The Keys to Scaling Managed Services Businesses, Part 2: Teams, Subscription Models and Business Process Automation

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    Written by Rajesh Marar on 2021-07-07 Last updated 2021-09-27 - 5 minute read

These are times of flux for managed services. With the world largely going remote and heading to the cloud faster than ever in 2020, this upward trend in demand for cloud services continues even as some workers return to the office as many employers adopt permanent work-from-home policies and others adopt a hybrid in-office and work-from-home approach. Seizing this moment of advancing demand for cloud requires a deliberate and targeted strategy from managed service providers (MSPs).

In part 1 of our series on the Keys to Scaling Managed Services Businesses, we outlined three important steps to grow your MSP practice: defining priorities, targeting customers and identifying ecosystems. In this second installment, we provide three additional factors that are critical to expansion efforts: upskilling teams, transitioning to subscription models and automating business processes.

For MSPs keen to grasp this opportunity and scale, getting these three additional steps right will be fundamental.

 

1) Upskill your teams for the future

The past 12 months have truly reshaped the landscape of managed services. The remote demands of the pandemic have given way to mass adoption of cloud infrastructure and technology, which in turn has translated into a boon for MSPs--and this trend shows no signs of slowing. 

From leaders noting that the pandemic has accelerated cloud adoption by several years, to more than 90 percent of B2B decision-makers expecting the remote and digital model to stick around for the long run, one does not need to look far to see that things have changed quickly and likely permanently.

Despite this rapid growth--or more likely because of it--there is still plenty of room for MSPs to improve their cloud know-how. Research suggests there is a dearth of expertise among internal teams, with the rate at which organizations are moving application workloads to the cloud exceeding the abilities of their IT teams. For example, more than 80 percent of survey respondents said a lack of internal skills and knowledge is the top barrier to cloud success, while only 56 percent reported an actionable plan to upskill their workforce. 

Worse still, this lack of cloud proficiency comes at a time when the threat of bad actors is increasing. In search of potential attack entry points, threat actors have shifted their strategies to locate vulnerable organizations that are a single step away from their main target. Now, service providers and business partners of primary targets are more often victimized. 

Upskilling teams not only better equips them to prevent security breaches, but also helps to qualify MSPs for industry certifications that provide financial incentives and enhance their reputation and standing in the industry, resulting in higher revenue and growth. The time is now to provide educational opportunities for team members and pursue cloud certification. Those that invest in training their teams for the future of cloud managed services are the MSPs set to benefit from their ability to service more clients and scale operations.

 

2) Transition to subscription models

The ability for any business to scale is dependent on revenue, and the approach to revenue generation is another area that is evolving quickly in today’s new normal. Rather than project-based transactions and their inability to accurately predict revenue, MSPs are more often turning to subscription models to better plan ahead.

Armed with more predictable data on the flow of revenues and expenses associated with each subscription, MSPs can forecast growth based on regular income streams and known margins. Thus, they can enjoy substantial and sustained growth as well as higher revenues and customer lifetime values thanks to the recurring billing model.

The benefits of the subscription model are clear for both customers and providers. Today’s most successful businesses provide highly responsive experiences and support to their customers. In return, customers give their loyalty and recurring business, providing a constant source of revenue. This symbiotic customer-provider relationship helps to scale MSPs in a way that was simply not possible with the one-and-done consumption model of yesterday. 

With improved financial predictability and cash flow, profitable growth and new levels of customer retention, it should be no wonder that subscription models are more often preferred by MSPs in their path to scalability.

 

3) Automate your business processes

We all know that time is money, and yet the path to achieving greater efficiency can be less clear. Despite organizations and business leaders understanding that they should automate processes to increase bottom lines, most fail to do so. In fact, only 3 in 10 MSPs feel they are doing a good job at maximizing their profit margins.

To scale, MSPs must automate many elements of sales, finance and operations. This includes the transition from manual billing and reconciliation to advanced finance automation, which simplifies product and service billing reconciliation, including IaaS consumption, HwaaS and other complex delivery models. MSPs have a massive opportunity to automate manual business processes and reap the benefits of more efficient workers, improved output and increased accuracy to ensure proper payment and revenue recognition. 

The idea is that these efficiencies then spread to other core elements of the business. The time gained by not working on routine tasks that can be automated, for example, should be used for more strategic tasks of the business to achieve greater scale, such as new customer acquisition and the expansion of existing contracts.

At the same time, additional investments into self-service tools to allow customers to self-manage easy IT fixes, and into a digital storefront to enable customers to easily purchase the solutions they need, also enhance efficiency.

 

Turn to technology as an ally

There’s a lot for MSPs to consider as we move from the new normal to the next normal. The trend of digital transformation is only moving in one direction and the MSPs who respond today will realize the greatest amount of success. Thankfully, technology can assist your business in the race to scale.

Advanced professional services automation (PSA) systems, like CloudBlue PSA, enable MSPs to automate their business processes on a holistic level from quote to cash in a single tool and gain an end-to-end view of sales, finance and operations in a single pane of glass.  

Purpose-built for the modern MSP, CloudBlue PSA provides accurate, real-time 360-degree views of customers, contracts and profitability while simplifying business processes. The solution dramatically cuts down on the time and money providers spend on tedious processes, such as contract management, billing, reconciliation, ticketing and customer relationship management. The result is streamlined contract management to better help your business focus its resources on growth.

Learn more about how CloudBlue PSA can help your business scale.

 

About the Author: Rajesh "Raj" Marar, Executive Director is responsible for business, technology strategy and sales growth for Harmony Business Systems, a CloudBlue Company. Raj joined the Ingram Cloud organization in 2017 as executive director for IaaS responsible for products and services. He launched an IaaS Center of Excellence (COE) for services to accelerate cloud adoption, migration and optimization at scale to help Ingram Micro achieve the Azure MSP Expert designation and to drive exponential growth for IaaS. Raj is an executive with 25 plus years of experience as a leader driving digital transformation. Prior to joining the Ingram Micro Cloud team, Raj worked for the Ingram Micro Global IS team where he had taken on roles with increasing responsibility over a ten-year span. He served as Executive Director for global platforms to lead an application modernization & data center virtualization, consolidation, automation and migration initiatives. He also led several major transformation initiatives for global ERP (SAP) deployment, Middleware, Partner Connectivity and E-commerce to help build a robust scalable & cost-effective platform to support innovation and growth. Follow Rajesh Marar on , LinkedIn or Website


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