minimize escalations.
Preparing for Profitability in the Future
The global managed services market size is expected to reach $372.6 billion by 2028. The market is poised to expand and evolve. To differentiate themselves and drive improved business outcomes and cost savings, MSPs must focus on process automation to streamline simple tasks and reduce their reliance on support staff.
Leveraging the AI capabilities of ITSM platforms can provide valuable insights and drive improvements in day-to-day support tasks. MSPs must also focus on building a comprehensive platform and framework to leverage tools, automation, and accelerators for delivering enhanced business outcomes and cost savings.
It is also essential to support knowledgeable, skilled teams while also building multiskilled teams with the right digital capabilities to manage cloud platforms. This will help MSPs remain competitive and meet the evolving needs of their clients.
Raman Sapra is president and chief growth officer of Mastek.
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