Compete on value – not price

A recent blog by Richard Tubb caught my attention[1]. It related the frustration experienced by MSPs about the amount of business they were losing to cheaper competitors. Richard’s advice? “Rather than blindly competing on price – a race to the bottom that you’ll never win – consider raising your prices. Doing so will help you attract the type of client who shop based on value, the type of client your high quality service is suited for.”

This frustration chimes very much with the feedback I have received in my own conversations with MSPs.

Recent years have seen the entry of large, well-re­sourced competitors into the managed services space. Attracted by healthy margins and the opportunity to diversify revenues: traditional, pure-play MSPs now face high levels of competition that is forcing a commoditisation of services like NOC and Service Desk – and a focus on price.

As a ‘traditional’ MSP, how can you hope to compete?  How do you move away from a price-based business model to one that is based on value-add? How can you scale up to deliver a broader range of services and higher-value projects to larger clients without massive investment?

MSP Journey

 

Outsourcing lower margin activities like NOC and Service Desk to a specialist partner such as Inbay could be the solution. Here are five reasons why:

  1. Improved margins

Delegate day-to-day routine tasks to a specialist partner and you will gain access to a skilled team, to leading RMM automation tools and to a service based on industry best-practice – all of which will ensure you can match and exceed your existing service levels to clients.

  1. Focus on higher value activities

Safe in the knowledge that your client networks are being expertly managed by your partner – your own people can be freed up to work on higher value activities for clients: cloud deployment and SaaS, managed security services, VOIP, mobile device management and so on. They will also have more time for relationship building with clients, really get to know their business, discover the services for which each client would be prepared to pay a premium and move from a low-level technical discussion on to a business conversation.

  1. Adding value through 24/7 support

Partnering with a specialist like Inbay will enable you to respond to demand for an ‘IT anywhere’ and ‘always-on’ service from businesses that no longer work standard office hours. You will get the opportunity to add value to larger, international clients by delivering 24/7 support, 365 days a year without the high risks and overheads of setting this up in-house.

  1. Pay-as-you-grow

Outsourcing NOC and Service Desk offers a scalable solution that allows you to draw down resources on-demand – at least that’s the way we do things at Inbay. This means you can move up to servicing larger clients without having to increase head count; a pay-as-you-grow approach for a cost-effective business model.

  1. Move from CAPEX to OPEX

By outsourcing NOC and/or Service Desk you can reduce capital costs and control operating expense, through minimal capital outlay, reduced ongoing training and maintenance cost. This puts your business on a firmer footing – another value-add for your clients.

To return to Richard’s blog[2], I agree entirely that MSPs should be attracting the type of client who ‘shop based on value’ – rather than seeking out the lowest price. I would go one stage further, however.

Yes, absolutely, set your prices at a level that is compatible with the delivery of high quality service; but also consider seriously working with an outsourcing partner who can remove much of the day-to-day ‘noise’, freeing you up to focus on higher value activities; a partner who can also enable you to move up to working with larger clients by offering additional, in-demand services such as 24/7.

Outsourcing NOC and Service desk could be instrumental in your ability to compete on higher value rather than on an ever-lower price.

[1] Does your MSP keep losing business on price, Richard Tubb, January 8, 2015, www.tubblog.co.uk

[2] Does your MSP keep losing business on price, Richard Tubb, January 8, 2015, www.tubblog.co.uk

 

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