Best Practices from the Top-Growing MSPs: How to Transform Your Business to Become a Bionic MSP

The MSP marketplace is constantly evolving and understanding the big picture is a critical first step. This eBook examines the practices and trends that differentiate these “Bionic MSPs” from their lower-growth peers.

Each year Kaseya conducts an extensive worldwide survey of MSPs to provide visibility into MSP market growth, highlight behaviors and strategies that set the successful MSPs apart from the pack, and uncover the leading technologies most beneficial to MSP customers. The results shed a wealth of knowledge about the types of services MSPs currently offer, how these services are prices, and how the MSP business has changed over the past year.

This year, the highest-growth respondents were put under the microscope. This article examines the practices and trends that differentiate these “Bionic MSPs” from their lower-growth peers. Read on this article to learn best practices from top growing MSPs that will transform you business into a high-growth Bionic MSP.

Introduction

Each year Kaseya conducts an extensive worldwide survey of MSPs to provide visibility into MSP market growth, highlight behaviors and strategies that set the successful MSPs apart from the pack, and uncover the leading technologies most beneficial to MSP customers. The results shed a wealth of knowledge about the types of services MSPs currently offer, how these services are priced, and how the MSP business has changed over the past year.

Service providers are far from a homogenous group. This year we decided to put our highest-growth respondents — those that reported an average annual monthly recurring revenue (MRR) growth over 20 percent — under the microscope. This ebook examines the practices and trends that differentiate these “Bionic MSPs” from their lower-growth peers.

The MSP marketplace is constantly evolving. Understanding the big picture is a critical first step.

Top Trends

As business demands grow more intense and less predictable, it’s both an exciting and daunting time for MSPs tasked with the unenviable job of maintaining performance levels of IT Services. Convincing organizations to outsource IT functions to a service provider is no longer the major hurdle MSPs face when it comes to landing new business; today’s challenge is providing a broad enough menu of services for customers that want to rely on MSPs even more.

Based on the trends we’ve observed, there are four key areas to bear in mind when considering extending your repertoire to fuel growth.

1. Integration matters: The reign of closed solution suites is over. For data to be used to its maximum potential, it must be shared among application and processes. Time to make way for technologies that are open, flexible, and integrated.
2. Infrastructure management is now table stakes: The need to manage on-premise, cloud, hybrid-cloud, virtualized, and components is spawning new technological requirements. This presents an opportunity for MSPs to grow their business with new service lines and maximize profit margins by providing customers with flexible infrastructure management solutions that fit any budget.
3. Backup s seeing big changes: In a world where ransomware and malware are becoming far too common, high-growth MSPs don’t rely on hope and superficial backup tactics, they are beefing up their BDR tools – anticipating the worst.
4. Stabilisation of the MSP business model: From a pricing model perspective, there has been minimal change in revenue distribution in recent years, a key indicator that the MSP business market has largely stabilized. The real movement, however, lies in MSP business models, as service providers look for new ideas to revamp or restructure what they are currently selling.

What does it take to succeed

As we turn the spotlight on Bionic MSPs, an obvious question arises: Who are they? In a nutshell, Bionic MSPs have successfully built sustainable businesses that are high-performing and widely admired. Their average annual monthly recurring revenue (MRR) growth exceeds 20 percent. To achieve this growth, they stay on top of the latest technology trends and are constantly seeking new trusted ways to differentiate themselves and sustain their success. As the rapidly changing MSP landscape continues to push MSPs toward their next phase of evolution, Bionic MSPs do many amazing things to blaze a digital path and separate themselves from the pack. To do this, they prioritize to ensure they have the tools and technologies needed to professionally manage their customers and flexibly operate their business with a cost structure in sync with MSP 2.0 economics. There’s no reason you can’t transform your business to be a Bionic MSP, but to get there you’ll have to understand the metrics behind the business.

Bigger not equal to Better

It’s a long-held belief that to grow revenue you must grow headcount. Clearly, that is not always the case, and business growth isn’t necessarily proportional to organization size.

More than 1/3rd of Bionic MSPs have fewer than 10 employees.

Hiring additional employees rather than considering efficiencies or other alternatives is an expensive solution that often results in a workforce whose time is gobbled up by rote tasks, shrinking the room for innovation. Bionic MSPs look for the most efficient and effective solutions.

Bionic MSPs have successfully built sustainable businesses that are high-performing and widely admired. Their average annual monthly recurring revenue (MRR) growth exceeds 20%.

Strong Infrastructure Management is a Requirement

Most organizations seek out some external expertise to manage their exploding IT infrastructure and that’s precisely why infrastructure monitoring and management has been touted among the fastest growing services over the past 12 months. To grow, it is imperative MSPs find higher-margin ways to deliver infrastructure. This also explains the remarkably pro-active approach Bionic MSPs take to cloud deployment. IT infrastructure management depends heavily on accurate reporting, real-time dashboards, and constant monitoring of the entire environment.

Infrastructure monitoring and management has been touted among the fastest growing services over the past 12 months.

Deployment rates for these services are consistent among MSPs of all stripes. They are the bare minimum for entry in today’s MSP marketplace.

Automation

Leveraging the full power of automation is like tripling your team of administrators. Automation enables Bionic MSPs to hum along while putting the most mind-numbing, time-consuming maintenance tasks on autopilot. Automate routinely like a Bionic MSP, and you can manage thousands of endpoints per technician vs. a few hundred without it.

• 9% of Bionic MSPs manage fewer than 100 endpoints
• 22% of Bionic MSPs manage 101-500 endpoints
• 15% of Bionic MSPs manage 501-1,000 endpoints
• 37% of Bionic MSPs manage 1,001-5,000 endpoints
• 17% of Bionic MSPs manage 5,001 or more endpoints

Security

The top security offerings remain predictable and have been viewed as standard for some time. However, as the threat landscape becomes more nebulous and complex, Bionic MSPs have stepped up their game.

Integration

Most MSPs struggle with the “chicken and the egg” question of prioritizing between RMM and PSA. High-performance MSPs, on the other hand, know that blindly installing either of these tools is no silver bullet for success. Each may be a precursor to the other, but their ability to integrate together is hands down the single most important feature of any PSA or RMM solution.

80% of Bionic MSPs consider integration to be exceptionally important, compared to 69% of all respondents.

The same applies to the majority of applications that Bionic MSPs rely on to keep afloat among the competition. When working harmoniously together, these combined solutions deliver much more value than the sum of their parts.

92% of Bionic MSPs believe the integration of core MSP applications can help them drive better bottom line profits

Cloud Adoption

There is nothing foggy about how Bionic MSPs approach the cloud. Whether you’re looking at cloud integration, migration, implementation, or management, Bionic MSPs have embraced everything about cloud. As the market for cloud services continues to grow, Bionic MSPs continue to put their energy into this space by scaling up their cloud service offerings and focusing on customer segments that match their expertise and experience.

71% of Bionic MSPs currently host some sort of their clients’ infrastructure in a private cloud environment, compared to 59% of all respondents.

Bionic MSPs’ margin range for cloud services is almost double that of the overall population

Data Backup and Protection

There’s no denying that data dominates and drives businesses. Big data, IoT, and AI are fueling businesses to be increasingly data-driven. Given that data volumes continue to grow exponentially for nearly every industry, it is critical to have robust disaster recovery and backup capabilities.

Not surprisingly, Bionic MSPs are proactively pumping up their data storage and backup capabilities.

85% of Bionic MSPs use more than one backup provider to support customers’ backup and disaster recovery needs, compared to 78% of all respondents.

Build A Bionic Growth and Pricing Strategy

Conventional wisdom says that cost-based pricing is the way to go when selling a product or service. Not anymore. Not for Bionic MSPs at least. They realize that focusing solely on cost always leaves the door open for a less-expensive vendor.

However, focusing on the value that their services bring to their clients makes them a true partner.

16% of Bionic MSPs earned more than 50% of their revenue from a cost-based model

22% of Bionic MSPs earned more than 50% of their revenue coming from a value-based model

In 2018, pricing models among Bionic MSPs were split near evenly between a per-user and per-device basis

This same focus on value supports the higher fees that Bionic MSPs charge nearly across the board.

29% of Bionic MSPs charge between $51 and $100 per device per month for ongoing server support and maintenance, compared to 19% of all respondents.

75% of Bionic MSPs charge $100-200 as their standard hourly rate, compared to 64% of all respondents.

The average monthly managed services contract size for one-third of Bionic MSPs is $5,000 and above, compared to 21% of all respondents

Organic Growth

While there is no single path to success, being caught without a plan is a sure route to stagnation. When it comes to picking up a growth strategy more than two-thirds of Bionic MSPs prefer to grow organically through new service offerings.

They look for ways to embed themselves more securely with their clients, adding in new value-add services more often than their peers. Bionic MSPs make sure they find time to:

• Adequately communicate their value to clients
• Quickly develop and deploy new, profitable services
• Keep clients happy and productive
• Scale their business (and endpoints under management) while keeping staffing levels constant

Respond to Market Transformation Like a Bionic MSP

How many of these Bionic MSP traits does your business have? Our data clearly shows that luck alone does not shape a Bionic MSP. The more an MSP flexes its muscles and strategizes about every aspect of the business, the more likely it is to become a high-growth Bionic MSP.

Want to start your transformation to become a Bionic MSP?

Offered Free by: Kaseya