How do you know you are investing time and resources in the right places for growth?

2016 is a year of opportunity for MSPs according to recent industry reports which expect the annual growth of the SMB managed services market to continue through the year and to exceed 20% over the next five years.

The strongest areas of growth are expected to be in managed IT security services (22%)[1] , IT operations management (40%) and Office suites in the cloud, which are already growing at 50%, year-on-year, according to Gartner[2].

Autotask’s ‘Metrics that Matter ITSP Benchmarking Study 2016[3] echoes this optimism, citing revenue growth projections of 5-15% this year, and highlighting “consistent and strong” client renewal rates -with 75% respondents citing renewal rates of 80% or higher.

And growth from client renewals may also involve adding more users/seats/locations to the contract as well as potentially having to extend service hours covered or even add full 24/7 support.

Reflecting the generally buoyant mood, some 80% respondents to the Autotask study are hiring in new staff this year to meet the new demand.

With all of this information to hand, you will have a good idea of where you should be investing time and resources to deliver the new in-demand services – and fulfil your growth targets for 2016 and beyond.

But, when it comes to identifying the best growth opportunities for you – how does your current business measure up?

Undertaking a SWOT analysis can help you find out


This is a simple process whereby you identify internal strengths and weaknesses, as well as external opportunities and threats, and it is an extremely useful exercise to do when you are planning to move into a new service area.

Because you need to know which of the new opportunities will play to your strengths, which will require you to fill gaps or fix weaknesses in your current business – and which would best be avoided altogether because they are not a good fit for your company.

In short, if you know what your current success is based on, it is easier to determine where your future growth and profitability will come from.

This kind of evaluation can’t be found in an industry survey. It needs you to step back and take a dispassionate look at how you are performing currently, before putting the effort and investment into offering new services. It needs answers to questions such as:

  • How profitable are each of the current services we offer?
  • How satisfied are my clients with the level of service they are receiving now?
  • What do our resource utilisation rates look like?
  • Are we currently deploying our skilled technicians as profitably as they could be?
  • Do we have technicians in-house who could be redeployed into the new, in-demand areas if their existing workload was removed?

You may well have been through this process already – in which case you are undoubtedly well on your way to seizing the new growth opportunities.

If not, uncovering the answers to these and other such questions will help you establish how much time and investment you will need to put in to be able to deliver one of the new in-demand services profitably and with high service levels.
And that means measuring your business against a range of key performance indicators.

Measuring the success metrics that will help you most

The Autotask study[4] revealed some interesting findings here: When it comes to the metrics being used by MSPs to measure their current performance, responses showed at best a patchy approach to measuring key performance indicators (KPIs), as shown in the chart. Indeed, while almost 95% MSPs measure at least one of the KPIs listed, only 6% measure them all – although they all affect profitability and are likely to have an impact on future growth.



Unsurprisingly, perhaps, ‘billable resource utilisation’ is the top metric tracked, with ‘overall profits’ and ‘SLAs’ following close behind. Profitability by customer, by contract and by service appears much lower in the rankings – while ‘customer satisfaction’ only appears in 5th spot.

The top three metrics are certainly important in measuring your performance but do they give you the full picture of where your success is coming from? That detail comes from the KPIs further down the list – and the results are not always as expected. For example, your most profitable clients may not be those you send the biggest bills – or those who give you the highest satisfaction ratings. Your most valuable technicians may not be those with the highest utilisation rates, but those who generate the newest business. The individual services you offer will have different levels of profitability – indeed some may actually be losing money.

When you are looking for hard evidence to help you to decide on which of the new opportunities you are best-positioned to grab, tracking your current performance using only one or two metrics is really not enough. After all, if you are not sure of the strengths and weaknesses in your current business – how can you build the foundation for a new service offering?

Getting from where you are now to where you want to be


Having identified a new service opportunity for your business how do you get from where you are currently to where you need to be: a trusted partner to clients in a new area?

Before making that commitment and investment, you must be sure the opportunity is a realistic one for you to deliver on. This means asking some very basic questions:

  • How can you differentiate your new service from competitive offerings?
  • How big is demand and how rapid is the take-up likely to be?
  • How easy is it to sell as a concept?
  • Is it a good fit for your current and target clients?
  • Given that it is much easier to sell to an existing user than to a new prospect, how many existing clients are likely to buy the new service?
  • Do you have the skills and experience in-house to manage the introduction and growth in adoption of the new service in a controlled way?
  • If you are redeploying existing resources to deliver the new services – what will be the impact on your current business?

And, of course, the most important question:

  • Can you deliver the new service profitably?

Take, for example security services – widely anticipated as the leading area for growth. The figures below indicate anticipated growth spending on individual security areas according to research by MarketsandMarkets, quoted in CompTIA’s latest Trends in IT Security report[5]:

The same report indicates that MSPs are well-positioned to expand their services in these areas: many already offer security as part of other managed services so this is a good starting point from which to expand the range of security services offered and to move discussions with existing clients and prospects to focus more on security as a broader topic and distinct product set.

CompTIA suggests MSPs taking advantage of the widely reported security breaches (or indeed a security breach within an existing client) to move the ‘security conversation’ up the agenda. Not unexpectedly, the Report findings show that many MSPs receive new enquiries from existing clients (33%) or prospects (31%) following the reporting of a major security breach.

Certainly, taking an incremental approach to moving further into security services delivery would work well for MSPs wanting to take a ‘step at a time’ approach as they could phase in investment and additional resource over time.

For example, one starting point for growth could be to deliver true 24/7/365 network monitoring, possibly via a partner, as 24 hour coverage is particularly crucial when it comes to security concerns and customer peace of mind. This would also ensure that routine preventative security management tasks could be done out-of-hours.

Working with a partner is a good way forward when looking to invest in new growth areas – not just to access additional expertise but to ensure that high levels of service are maintained for your ‘bread and butter’ services such as Network Operations Centre (NOC) and Service Desk, so you can redeploy your own technicians from routine monitoring, management and maintenance tasks to the higher-value areas of client concern like IT security.

As an MSP, you must be constantly looking for new opportunities. Your clients’ business and IT challenges are constantly changing so the managed services you offer must also evolve to ensure they remain relevant moving forward. The more you understand about your current business, the better placed you will be to ensure you invest time and resources in the right places – for you.

If you would like to discuss how you can free up your time so you can focus on growth in a new in-demand service please contact us here

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