Managed Service Providers Need Strategic Approach for Profitability

Managed service providers (MSPs) must enhance offerings, improve service & nurture customer relationships for profitability.It’s not an understatement to say that 2020 has been challenging for businesses of all types. As the economy experiences unprecedented gyrations, organizations are less willing to make capital investments, and are looking for more predictable operating costs. Many businesses are turning to managed service providers (MSPs) for their technology staffing and infrastructure as a way stabilize IT budgets.

While this presents an opportunity for MSPs to diversify their offerings and increase their customer base, it also complicates their data center operations and processes. Not only must the MSP ensure that customers stay up and running with the highest levels of security, they must also keep their own business running at the same level – with reduced staff and limitations imposed by the COVID-19 pandemic. Profit margins were slim to begin with, and have constricted even more

According to Valuates Reports, the global managed services market size is projected to grow from USD 178.5 billion in 2019 to USD 309.4 billion by 2025, at a CAGR of 9.6% over the forecast period. How can MSPs enhance their offerings, improve their service levels and nurture customer relationships, all while boosting profitability? Expanded service offerings, along with strategic investments in data center operational efficiency are sure ways to drive new revenue.

Data protection and management services are a growth area for MSPs. As MSP customers migrate workloads to the cloud, they need additional services around data protection, both to thwart cybercrime and to ensure compliance with data privacy regulations. At the same time, MSPs themselves are increasingly targets of cyberattacks as malicious actors try to gain access to data centers. Leveraging data protection tools across customer and internal networks can yield enhanced security due to consistent usage, reduced learning curve and resource optimization.

Rapid backup and recovery is an area where cost savings can contribute to overall profitability, especially where thousands of physical and virtual servers are involved. Every second counts, so shaving time from backup operations is guaranteed to also save money. And given that Microsoft Office 365 has limited backup capabilities, this is a growth area.

Tools that monitor virtual machine performance can also yield incremental changes that add up, especially when an MSP may be penalized for failure to maintain service levels. If an MSP can proactively detect bottlenecks, balance workloads and identify underutilized servers, those savings can be significant.

Finally, although storage costs have decrease dramatically, data volume growth has been explosive. Technologies like compression and deduplication can reduce storage volumes by up to 95%.

The MSP landscape is hyper-competitive as outsourced computing becomes a commodity service. Expanding offerings and spending time building customer relationships are going to be differentiators as prices get driven down. Now is the time for MSPs to explore the strategies and tools that will streamline operations and reduce costs in order to maintain profitability.

To learn more how Quest can help, visit our MSP webpage

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