At the outset of 2023, uncertainty loomed large over the economic horizon. Rather than succumb to apprehension, you embarked on a proactive journey, determined to uncover actionable insights to navigate this uncertainty. The focus was clear: to delve into pricing methodologies within managed services organizations, deciphering the strategies that yield superior business outcomes.
In our comprehensive “State of Managed Services 2024” report, we unravel pivotal moments from the past year, shedding light on the challenges that managed services members encounter to equip you with invaluable knowledge, enabling you to confront these challenges head-on and chart a course toward sustained success.
This report is tailored for professionals operating within the realm of managed services, including business owners, executives, and decision-makers. Whether you’re seeking to optimize pricing strategies, enhance operational efficiency, or steer your organization through turbulent times, this resource is designed to empower you with actionable insights.
By delving into this report, you’ll understand:
- Pricing methodologies adopted by leading managed services organizations.
- Key moments and trends shaping the industry landscape.
- Top challenges managed services providers face and actionable recommendations for overcoming them.
Navigate the intricacies of managed services’ trends and pricing strategies, empowering you to thrive amid uncertainty and drive sustained business growth. In this blog we will dive into:
Navigating Managed Services Trends
As you reflect on the past year and gear up for what lies ahead in 2024, it’s crucial to dissect the trends that have been shaping the landscape of managed services. In 2023, you may have found yourself grappling with an identity crisis within the industry. What exactly does “managed” entail? Is it synonymous with outsourcing or subscription-based services? These questions led us to two key areas of focus:
Commoditization of Services
One of the major challenges was the commoditization of services. Organizations had to adapt to absorb this shift as the market evolved. This involved developing comprehensive plans to address common hurdles such as invalid financials, misaligned skill sets with market demands, and the overall impact of commoditization on portfolio and corporate strategy. Navigating through these challenges required a strategic approach and a readiness to innovate.
Shifting Customer Expectations
Customer behavior underwent a significant transformation, with a clear shift toward demanding “outcome-based” solutions. To delve deeper into these evolving expectations, we embarked on a research journey to explore pricing methodologies within managed services organizations. Through investigations, several key findings emerged:
- Cost-plus remains the dominant pricing methodology, but newer methods are gaining momentum.
- Value- and consumption-based models are linked to more favorable outcomes and improved gross margins compared to traditional approaches.
- Although in its infancy, outcome-based pricing is gaining traction.
- Offering standard and configurable packages is essential to streamline complexity and meet customer demands effectively.
Navigating Challenges in Managed Services
Delving into the intricacies of managing a successful services organization, it’s crucial to address the hurdles that often stand in the way of profitability and growth. In 2023, a myriad of challenges on their journey toward becoming thriving managed services entities. Let’s explore the top three challenges faced by our members and how they can personally influence you.
Getting the Offer Right
Imagine you’re at the helm of a managed services business, striving to deliver exceptional value to your clients. However, despite your best efforts, you find yourself grappling with delivering on your promise. This struggle often stems from overlooking a critical aspect—getting the offer right. It’s not uncommon for organizations to underestimate the significance of crafting compelling service offerings tailored to meet the evolving needs of their clientele. By overlooking this aspect, you risk falling short of client expectations and hindering your path to success.
Pricing Managed Services Offers
Consider this scenario: You’ve meticulously crafted your service offerings, but now comes the daunting task of determining the right price. Pricing strategies can significantly impact your bottom line and ultimately dictate the success of your business. While many organizations fixate on specific pricing models, our research highlights the importance of selling around outcomes. Aligning your pricing with the value delivered to clients can enhance profitability and foster long-term client relationships.
Ensuring Profitability
If you’re a managed services executive tasked with steering your organization toward profitability, the question that often looms large is, “How can we boost our bottom line?” Whether it’s contemplating price adjustments, optimizing operational costs, or exploring more cost-effective service delivery methods, the pursuit of profitability is a constant endeavor. However, navigating this challenge requires a nuanced approach and a keen understanding of your business’s unique dynamics.
This report delves deeper into each of these challenges, offering actionable insights and strategies to help you overcome them. Whether you’re grappling with refining your service offerings, fine-tuning your pricing strategies, or enhancing profitability, our aim is to equip you with the knowledge and tools needed to thrive in the competitive landscape of managed services.
Looking Ahead to 2024
As you enter the new year, explore artificial intelligence (AI) and its transformative potential in managed services. With AI capabilities rapidly evolving, we introduced a framework to visualize the current landscape and continued to explore policy recommendations to leverage this technology effectively.
In 2024, the focus will intensify on how AI can revolutionize managed services. A dedicated research track centered around AI and automation, poised to capture emerging trends and best practices, can help you optimize AI. Participate in this research journey as we unravel AI’s potential to drive innovation and efficiency within the managed services sector, together.
The future of managed services is brimming with promise, propelled forward by relentless technological innovation. As AI-driven automation and machine learning continue to revolutionize the industry, the possibilities for managed services organizations are boundless. These advancements empower organizations to deliver more sophisticated and proactive solutions, propelling them toward unparalleled success.
While the challenges outlined in this blog provide valuable insights, they merely scratch the surface of what TSIA offers to managed services organizations. Ready to unlock the full potential of your managed services organization? Dive deeper into the findings and recommendations outlined in our comprehensive report. Read the full report for more answers, and embark on a journey toward success and innovation with TSIA by your side.