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3 Reasons to Consider the Managed Service Business Model

January 07, 2013  

Have you pondered the benefits of transitioning to the Managed Services Provider (MSP) model? There are a few key advantages to adopting this business practice, namely recurring revenue, diversification and client engagement. 

Recurring Revenue

Gaining regular recurring revenue is one of the key advantages to becoming an MSP. Delivering managed services enables you to charge monthly retainer fees, often set-up as scheduled pre-payments. Regular and predictable, annualized revenue streams ensure positive cash-flow into your business and enhance your ability to grow your business effectively. 

Risk Mitigation Through Diversification

Diversification is essential to mitigate the risk of sudden changes in the market or specifically with a large client account. By establishing predictable monthly revenue you’ll be able to hedge against the risk of a sudden shortage of business giving you better control and stability for growth. However, to effectively adopt this business model and scale your business you need infrastructure and process. Many MSPs invest in business automation software like Autotask to support sales, help desk, project management, task scheduling and accurate billing, and enable greater collaboration across departments. Adopting a business platform to support service level agreements and recurring contracts ensures a smooth transition towards managed services, while helping your business grow profitably and effectively. 

Increased Client Engagement 

Adding managed services to your catalogue not only provides additional opportunities to ensure your clients’ critical IT infrastructure and business systems are running smoothly, it opens the door to monthly ‘operational review’ meetings.  The goal of these meetings is to communicate the work you have completed during the last period; this can be especially important when you deliver your services behind the scenes as the client rarely experiences disruptions or incidents.  Regular meetings provide a perfect opportunity to review managed services reports, engage your clients in a continuing conversation about the opportunities and challenges in their business, and to earn the role of trusted advisor. Furthermore, you can (and should) be providing forward-looking plans, such as a Business Technology Plan, to support your clients’ business goals. 

 

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