How Do Your Managed Services Performance Metrics Stand Up To Comparison?
By Christine Kern, contributing writer
In an infographic, the Technology Services Industry Association (TSIA) presents benchmarking data from a number of managed services providers in order to establish an industry standard. As TSIA points out, using benchmarks for comparison to your peers is essential not only for maintaining a competitive edge, but also to ensure the health of your organization as a whole. The infographic is based on benchmark data collected and analyzed from a core sample of more than 23 managed service providers in order to provide a starting point for managed services providers to assess their performances against others in the industry.
The data is from hardware/software original equipment manufacturers (OEM), VARs, managed SAAS/cloud providers, IT outsourcers, and system integrators, and includes 127 data points across key performance metrics (41), operational practices (54), and demographical/structural (32). The benchmark study consists of seven modules, each an essential component in assessing an individual company’s performance set against its industry peers.
When the data was assessed, TSIA found that 44 percent of MSPs experienced revenue growth, 16 percent saw operating income, 39 percent returned a gross margin, and 90 percent saw positive revenue renewal rates.
The study also found that, in terms of gross margins, dedicated managed services delivery outperformed shared services delivery (52 percent to 25 percent), while the outperformance was 33 percent to 6 percent in terms of growth rate for sales.
In addition, the study also collected data on the sales cycle for MSPs, with the average quote time at 27 days for standard managed service offers and 66 days for custom offers, and average deal closures coming in 162 days for standard offers and 217 days for custom offers.
Utilizing the benchmarking program is definitely one way to ensure that your MSP is competitive in today’s booming market. A Business Solutions Magazine article points out, the managed services business is flying high. In a survey, based on 86 respondents with combined annual revenue of $367,000,000, BSM asked a series of questions to illustrate the business benefits of offering recurring revenue-based services.
Based on BSM’s survey results, it is clear that managed services “make better businesses, create stability, give owners peace of mind, and are worth more when it’s time to sell.” And the survey also discovered that “MSPs continue to grow their recurring revenue by leaps and bounds.” Of the respondents, just 5 percent reported a decline in managed services revenue in 2014, while almost 30 percent saw a 25 to 100 percent increase, and 7 percent increased their managed services revenue by more than 100 percent.