The IT services industry is constantly changing. With new technologies coming out seemingly every day, it’s hard to stay put when it comes to selling IT solutions. Yet, many IT services providers are stuck using outdated models – most commonly, they’re stuck in a break-fix business, where they simply wait for something to break, then are called in to fix it.
Can you afford to stay as a Break-Fix shop? Most likely not, you’ll simply fall behind your competition. It’s hard not to recognize some basic, high-level benefits of becoming a Managed Services Provider (MSP) and moving away from the break-fix model.
Let’s take a look at just a few of the many reasons to become an MSP.
1. Monthly recurring revenue
No more techs sitting on the bench. No more slow months where your customers just didn’t seem to have any problems, or at least not enough to keep your cash flowing. When you become a managed services provider, your clients pay you a monthly recurring fee to remotely monitor their devices. Instead of relying on your clients’ systems to break, you’re guaranteed monthly revenue for each of your clients; then it’s on you as the MSP to deliver on your services.
The MSP model allows for a predictable cash flow model as your customers subscribe to a service that runs regardless of activity levels etc. The resulting predictability in revenues allows for better business planning and a real chance at growth.
Think about your costs as a business. Most of them are recurring costs (rent, bills, salaries, software licenses etc.). If you know how much your costs are each month, you will know how many contracts and/or clients you will need in order to be profitable each month.
Understanding your revenues and costs is a key step to business management and business growth. This is why managed services are much preferred by both clients and providers: it makes it much easier to plan for costs and build a sustainable, growing business.
2. Better client relationships
The MSP model moves your business away from being the one that benefits from your customers’ misfortunes. If you’re a Break-Fix shop, you rely on your clients to fail in order for you to succeed. Even if you’re the best at fixing broken systems, it’s hard to build really strong business relationships when you’re just a repairman.
As an MSP, you become a trusted advisor that identifies problems for your clients before they happen. Your clients view you as a valuable member of their team, rather than someone they must call when something goes wrong. A recent study showed 96% of businesses that use an MSP for their IT services are very satisfied. Do you get those same results from your break-fix customers? I highly doubt it.
There are a number of benefits to building strong relationships with your clients.
- It’s significantly easier to expand your service offering with them and grow your monthly revenues.
- They’re much more likely to refer contacts your way (here are some tips for building successful referral programs).
- They will pay more for your services overall, meaning higher margins for you.
3. Offer more services and earn more revenue
By providing managed services and remote device management, you can handle more devices from one single location. This means you can onboard more clients, without needing to onboard more staff – a practically foolproof way to add more profit to your business.
You also have the ability to offer a wider range of services to your clients, which also helps you increase your revenues. Many remote monitoring and management (RMM) platforms provide support for additional IT services, which enables you, as the MSP, to offer a broader service offering. These additional capabilities allow for a wider scope of services, which can attract larger clients.
4. Proactively prevent IT issues
As an MSP, you have the opportunity to be proactive and prevent your clients’ systems from failing. With RMM software, you can detect when networks are close to overload, or when a server might be at risk of crashing. This allows you to make adjustments, add infrastructure, lockdown devices etc. before there is any business impact on your end clients.
This is a huge change for IT services providers, because they become a valuable team member, rather than someone companies call in to clean up a mess.
Like I mentioned earlier, this allows you to build stronger business relationships, ultimately allowing you to grow your revenues much more easily. Anytime you can serve to keep your customer out of trouble you build trust. Trust creates the willingness for customers to consider spending more with you when the need arises. If you can continue to prove yourself as an invaluable asset to your customer’s business, you make much harder for them to go elsewhere, including in-house, for the services you provide.
In the end, it’s difficult to see why IT providers are still stuck as Break-Fix shops. As an MSP, you benefit from consistent cash flow, deeper client relationships, larger opportunities and more. Sure sounds like a winner, doesn’t it?
By Gretchen Hoffman
By Meaghan Moraes