By Ian Thornton-Trump
This is one of two columns looking ahead at factors that will affect the managed security services market.
As discussed in my companion column, digital and managed-service delivery trend lines point to cloud-migration projects, SaaS-delivered services and security-as-a-service solutions for customer compliance as high-growth opportunities.
Deliver those three together and you’re poised for a great leap forward into expansion and growth — if your business-management processes and systems can keep up.
While native digital service providers weaned on MRR might have a simpler time of it, established MSPs tend to have a wide range of input costs and billing models in use. And if they’re not careful, resellers and DSPs adding their own managed services can fall prey to confusion. If you are going to start delivering migration projects and expand your security services for clients, you must become serious about tracking and managing your business.
Many MSPs have hybrid arrangements, with some customers in a traditional break-fix services model, commonly called Time & Materials (T&M), and others in a “pure-pay” MSP model, which is fixed service, per-seat pricing. As you grow, every customer you bring in the door will have different needs; core services may be at a fixed monthly price, but projects remain T&M. Security add-ons like incident response, which I discuss here, add another layer of pricing confusion, as do those panicked “security 911” calls.
The actual running of an MSP business (and reporting profitability) becomes more complicated when tracking the input costs to service delivery, along with the costs of delivering services themselves.
The more you can deliver in a SaaS model, the better cash flow tends to be. But not every billing scenario falls comfortably into the monthly bucket. The cost of servicing a typical client (or various client profiles) is one of the better metrics against which to measure success. However, when you adjust for different billing models, understanding your profit-and-loss situation, especially per customer, becomes very complicated. Look for a PSA platform that has the flexibility to track, input, manage and distribute costs for, as an example, your RMM or DLP solution across your customer base no matter the billing model, which might be:
To add further complications, there might be …