How MSPs Can Drive New Profits

Author: Christine Gassman
Author: Christine Gassman

Today, managed service providers (MSPs) are evolving alongside innovations like cloud technology and mobile devices. These information technology tools have put the spotlight on data’s rising importance to businesses of all sizes. MSPs are rapidly reinventing their business models, customer relationships, operational efficiency, hiring/training approaches, and partnering practices.

As they reinvent themselves, many leading MSPs are making Total Data Protection platforms the cornerstones of their evolving business models. This transformation goes hand in hand with  the realization by small to medium-sized businesses that data is their business.

Many companies consider data to be their most critical asset, which can directly impact their revenue. Datto’s new eBook: Recurring Revenue Made MSPeasy explores the growth of recurring revenue models, ripple effects that impact customer and supplier relationships, profitability, hiring/training – and the role Total Data Protection platforms play in all of these areas. Total Data Protection solutions safeguard data everywhere it lives including on-premise, virtualized environments, the cloud, and even in third-party SaaS applications. These solutions give MSPs have an opportunity to help customers navigate and succeed in the age of total data dependency.

Example MSPs Doing It Right

To better understand how recurring revenue models and Total Data Protection solutions work together, we interviewed MSPs who have found success with this strategy.

“The best way to be more profitable is to do less. The best way to do less is to be more reliable.” In that simple statement, Foration’s Managing Director Paul Weeden sums up what it truly means to achieve operational efficiency and profitability. An enormous amount of hard work goes into achieving that simplicity, and much of it depends on selecting the right technology providers. The power of simplicity lies in the clear understanding and confidence it instills throughout the MSP organization.

From technical staff performing rapid restores to a salesperson’s ease in articulating a simple pricing model, MSPs provided various examples in which simplicity equals less work and greater profit. “The level of automation and integration we get from our Total Data Protection provider means we do less, and it enables us to punch above our weight,” says Weeden.

He explains how API-based integration allows Foration to trigger alerts in in a surgically precise way if the issue in question requires human action. Otherwise, it automatically closes.

Complexity and Data Analysis

On the other hand, MSP profitability can take a hit from vendor complexity. “Having a high-quality product can be completely offset by having a complex pricing model. You’re never going to sell it, because it requires so many additional resources to articulate it and make sure it’s appropriately positioned,” explains John Manley, Virtual CTA at New York MSP, Atlantic Tomorrow's Office.

Meanwhile, Delano Collins is nearing the end of a “forklift” upgrade of Total Data Protection solutions for nearly 50 clients. Collins is the CIO at Georgia-based MSP, EDTS. It was the result of analysis he did on 18 months worth of data and anecdotal experience from support engineers. His analysis revealed that the complexity and lack of automation, integration, and self-service of the previous backup and recovery solution cost EDTS the equivalent of a full-time engineer in the extra effort. That, combined with lower purchase prices, saves EDTS more than $210,000 per year on the bottom line compared to the previous solution.

Because Foration generally charges recurring fixed prices, Weeden emphasizes the need for ongoing analysis of his customer interaction data from as key to continuously improving profitability. “We analyze data to understand which clients we’re under serving or over serving, and then whether they're just greedy, or if they or we are doing something wrong,” he explains. “Because we aim for a low barrier to adoption, we charge a flat installation fee – and sometimes we waive it,” says Collins. “That means we have to get in there with surgical precision, get it installed, get it going, and get out of there.”

To learn more about how MSPs can drive profit through MRR in 2017, check out our new eBook: Recurring Revenue Made MSPeasy. In this eBook, we provide tips on selling the MRR pricing model to customers/prospects, how to be more profitable, the best modern pricing models for MSPs and more.

Christine Gassman is manager of partner development at Datto Inc. Read more Datto guest blogs here.