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Several months ago, I authored a five-part miniseries of Inside Technology Servicesblog articles, articulating the top  mistakes made when starting a managed services (MS) business. The blogs were based on a TSIA Service Insight (research report) published for members in TSIA’s Managed Services discipline. The blog articles identified each mistake, while the full research report delved into deeper detail about the consequences of making those mistakes, as well as steps that could be taken to avoid them.Fast-forward several more months, and here we are in March 2014, 15 months into the launch of theTSIA Managed Services discipline. And what a productive 15 months it has been! The MS member benchmark reviews are well underway, and the data we have collected from the performance and practices of our MS members has been nothing short of amazing.

Because of how deep our fact-finding goes in the benchmark process, we can run analytics on hundreds of views through the correlation of dozens of practices and key performance indicators. These analytical views are the basis of our assertions for which service practices positively or negatively affect a company’s performance.

This new blog miniseries, launching with today’s post, moves past the mistakes made by managed services providers (MSPs) and provides a summary of five key practices that have a positive, measurable impact on a company’s key performance indicators (KPIs). Our assertions not only use the data mined from TSIA benchmarking research, but it also includes input taken from senior technology services executives through TSIA conference participation and interviews of over 120 additional service executives across the technology industry.

This first practice is truly the foundation of a managed services business. It’s what sets the course and the tone of the organization, creates objectives, and establishes measurability.

The first key practice of a successful MSP is:

#1 – A Well-Defined and Documented Managed Services Strategy

Documenting and evangelizing your managed services strategy is one of the most foundational and beneficial activities an MS organization should execute on. We’ve all heard the phrase “SMART” used when planning goals: specific, measurable, attainable, relevant, and time-bound. An organizational strategy is essentially a set of goals that answer the following questions: Where do you want to go? How do you plan on getting there? What are the expected results or business outcomes? Why does this make sense for the corporation?

According the TSIA Q4 2013 Managed Services Benchmark Study, 82% of managed services members state that they have a formal, documented managed services strategy. However, when peeling back the layers of the onion, only 25% of the companies stated their MS strategy included a detailed strategic vision over a three- to five-year period with specific outcomes (Figure 1). These included a detailed business plan supported by a financial business case justification, including required investments, intended operating income levels, realistic growth rates, and well- thought-through expenses plans. Interestingly enough, the companies that employed a highly detailed strategy that included all aspects of the SMART principle had significantly higher gross margins, higher operating income levels, and revenue growth rates than those that did not.

documented managed services strategy  

(Click image to enlarge.)

The TSIA Insight document titled “Five Key Practices of a Successful MSP” expands further on this crucial MSP practice and also includes an outline companies can use to start building their SMART managed services strategy.

Don’t forget to stop back next week to learn the next key managed services practice. As always, feel free to reach out to me directly to learn more about managed services and how TSIA can help your MS business.

Read more posts in the “5 Key Practices of a Successful Managed Services Provider” series:

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George Humphrey

About Author George Humphrey

George Humphrey is the vice president and managing director of service and delivery research and advisory for TSIA. Given his extensive background, George also directly supports the managed services research practice. He is a networking and communications industry veteran with over 25+ years of experience. Throughout his career, he has held several leadership positions in managed services, including global strategy, product line management, marketing, operations, and client management.

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