Tech Trends: Finding & Increasing Profits In Managed Services

By Brian Albright, Business Solutions magazine.

For managed services providers (MSPs), increasing profits can present a challenge. Do you try to boost revenues by attracting new customers, or offering new lines of business to existing clients? Can you trim internal costs? No one wants to miss out on potential revenue opportunities, but too much diversity can drain internal resources.

"As the channel matures, it's important for MSPs to have a deep understanding of all their customers' needs to ensure they are offering the largest set of solutions for their clients," says Austin McChord, CEO of Datto. "MSPs can increase revenue by broadening their product offerings. Think of going beyond pure IT solutions and provide assistance with social media marketing and new media consulting, or support IP phone systems."

Spotting these opportunities requires communicating effectively with your client base. Performing regular quarterly business reviews can be just as important as providing technical support.

Expanding your offerings can increase costs, but having too limited a solution set may hinder profitability as well. "The best route depends on what resources are available," McChord says. "For young, small MSPs, it's better to focus on a few service offerings and perfect those, growing your business by total client base. Once the MSP grows, it's easier to offer a broader spectrum of services, and additional profitability will come from customers using multiple services."