Top 3 Managed Services Success Inhibitors Vex Some Partners

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If you haven’t realized what might be tripping up your MSP business success, a new Techaisle study might be able to help you out.

The inability to 1) balance product sales and service revenue, 2) adjust to a customer-centric approach, and 3) align recurring and non-recurring revenues, are the top three channel partner managed services success inhibitors, the research and consulting firm reports.

Techaisle's Anurag Agrawal

Techaisle’s Anurag Agrawal

While these aren’t the only areas that might cause partners to stumble, or succeed if they get it right, they’re the top ones to watch for, per Anurag Agrawal, Techaisle CEO, who points out that his company has been surveying MSPs since 2008.

“While some years that we track MSPs the challenges remain the same, other years they change. But, these three challenges keep percolating to the top,” he told us.

Diving a bit deeper into the study results, Techaisle notes the following about the top three stumbling blocks:

  • The ability to sell services independently from product sales, while maintaining the ability to sell products to customers as well.
  • The ability to package and efficiently deliver standardized services to multiple customers, growing by expanding portfolios of discrete services rather than by simply agreeing to address sprawling customer requirements on a “one-off” basis.
  • The ability to align internal processes and costs/cash flow with a recurring revenue, rather than transactional, approach to the business.

A big misconception about MSPs is that they’re primarily focused on delivering services to customers, or all that they do is offer services. That’s not the case. MSPs see demand for both services and products, and successful ones respond to both.

What makes MSPs successful in this area is the extent to which they lead with services, and how that plays out when looking at the services-to-product sales ration.

“Successful MSPs lead with services, while channel businesses that are not successful at selling managed services lead with and derive the greatest proportion of their revenue from product resale,” Agrawal said.

In fact, Techaisle research shows that successful MSPs have a revenue mix of 48 percent product, 52 percent services. Looking at that revenue based on contracts, 59 percent comes from services-led contracts and 41 percent from product-led contracts.

“What we find is that there’s got to be a balance between bringing in recurring revenue and non-recurring revenue,” he said, or else partners will chase signing up more and more customers without realizing that they’re more focused on a sales process than …

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