As the world moved online in 2020 and beyond as a result of the pandemic, managed service providers (MSPs) ramped up their investment in cloud technologies to meet unprecedented demand from businesses for improved virtual access to information and dedicated cloud hosting platforms.
But despite the progress that MSPs worldwide have made to enhance their competitive posture, many of them are struggling to successfully grow the infrastructure-as-a-service (IaaS) side of their business.
The main gaps that need to be filled are related to billing, contract profitability and strategic interoperability between interfaces to fully utilize data. Fortunately, these challenges can be overcome with the help of professional services automation (PSA) software.
Here’s how a modern PSA solution can help MSPs leverage IaaS more efficiently to scale in an increasingly competitive market:
#1) PSA software helps unravel the complexity of IaaS billing.
MSPs need to constantly come up with new IaaS billing models to address the many challenges that come their way and the ever-changing needs of businesses or risk losing profit and clients at the same time.
However, devising an efficient pricing model can be a complex process, and the time and effort required to produce an invoice can be significant.
One of the main challenges that go along with IaaS billing is that dynamic pricing models are not easy to scale. The reason is tailoring pricing plans to different local markets based on various parameters requires incessant manual intervention, which makes the process time-consuming, complicated and error-prone.
Generating accurate invoices is also a complex endeavor as it is not always easy for MSPs to understand what services were consumed, in what amount and by which customer.
Applying relevant charges and managing invoicing could prove a nightmare without having an automated mechanism in place to efficiently calculate product or service usage, especially when invoicing for different product and service combinations and when there are various billing increments on the same invoice—for example, pay-per-use, one-time costs and monthly fees. This means tracking revenue per contract becomes problematic as well, opening the door for revenue and margin leakage.
Another difficulty lies in the fact that cloud packages often include both subscription and consumption products across multiple vendors, making it a formidable task to successfully piece disparate billing models together. So it is vital that MSPs employ a PSA tool to streamline billing systems.
Strong, comprehensive PSA solutions help MSPs untangle tricky pricing constructs and manage complex billing models in an effective manner as they are equipped with a wide range of features and functions. Those include built-in time tracking, automatic ticket open and closure actions to drive incident-based billing, and customizable software integrations to help smart tag tickets, orders, invoices and statements. A modern PSA solution works with an MSP’s existing billing and accounting solutions rather than a time-consuming and costly replacement.
#2) Centralize PSA software offers a clear look into contract profitability.
MSPs that offer IaaS solutions to their clients remotely can fall into the trap of over-servicing them without properly billing them or having a clear line of sight into profitability.
As in all managed service businesses, it’s crucial for an MSP to understand the amount of time and energy put into a contract because productivity and efficiency suffer when a team becomes overworked. Poorly managed contracts alone can cost a service provider business 9%, if not more, of annual income.
A powerful PSA tool can help MSPs get a clearer view of their contract profitability by providing a time-tracking tool that most accurately calculates the time MSP employees spend addressing issues and resolving tickets for clients and comparing that with financial data on how the client is billed.
#3) PSA software helps increase efficiency by centralizing data and operations.
MSPs often have disparate systems to manage IaaS and other cloud-based solutions such as software-as-a-service (SaaS) and platform-as-a-service (PaaS) for multiple clients.
To manage IaaS services in particular, MSPs often rely on a multitude of separate systems such as remote monitoring and management (RMM), customer resources management (CRM), ticketing and service desk, and accounting solutions.
The issue with this practice is that it makes business processes and operations cumbersome and leaves MSPs vulnerable to loss of data, which, in the cloud, often occurs through accidental deletion, user mistakes, and overwriting data.
What’s more, if MSPs fail to take data protection seriously, they will risk incurring damage to their reputation and paying hefty fines as there are regulatory laws that mandate “recoverability” of data. Having distinct systems in a state of disharmony can increase this risk.
Not having a centralized system can also lead to data breaches, which matter more than ever now that cloud cybersecurity incidents have surpassed on-premises ones for the first time in digital history.
Furthermore, disjointed systems create a barrier to data access, data extraction, data analysis, and data interpretation, which is a major pain point for employees at MSPs.
An efficient PSA tool streamlines all processes and operations and gives an MSP insight into the health of their business. It essentially collates the data from disparate systems into a single-pane-of-glass view to enable MSPs to understand everything from performance metrics such as revenue, cost, utilization, and profit margins to service-level agreements (SLAs), billing schedules, ticketing, and contract profitability—saving time and energy while providing important data to help business leaders make better decisions.
Overcoming IaaS growth challenges with a modern PSA solution
The global IaaS market grew 40.7% in 2020 to reach $64.3 billion, up from $45.7 billion in 2019. To capture a larger share of this fast-expanding market, MSPs need to overcome the obstacles that hinder the growth of the IaaS side of their business.
An efficient PSA solution such as CloudBlue PSA can help MSPs develop accurate yet flexible billing, keep close tabs on contract profitability and ensure strategic interoperability between systems to utilize data in the best way possible.
By helping MSPs advance their capabilities in these areas and more, CloudBlue PSA enables MSPs to modernize their business so they can more easily grow their IaaS practice.
One solution that can fit the needs of MSPs of all sizes is CloudBlue PSA. Find out more about how CloudBlue PSA can help you grow your MSP business and contact us at PSA@CloudBlue.com with any questions.
About the Author: Max Feneck is the Head of Global Alliances at CloudBlue PSA. He has spent the past 25 years working in the Cloud, Data Centre, and Managed Services arena. Max has worked for many prominent names in the industry and in the last decade has worked with many leading technology providers to deliver joint solutions that solve business problems for enterprise customers. Max has been accountable for over a billion dollars of revenue during this time. He is now looking to help solve the problems faced by Managed Service Providers through the use of better software and automation, helping those companies be more successful. Follow Max Feneck on Twitter, LinkedIn or Website