Download Transitioning to Managed Services

Businesses across a broad variety of industries are beginning to embrace a service-centric relationship with their clients due to the many benefits this approach affords. Software as a service (SaaS) is perhaps the most obvious example, in that it substitutes continuous, subscription-based application services for the earlier intermittent, non-recurring sales transactions that entailed higher customer acquisition costs and made long-term revenue projections difficult.

It comes as no surprise that an increasing number of resellers are considering a move to the managed service provider (MSP) business model. The reasons to become an MSP are compelling: a predictable, recurring revenue stream; deeper engagement with clients; and a trusted advisor relationship which, in turn, generates more business opportunities. The standardization of MSP solutions across all clients simplifies purchase, deployment, and support.
MSPs should not underestimate the importance—and core business worth—of establishing an ongoing service relationship with clients. The consistent, long-term revenue stream these relationships engender enable MSPs to significantly boost the valuation of their businesses (up to 3-5x revenue vs. 1x for a typical reseller). The business-critical nature and customization of the services MSPs can offer their clients combine to reduce churn, maximize customer retention, and boost MSP profits.