For managed service providers (MSPs) facing numerous and mounting challenges, maintaining a robust and resilient business model is essential for survival and advancement. MSPs need to embrace strategies and tools that can help them achieve financial stability and operational efficiency.
Fortunately, those strategies and tools are within the reach of MSPs of all sizes. The key is to understand and put into place best practices that will deliver benefits without causing a negative business disruption.
By implementing a few essential practices, MSPs can not only protect revenue and cut costs, but also position themselves for improved efficiency and greater profitability.
Financial stability with the 40 / 20 / 40 Rule
One of the fundamental guidelines for MSPs is the 40 / 20 / 40 rule. Using this rule, MSPs allocate 40% of revenue to overhead and internal technology, 20% to external technology and 40% to services gross margin. Using the 40 / 20 / 40 rule, MSPs can ensure that they cover their operational costs while generating a healthy profit margin. This balanced financial structure is crucial for sustaining growth and meeting diverse client needs.
Operational efficiency with automation and standardization
Another important strategy for MSPs is to focus on automation and standardization. By automating routine tasks and standardizing processes, MSPs can reduce the risk of human error and streamline their operations. This not only saves time and resources but also improves the quality and consistency of services provided to clients. Automation and standardization also enable MSPs to scale their services more easily and efficiently, empowering them to take on more clients without increasing their operational costs.
Optimizing the technician-to-endpoint ratio
MPSs who want to maximize efficiency and improve client relationships need to optimize their technician-to-endpoint ratios. The gold standard is 350 fully managed endpoints per technician, although that number can vary based on the complexity of services and the technology stack. By maintaining this ratio, MSPs can ensure efficient operations and high service quality. This not only improves service delivery, but also helps in managing costs and scaling operations effectively.
Optimizing the technician-to-endpoint ratio also enables MSPs to provide a higher level of personalized support to their clients. With fewer endpoints to manage, technicians are able to focus more on each individual client, understanding their unique needs and providing tailored solutions. This not only improves the overall client experience, but also strengthens the relationship between the MSP and their clients. In addition, a lower technician-to-endpoint ratio means that technicians can respond more quickly to any issues or concerns, minimizing downtime and maximizing productivity.
Enhancing competitiveness with tiered service packages
To stay competitive and cater to a broader range of clients, MSPs should consider implementing tiered service packages and flexible pricing models. Flexibility can enhance client retention and attract new business. And, by offering a variety of service levels, MSPs can better meet the diverse requirements of their clients and adapt to changing market conditions.
Tiered service packages can also help MSPs differentiate themselves from their competitors and showcase their expertise in various areas. For example, MSPs can demonstrate their capabilities and stand out in the market by offering low-level packages for clients who only need basic IT support and a premium package with additional services such as cybersecurity and cloud management for clients with more complex needs. This can also lead to upselling opportunities as clients may upgrade to higher service levels as their businesses grow and their needs evolve.
Continuous improvement and innovation
For MSPs, continuous improvement is essential for long-term success. Regular benchmarking, client feedback and investment in innovation are key components of this process. By regularly assessing performance against industry standards and gathering feedback from clients, MSPs can identify areas for improvement and implement necessary changes. Investing in new technologies and innovative solutions can also help MSPs stay ahead of the curve and provide cutting-edge services to their clients.
Again, implementing tiered service packages can also contribute to continuous improvement and innovation. By offering different levels of service to cater to the varying needs and budgets of clients, MSPs can gather valuable feedback and insights on what works and what needs improvement. They can use that feedback to refine and enhance their services, leading to a more comprehensive and efficient offering. Additionally, investing in innovation can help MSPs stay competitive in a rapidly evolving industry, providing clients with the latest and most advanced solutions.
White paper: Delve deeper into MSP improvement strategies
MSPs that implement some key best practices can achieve a resilient and profitable business model. By adhering to the 40 / 20 / 40 rule, optimizing the technician-to-endpoint ratio, and implementing tiered service packages, MSPs can ensure financial stability and operational efficiency.
Continuous improvement through regular benchmarking, client feedback and investment in innovation further supports long-term growth and resilience. By following these strategies, MSPs can un-break their business models and thrive in the competitive landscape of managed services.
For a detailed and comprehensive expert analysis on how MSPs can un-break their business models using these best practices and more, read the white paper.
About Acronis
A Swiss company founded in Singapore in 2003, Acronis has 15 offices worldwide and employees in 50+ countries. Acronis Cyber Protect Cloud is available in 26 languages in 150 countries and is used by over 20,000 service providers to protect over 750,000 businesses.
