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Top 5 Operational Challenges for MSPs
(and how to solve them)

Read in 3 Minutes
May 1, 2023

In the world of business, operational challenges are an inescapable reality that every organization must confront. Here is a look at the top five operational challenges MSPs face today.

1. Change

Sometimes the only thing consistent in an MSP is change. This situation can frustrate all of us, but if we want to succeed, we must adapt with the current environment.

MSPs must be able to scale their services to meet their clients' needs as they grow. This step requires a flexible infrastructure to support growth

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without sacrificing service quality. MSPs must also be able to manage their growth and ensure they have the resources and capabilities to meet the needs of their expanding client base.

2. Profit margins

Another major operational challenge for many MSPs is ensuring good profit margins. Techs are often very interested in getting the latest tools, but they don’t take time to think about how the investment of tools can impact your profits.

When considering new tools, you need to use an evaluation process. Will it make or save you money (ideally both!)? Does it fit into your stack?

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Is it something your customers will buy? Can your staff support it? Do you have the correct infrastructure? Will your salespeople know how to sell it?

You must know your profit margins on everything you sell. For example, if you have multiple agreement types, you need to know the profit margin on each one. You should also know your actual profit for every customer and your profitability percentages. Who is your biggest customer, and what percentage of your revenue are they responsible for?

It may be the case that your biggest customer is the one with your lowest labor-loaded gross margin percentage. They may be your least profitable customer. This issue could mean, for example, that it is not worth letting them get away with demanding a lot more than other customers just because they pay you a lot of money.

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3. Shifting needs away from clients

If you work extra hard for your customers and treat them well, you'll probably assume they'll stick around forever. In order to maintain their business, set expectations carefully with clients at the beginning of the relationship.

Don't act like everything is perfect and there will be no problems if they sign with you. Let them know there will be bumps in the road, but you’ll do your best to stay ahead of them. They need to understand that things will change, and you and they will need to change along with them.

Not prepared to provide these services on your own but want to offer IT management services to your clients? We can assist! D&H can supplement your internal team with co-delivery options or manage service delivery on your behalf.

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4. The Great Resignation

The Great Resignation impacted many businesses, and MSPs are no exception. One big area where it shows is in hiring. These days, many people are only willing to work remotely, or maybe they can only work certain days a week remotely. This request can be a big problem as many MSP roles, such as Level 1 techs, cannot work remotely.

The IT talent shortage is a significant challenge for MSPs. It's difficult to find skilled IT professionals to fill technical roles, which can hinder growth and limit the services MSPs can offer. MSPs must develop effective recruitment and retention strategies to attract and retain top talent.

In addition, some MSPs are currently reviewing how much they must pay people when the costs of

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goods and services are at a peak point. It's difficult to make the right investments in employee retention and recruitment in the current economic climate.

According to a recent survey, executives and employees agree that outfitting remote workers with improved hardware and equipment is one of the most important requirements for boosting productivity. With more and more companies shifting to hybrid working arrangements, the need for adaptable solutions is growing.

5. IT security

Cybersecurity is a top priority for businesses of all sizes. MSPs must ensure that their client's networks and data are secure and protected from cyber threats.

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With the increasing sophistication of cyberattacks, MSPs must stay up to date with the latest security trends and technologies to protect their clients' systems.

As an MSP, remember that you could be a security risk for your customers, so consider who has access to which data and how you manage passwords. Make sure everyone has only the access they need to limit risks.

The security threat landscape is constantly evolving, and preventing disruption and data loss has never been more important, but there is no one-size-fits-all solution. D&H can provide you with data protection and security solutions to satisfy the specific requirements of your clients.

Operating an MSP, like any business, will always have its challenges, but being aware of them and planning how to tackle them can eliminate many of these worries.

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Now that you’re ready to optimize your operations, we can also advise how to layer in Infrastructure into your Managed Services practice. Don’t miss our upcoming webcast Adding Infrastructure To Your Managed Services Offering on Tuesday, June 20th. During this exclusive D&H partner event, you’ll hear from Nick Points, VP of Sales at CharTec, who will advise on how to inject some life into your static revenue!

Register Now

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