The Real Magic Behind Best-in-Class Managed Service Providers

One of the shortcomings we see constantly in emerging mid-market and mid-market organizations is the lack of IT management tools.   During our contracted annual IT audits, we often discover ticketing systems that are doing nothing more than providing a rudimentary database for open issue tracking, monitoring and alerting tools that are barely configured, no time tracking for IT employees, no project management tools other than excel, no automation tools, and little or no integration between whatever tools are being used to manage the people, the processes, and the infrastructure.  Although there are very good technical arguments for investing in these tools regardless of the size of the IT environment, paying for the tools and the engineering labor to deploy and manage them correctly can provide a shortsighted business argument against them.  With the right manager, and a small group of very talented and disciplined technical engineers, you can gamble with this lack of tools for a period of time without causing major problems.  Make no mistake; this lack of visibility into the IT operation is a major technical problem, one that anyone who has managed IT operations for a high growth organization will acknowledge.  What is generally less clear is this operational blindness is also a major business problem.

Every time I get the chance to meet with other IT directors and CIO’s, they remind me how difficult it is for them to convince business stake holders to continue making the necessary investments in IT infrastructure, software, and engineering talent to address the needs of a growing business.  The two questions I always ask next are what business information is being provided to the stakeholder to justify more budget dollars for IT, and how often is that information being communicated.  More often than not, the answer I get is a sheepish look.  Many don’t even have a formal annual budgeting process for handling licensing and renewals.

So how does this apply to best-in-class MSP’s?  One characteristic that accurately predicts profitability in the MSP space is the investment the MSP makes in tools to measure and maximize engineering productivity. One of the biggest contributors to that productivity increase is the extensive use of automation to eliminate repetitive tasks, proactive monitoring and alerting to minimize manual auditing, and utilization reporting to measure how and where engineering labor is being allocated. Best-in-class MSP’s try to automate everything, focus their engineers on engineering work, not manual monitoring, and measure every ticket, time entry, and engineering task.  For larger MSPs, this level of visibility is critical to business success and the difference between making a 10% net profit or a 10% net loss on their managed service agreements.  It was a revelation to discover how valuable these tools were in our MSP practice to those customers that wanted visibility into their IT departments to see the “business” side. We now have clients that have added their own internal IT departments, but continue to use our toolset to manage their people and their infrastructure.

One ultimate truth to remember is that the business stakeholders care not about technology for the sake of technology; they care about how IT will improve the bottom line, increase customer and employee retention, and provide insight into their critical business numbers.  What they care about is the money, and the really good ones are particularly sensitive to waste.  I always try to emphasize the value of implementing business measurement tools for IT by explaining how much easier it is to justify an IT budget increase by showing the KPI’s that will be at risk when IT labor utilization exceeds 90%.  Even more convincing are previous quarterly reports showing the steady growth of utilization closely mirroring growth in the business. 

No one, least of all business owners, enjoys throwing money into a black hole.

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