When Business Solutions interviewed Len DiCostanzo, senior vice president of community and business development for Autotask, for the article “Making The Case For Managed Services,” he also listed the three biggest mistakes new managed services providers (MSPs) make.
- Given they have picked the right product, the right vendor partner and have determined their client or prospect base is ready for managed services, it comes down to not pricing their services right. I have heard from MSPs wondering why they have developed a recurring stream around managed services, but are not seeing the profits they expected. And, it is typically because they did not understand their costs. Perhaps they set their pricing based on what the market appears to want to pay, and they did not consider their costs nor how many units of managed services they had to sell in order to surpass break even and generate profit!
- A secondary issue is how they deliver their managed services. I have heard many services providers talk about their “all you can eat” model. I always say that is a lot to eat! Services providers need to define the services or offerings covered under the managed services agreement as well as what is not covered. They need to have an à la carte type menu of offerings to show what is not covered, so that all you can eat goes away, lest they be accused of nickel and diming someone.
- A third mistake is not taking control of the environment they just cleaned up via the remediation engagement they should have sold prior to selling the managed services package. Once an environment is cleaned up, the services provider needs to lock it down and prevent users from installing software and hardware on the network and breaking it. This results in a truck roll that may have not been sold as an à la carte offering, but as part of an “all you can eat” offering. The goal is to reduce service calls, not increase them.