Managed Services Usage Rises, But Pricing Falls

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A few factors are at play here. The slow economy, fierce competition and uncertainty about cloud computing’s impact have driven many MSPs to sell down instead of up, essentially undervaluing their services to snag customers. The most successful MSPs adhere to best practices and understand that pricing on value — even if it’s higher than your competitors' — is best in the long term. That’s easier said than done in this economic climate, when resisting the urge to discount is difficult, if not impossible.

How can MSPs articulate value and justify normal market prices? Data from the CompTIA study points to some best practices and actions that resonate with customers.

Activity Reports. Communication is key to a successful MSP-customer relationship. MSPs doing their job right are often invisible to the customer who is experiencing no downtime, glitches or other technology problems in the course of the contract life cycle. The irony, though, is that the out-of-sight, out-of-mind situation can hurt MSPs when it comes time to renew contracts — when customers are most likely to demand stagnant or lower prices. CompTIA’s study found that among end-user companies that are highly satisfied with managed services, three-quarters say their MSP provides regular activity reports on all of the steps they take monthly to avert downtime, security breaches, performance declines and other measures to keep the customer up and running.

Quarterly Business Reviews. These meetings go beyond activity reports and should be held in person, ideally, and include C-level executives from both the MSP and the customer. QBRs encompass more than technical reports on actions taken; they are more prescriptive in nature in identifying places where the MSP can help support a customer’s ongoing business objectives through new services and initiatives. Done well, these meetings can cement the MSP as the trusted advisor and an extension of the customer’s staff.

Certifications and Training. Understand MSP best practices so that pricing and discounts are the go-to way to collect and retain customers. CompTIA, among other associations and vendor organizations, offers ways for budding and existing MSPs to get both the technical and business acumen they need to succeed.

Carolyn April is director of industry analysis at CompTIA , a nonprofit trade association advancing the global interests of information technology professionals and businesses. April can be reached at capril@comptia.org.
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