The break-fix model is out of date; staying with it means falling behind the competition. So we look at the benefits of moving your business to an MSP model instead.
The IT business is famous for its convoluted language and ever-changing buzzwords, but the essence of the break-fix model adopted by so many IT channel partners is as simple as it ever was – wait for something to break, then get called in to fix it.
Is this really the way forward? The problem, fundamentally, is that no matter how diligently a break-fix company delivers its reactive-only services, the fact that they are reactive-only immediately puts them in the lower branches of the service quality tree.
In short, to move their services up the customer value chain and make them more profitable, break-fix companies have to go proactive instead, preventing the breaks before the fix is even needed! And that means changing to the MSP model.
Here are a just a few core MSP benefits that decisively trump the old-world break-fix approach to doing IT business.
Predictable, recurring revenues
Think billing customers hefty amounts for break-fix intervention is profitable?
Think again. Break-fix is an expensive service to deliver because you can’t predict when something will go wrong. This means multiple ad hoc scrambles to deliver services for which the associated labour and time costs are notoriously hard to estimate and control.
Make no mistake, break-fix renders cost and budget planning almost impossible, and so can quickly turn out to be a drain on the business.
(In fact, for an entertaining tour through no fewer than seventeen separate reasons why break-fix is a bad idea, read this piece from MSPAnswers.com.)
The MSP model, on the other hand, generates a reliable, recurring monthly fee, enabling predictable cash flow month in, month out, and with no requirement for customers’ systems to break!
Ultimately, this supports the planning process that underpins business growth – if you know how much your costs are each month, you know how many contracts you need to bring in to turn a profit.
It’s a far cry from waiting for something to go bang and then frantically working out how much you need to charge the customer for it to cover the lean weeks of recent times and those yet to come!
Higher-value customer relationships
Your core differentiator, as an MSP, is that you are not paid to fix the customers’ systems, you are paid to monitor them and prevent issues from taking hold in the first place, using, for example, RMM (Remote Monitoring and Management) tools, like this one. and PSA (Professional Services Automation) tools, an example of which is shown here.
What this in turn means is that you are no longer relying on your customers to fail in order for you to succeed; this positions you as a “trusted adviser” and enables you to forge stronger business relationships with them.
These stronger relationshjps pave the way for you to expand your service offering, grow those all-important monthly revenues (and the margin you’re making on them), and they also make your customers more likely to recommend you to other prospects!
Lower staff costs, higher productivity
The much-vaunted “single pane of glass” – a portal or console that enables you to easily onboard and manage devices, customers and users, no matter how many of them there are – is now a firm reality in the MSP universe.
Consequently, it takes far fewer staff to manage customers’ systems, which in turn delivers higher productivity at much lower cost. Needless to say, the same console can typically be used to deliver additional services to existing clients, on demand, instantly swelling your revenues and binding your customers closer to you.
Stops you cutting your own business’s throat…
With traditional break-fix services, the only way to make money is if something goes wrong. This is a double-edged sword; the danger is that if you do your job too well, you’re out of business (as if to reaffirm this, insolvencies amongst IT and communications companies rose by 22% at the end of 2014, compared to the previous year, according to research from Exaro).
Don’t do the job well, however, and the customer will soon see through it and be off consulting another provider.
With the MSP model, of course, all of this ceases to be an issue, because you are measured on your ability to monitor and to prevent disruption, not on your ability to clean up a mess once it’s already happened. You’re delivering a service that is always on and always revenue-generative, not sporadic correctives that temporarily plug urgent holes in your cash flow!
In conclusion: tips for moving from break-fix to MSP
Nobody’s suggesting moving from the break-fix model to the MSP model is painless – it isn’t (not least because you’re actually moving from one mentality to a fundamentally very different one).
But the Web is well stocked with helpful articles (like this one) calling out the essentials, others (like this one) giving more detailed advice on how you should actually price your MSP services, and discussion forums (like this one) that share the experiences of companies that have already made the transition.
Otherwise the next thing that breaks could be your bottom line.