MSP’s Don’t Outsource your SLA

by Ray Stasieczko January 24, 2017

Recently some of my friends in the Imaging Channel who are building or growing a Managed IT Services Practice asked for my thoughts on outsourcing to Master Service Providers. Based on firsthand experiences from the transitioning of a legacy Copy Print organization to a fully Managed Services, Managed Security Services Practice. This article explains my thoughts and insights on the question. Should MSP’s outsource their Helpdesk?

Within the Managed IT Service industry, there is a striking commonality between successful MSP providers (Those billing at least $150,000 in monthly recurring service revenue) regarding Helpdesk services. That commonality is many don’t outsource their Helpdesk to Master Service Providers, and never did.

 The reason is this – Those with success in the Managed Services deliverable quickly realize that having total control of their customers’ technology infrastructure then outsourcing the front line their helpdesk is gambling with the value of their SLA. The helpdesk is the lowest cost labor item in the Managed Services deliverable. Master Service Providers both full-time and part-time (part-time I define as organizations who decided to build a Master IT Services practice in hopes it will bring value to their unrelated core offering.) Those who attempt this suffer from losses and being distracted. Both of those facts limit the long-term feasibility of their success. In business only the profits from good intentions can control the runaway cost of emotions. 

A helpdesk is so much more than the clearing house of alerts, whose statistics represent a false sense of accomplishment from the Master Service Provider, especially when comprehended by those MSP’s with less experience. The Helpdesk resource you offer will be significate in defining your SLA. Managed Service Providers should not risk their remarkability with the noise of Helpdesk Services from Master Service Providers who reside outside of their control. Your customers both current and future care more about their experience than any false confidence a service provider believes regarding the value of customer relationships over customer experiences. It’s not 1990. Today’s customers’ what a better experience, it’s how they value the experience which will define the relationship, not the other way around.

 “You can be the vendor with the greatest relationships and quickly lose to the new competitor who delivers a better experience.” 

 The Master Service Providers Helpdesk offering had a place in the IT deliverable. Let’s go back in time. Years ago the help desk was a burden to the IT leaders who were managing and building their companies technology infrastructures. The noisiest component was desktop support. However, we should also recognize that the IT literacy within the workforce was at its worst back then. Password resets, and by today’s standards, the calls were simplistic in nature. Today’s customers’ have better technology skills and literacy than those who attended Technology College courses ten years ago.

 This trip back in time reveal’s something more important. Managed Services did not exist, outsourced helpdesk was a single deliverable, and in most cases, the company’s’ that bought that stand alone service had internal IT staffs. These internal teams would shelter the noise or dysfunction of the outsourced Helpdesk vendor. The deliverable was “Break-Fix” from the IT channel, and honestly so was the deliverable from the Master Service Provider. Today there are what I call Break Fix Master Service Providers trying to be Master Service Providers to those delivering comprehensive Managed Services. This model is dysfunctional and will never get traction as a profitable business model, a must for all going concerns.

The excitement of Venture capitalist and emotionally based business models have time limits, and mounting losses shorten that time. Recently one of the larger Master Service Providers announced a 20 -30% price increase to their MSP partners who continue to use their on-shore facility rather than move their end-users to their new offshore facility. (The trimming on that announcement not thought out.)  Is this an attempt to bandage a gaping wound of mounting losses? Make sure your Master Service Provider is profitable, don’t assume it based on salesmanship. 

 

 Master Service Providers cannot scale profitably based on the uniqueness of the Managed Service deliverable. Induvial MSP’s should have standardizations and the successful ones do. However, Master Service Providers servicing these MSP’s will never have consistency between them.  Some Master Service Providers will attempt to define and dictate their MSP partners’ deliverable. On the surface, this stacking approach sounds reasonable however the reality is, as their MSP partners increase their maturity in delivering IT services they will and should modify. MSP’s can move much faster than any Master Service Provider can. When MSP’s control their Helpdesk they can explore, plan, and execute what’s right for their end-users, and their business. Rather than adopting strategies, programs, and products which benefit the Master Service Provide in their attempt to scale profitable.

 Caveat emptor      

 Outsourcing your SLA is and should be considered one of the most important pieces of the puzzle in delivering Managed Services. Before you even think about it get some references not just from Managed Service providers or the consultants hired by Master Service providers. Talk to end users, at the very least call the number and make sure the phone gets answered, and the response matches what your SLA demands. After all, you are outsourcing your reputation not just your SLA. Some Master Service providers do not even have an SLA with their MSP partners, does yours.

 Remember your remarkability is at stake, and your customer referrals are based on your remarkability. I have had the opportunity to experience an outsourced Help Desk from two different Master Service Providers one part-time and one full-time. It was evident by our deliverables strict SLA guidelines, along with our determination to be remarkable that led to ImageQuest bringing the Helpdesk in-house. Building an Internal Help Desk is not as complicated as some consultants or Master Service Providers lead you to believe.

 I am sure some MSP’s have an experience which meets their expectations, however, as you deliverable and your organization matures in skills, revenue, and profits you will learn the value of control. More importantly, your end-users demand the experience they started with and expect it to get better. If your Master Service Providers focus is on lowering their delivery cost and chasing revenue, you will soon get out of alignment especially if your goals are to continue improving both your value, and your users experience.

In closing, I would say this before you outsource know the facts, cost, and truth to build your own. Talk to those who did and are successful, and most importantly understand that delivering Managed Services remarkable takes control. After all your customers’ had outsourced to you, not some third party, Master Service Provider focused on doing in cheaper or changing your end-users experience in an attempt to raise profits.

 A great business model is to increase your customer spend by adding value creating a better experience. A flawed business model is one which increases the cost to the client without adding value or improving the experience. In most cases, this flawed practice is a desperate attempt to prolong their survival.                          

  

R.J. Stasieczko

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