Report

MetricsAnnual MSP Benchmarking Study

THAT MATTER 2017

About the Survey .................................................................................................................................... 3

Executive Summary: Setting Sights on Growth ........................................................................ 4

Workforce Expansion in the Works ................................................................................................. 6

No End to Endpoint Increases ........................................................................................................... 8

Shifting Priorities, New Opportunities ........................................................................................... 9

Automation: The Key to Smart Growth ......................................................................................... 11

Manual Tasks Are Costly ...................................................................................................................... 12

Recurring Revenue Is Essential ........................................................................................................ 13

Success Metrics Are Shifting ............................................................................................................ 14

Outreach Improves Customer Satisfaction ................................................................................ 16

Conclusion .................................................................................................................................................. 17

Table of Contents

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About the Survey: A New Era of MSP

Decision Tree Labs conducted the Metrics That Matter survey in July 2017 on behalf of

Autotask Corporation. More than 1,030 MSPs from around the world responded.

Executive Management

Sales & Marketing

Service/ Help Desk

Project Management

Operations

Other

Professional Services

42%

7% 6% 9%

17% 12% 7%

Location Respondents by Role

North America

Europe, the Middle East and Africa

Asia-Pacific Region

61% 29%

10%

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In a world where cloud platforms and

applications, mobile devices and big

data are commonplace, and businesses

are increasingly integrating advanced

technology, such as wearable devices,

artificial intelligence and machine learning,

the information technology service providers

(MSPs) who keep those systems running are

more important than ever.

As the MSP market has matured, this

year’s numbers indicate that established

firms are winning more business, with both

project and ticket volume increases scaling

positively according to MSP size. Those

logging more than 26 projects or between

10,000 and 100,000 tickets per year saw

the greatest volume increases in those

respective categories.

Project Volume

Ticket Volume

Executive Summary: Setting Sights On Growth

Less than 5,000 tickets each year dropped by nearly 13%

5,000 to 10,000 tickets increased by 5%

10,000 to 100,000 increased by nearly 8%

26 to 50 projects a year increased by 7%

26+ projects a year increased by 10%

1 to 25 projects a year decreased by 9%

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MSPs are also reaching new revenue

heights, with more companies jumping

over the $2 million annual revenue mark.

This year, the more money you grossed,

the faster you were likely to grow.

As they grow, so does the need for better

people, processes and technologies

to maximize and manage that growth.

MSPs are using more remote monitoring

and management (RMM) systems to

help them identify issues with clients’

networks and platforms, and address

or escalate them immediately. Such

automated monitoring and deployment is

good for both the MSP and their clients,

because it streamlines processes, and

improves efficiency and effectiveness.

<$2 Million Annual Revenue

$2 to $5 Million Annual Revenue

$5 Million+ Annual Revenue

Reduced by 8% since 2016

Grown 3% since 2016

Grown 2% since 2016

Reduced by 27% since 2013

Grown 2% since 2013

Grown 5% since 2013

Revenue Growth Continues For MSPs

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Workforce Expansion in the Works

With continued expansion expected as dependency on technology continues to grow, MSPs

must invest in onboarding and training the best employees possible to compete and gain

market share in an increasingly demanding sector.

Three-quarters of respondents said they’re adding up to 10 people over the next year to

accommodate growing ticket and project volumes. While service desk staff dominate when

it comes to headcount increases, other functions are also seeing their share of expansion. Growth Point:

Many respondents are

also hiring engineers and

development personnel,

pointing to the need for

successful MSPs to develop

talent and create a deep

bench of skillsets and

expertise.

Service Desk Staff

Salespeople OperationsProject Staff Marketing

64% 40% 35%36% 20%

Where MSPs are Staffing up in 2017-2018

It’s not enough to have a great product or solve a particularly complicated business challenge, clients want to know that investing their money is going to deliver a strong return, and that the company they choose to partner with is going to help them maximize their investment. This starts right at the initial point of sale and means the employees that represent your brand need to be highly qualified to ensure your clients’ success.

Mark Banfield Senior Vice President & General Manager International at Autotask

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No End to Endpoint Increases

With laptops, tablets and smartphones integrated into most workplaces, MSPs are managing

more endpoints—and their focus on expanding service teams reflects that need. While the

percentage of MSPs managing more than 1,000 endpoints stayed flat year-over-year (39%), it

is still up nearly 5% from 2015, the first year the question was included in the survey.

But that doesn’t mean respondents aren’t seeing growth in this area. Half saw a steady

increase in the number of client endpoints year-over-year—and that momentum is

continuing. In fact, 63% of this year’s survey respondents said the total number of endpoints

they’re managing increased by up to 50%.

Key Insight:

As the Internet of Things

(IoT) brings more connected

devices into the workplace,

the number of endpoints

will continue to grow. The

2016 State of the Endpoint

report by the Ponemon

Institute found that 60% of

respondents had greater

difficulty in managing

endpoint risk in the 24

months preceding the

survey.1

Between 76% and 100%

More than 100%

Lost endpoints

Between 51% and 75%

Between 26% and 50%

Between 16% and 25%

Between 5% and 15%

Flat, or less than 5% 14%

35%

20%

8%

2%

2%

3%

1%

Endpoint Increases Year-Over-Year (2016 to 2017)

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Since the first Metrics That Matter survey was released in 2013, client priorities and critical investments have

matured and evolved. One area that clearly illustrates these changes is data security, which has grown from a top

revenue driver for a small minority of MSPs to a major business driver for MSPs.

Shifting Priorities, New Opportunities

6%

2013

63% 44%

How Security Service Revenue Has Grown

“IT strategy, process operations or security consulting” is a top revenue driver

Security accounts for 30% or less of revenue

Data security is the #1 priority for clients and new business driver

2015 2017

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The survey also revealed shifting priorities among MSP clients, which dictates how the MSPs

themselves expand their services. In just the past two years, MSPs have seen changes in

their clients’ most pressing concerns.

Even as priorities shift, key revenue drivers have remained consistent over the past two years.

Key Insight:

Even as areas such as

endpoint management and

business continuity remain

a key priority for many

businesses, clearly, they

are making investments in

various areas of security,

which are critical to

mitigate risk and keep their

businesses operating.

Disaster recovery and business continuity

Data security

Endpoint security

Information security

Backup and restore

Internet security

Always-on environments

Business continuity

Mobile connectivity

Endpoint management

Email security

51%

44%

70% vs. 71% 57% vs. 52% 29% vs. 26%

51%

36%

32%

30%

36%

31%

2016 Priorities

2017 Priorities

Top Security-Related Services Driving Revenue – 2016 Vs. 2017

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Growing business volume, revenue and headcount is good news for MSPs and bodes well for

the industry overall. To maintain that growth and continue to scale effectively, MSPs need to

find new ways to automate and streamline processes. Here, respondents give themselves

high marks in service and support, but need to improve in selling and invoicing.

Automation: The Key to Smart Growth

How would you rank your organization’s automated

delivery processes in the following areas?

Key Insight:

Nearly two-thirds of small

to midsize businesses

(SMBs) get paid late, and

invoicing delays add to the

time it takes to get their

money,2 according to a

2016 survey by Fundbox.

Such lag times have a

significant impact on how

your company can invest in

new hires, marketing—and

even payroll.

Automation of Key Processes

60%

40%

20%

0%

Selling Service Invoicing Support

Good Need to ImproveExcellent

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The survey also revealed that many MSPs are wasting up to 10 billable hours each week

on manual processes that can be easily automated, such as entering data into multiple

systems, scheduling and dispatching technicians, and capturing billable time. Such activities

eat into profitability through lost revenue, delays and increased potential for errors.

While hiring more people can help organizations keep pace with increasing demand to an

extent, automating service delivery and business management lets MSP leaders focus on

areas that will help them grow and become more profitable instead of getting bogged down

in rote, day-to-day tasks.

Manual Tasks are Costly

Key Insight:

The demands of meeting

client needs and managing

a growing business make

it difficult to prioritize

automation internally.

This is where vendors

can be invaluable

partners, integrating

and streamlining

communication between

cloud-based apps, and

making it simple to

integrate disparate tools

and automate processes

to help the MSP grow and

scale service delivery.

Data entry into multiple systems

Maintenance of on-premises software

Inability to optimally schedule and dispatch technicians

Inability to accurately capture billable time

Maintenance of on-premises hardware

Maintenance of disparate operational systems

69% vs. 73%

67% vs. 68%

68% vs. 70%

66% vs. 67%

67% vs. 68%

64% vs. 65%

Where MSPs Lost Up To 10 Billable Hours Per Week – 2016 vs. 2017

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Recurring Revenue is Essential

Demand for managed services and cloud-based services

Improved service desk processes, performance and automation efficiency

Improved service technician performance

48% 41% 37%

Sustainable growth requires both acquiring new clients and retaining current ones. Most respondents have

high renewal rates. When asked to attribute the reason for their rising renewal rates, this year’s respondents

pointed to improvements in service desk processes, performance and automation efficiency, as well as

improved service technician performance.

61% of respondents reported annual renewal rates of 90% or more.

Top Causes of Rising Renewal Rates

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Success Metrics are Shifting

MSPs use a few key metrics to gauge success. A year-over-year comparison of those

metrics points to a growing focus on customer satisfaction—it has become so important

it now tops the list of metrics that matter.

Key Insight:

As your own organization

grows, it’s a good idea to

track customer demands

and the shifting metrics

by which you measure

success. Doing so will help

you adapt your service

offerings and increase

customer satisfaction.

Customer satisfaction rating

Response time

Billable resource utilization Gross profits

45% vs. 52%

51% vs. 52%

55% vs. 51% 53% vs. 47%

Metrics That Matter – 2016 vs. 2017

Profitability by customer

48% vs. 44%

MSPs are uniquely positioned to help drive innovation and growth. When they have a 360-degree view of all the technologies implemented across the organization, they gain insight into the results being delivered and can clearly see the impact of those results on their operations.

That insight can greatly impact major business decisions.

Ultimately, MSPs that use a professional services automation solution can provide access to the core metrics and trends associated with the technologies that SMBs deploy.

Mark Cattini President and CEO at Autotask

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Outreach Improves Customer Satisfaction

MSPs are expanding the breadth of channels they use to reach and engage with clients to

improve satisfaction. In last year’s survey, customer surveys, Knowledgebase and

self-help portals topped the list of channels. This year, there has been a significant shift

in how MSPs engage with clients.

Although having an assortment of client service channels, including webinars and events, is

important, automation is essential in the customer satisfaction realm, too. Finding ways to

automate and streamline customer service response and modes of collecting feedback helps

ensure consistency and will also help improve internal efficiencies.

Key Insight:

Even growth-minded

MSPs are under-investing

in automated service

channels, such as live chat

(22% vs.15% in 2016) and

self-help portals (29% vs.

32% in 2016), that could

deliver critical competitive

advantages.

Social media Customer surveys

Knowledgebase

Knowledgebase

Customer surveys

Outbound communication

52% 49%

34%

Outbound communication

Social media

26%

41%

46%

49%

Top Channels Used To Improve Customer Satisfaction (2017)

Top Channels Used To Improve Customer Satisfaction (2016)

Self-help portals

32%34%

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Conclusion

The 2017 Metrics that Matter survey clearly shows that MSPs are in growth mode. But with growth comes growing

pains. Shifting customer demands, recruiting and training new employees, proliferation of endpoint concerns and

outdated manual processes are key challenges that MSP leaders must face.

As the sector and the businesses in it mature, forward-thinking MSP leaders must embrace the tools that will help

them scale their operations. Automation will be a key competitive advantage for many. Those who employ tools such as

RMM will eliminate inefficiency that hurts profitability, while optimizing technician time and capturing billable hours.

Increasing automation in areas like selling, customer service and invoicing, where MSPs give themselves low marks in

adoption of automated processes, can further improve new business development, customer retention and cash flow.

Business technology continues to evolve. IoT promises to be a game-changer in terms of connected devices in the

workplace, making MSPs even more in demand. Prepare to make the most of these opportunities by investing in the

talent and systems you need to meet increased demand and scale your business.

For more information on how client needs are changing and how MSPs can respond, visit the Autotask resource center

at www.autotask.com/resources.

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Share Report:

Sources1 Ponemon Institute, 2016 State of the Endpoint Report, April 2016.

2 Fundbox, “Fundbox Study Reveals Crippling Effects of Late or Unpaid Invoices,” March 16, 2017.