Moving towards managed IT services is proving a popular business choice for many IT service providers. Instead of having clients pay for your services on an “as needed” basis, you sign them up for a long-term contract and agree to meet all of their IT needs, usually for a fixed monthly fee.
The managed IT services model can benefit customers and service providers alike.
The customers have the reassurance of fixed IT services expenditure, and the service providers have regular revenue they can count on. However, the managed services model isn’t necessarily right for every service provider.
Here, we raise five questions you should ask yourself to help you determine whether the MSP model is right for your business:
1. How is your business structured?
Many small IT providers are “one-man bands” that don’t necessarily lend themselves well to becoming managed service providers.
If you are working alone, it’s possible you could provide a decent MSP service to a few clients, but don’t truly have the resources to provide the service to more without spreading yourself too thinly. If this is the case, you may be able to make more revenue by sticking to traditional break/fix services.
2. What kind of infrastructure do you have?
Managed service providers rely heavily on automation and have systems in place for monitoring networks and deploying services from a central location. If you’ve yet to build up an infrastructure of this nature, you may not be ready to provide true managed services to your clients.
This doesn’t mean you can’t build up the infrastructure and extend it so that you can profit from online backup, antivirus, and all the other things a typical business needs. But don’t offer managed services until you are properly set up for it.
3. What kinds of clients are you working with?
If you’re working with startups or other one-man bands, they may not yet be ready to sign up for a managed IT services contract.
You must look at your client base and gain an understanding of who you’re dealing with and what kinds of budgets they have. At the “smaller” end of the market, you may find yourself with clients that are only willing to pay for IT assistance on an “as needed” basis.
4. Does the MSP model make financial sense?
The MSP model tends to make more financial sense once you deal with companies of ten or more users. With smaller firms, you may find you can make more money billing hourly or daily.
Yes, the MSP model provides for a more stable income, but you may prefer (at least for now) to sacrifice this stability for the chance to make more profit at the end of the year.
5. Can you make an adequate commitment?
When you sign a client up for a managed services contract, they will have certain expectations of you. If you decide you want to take a three-week holiday, they will expect their needs to be met in your absence.
If your company is not yet sufficiently established to meet the needs of the contract at any given time, you may be better off avoiding the risk of over-commitment.
Is moving into managed IT services the preferred route for your business? Let us know in the comments box below.
And to follow through on the tips introduced in this short article, especially if you also support SaaS and IaaS, be sure to enroll now in our free 7-day eCourse: Go-to-Market Strategy 101 for B2B SaaS Startups and Scaleups.
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