4 Smart cost optimization tactics for MSPs

 Monday 26 November, 2018

The general rule of business is to acquire more customers, increase revenue, and maximize profits. Realistically, that’s too good to be true. There will be times when your MSP won’t have a sufficient customer pool that can help you sail through the breakeven point.

Often, profits won’t be a result of incremental revenue but rather, smart cost optimization tactics. A systematic cost-cutting approach to achieve profits, while maintaining a healthy cash flow or as the C-Suite likes to call it — profitable growth.

Let’s dive in to know how your MSP can achieve profitable growth using these four cost optimization tactics.

1. Choose cloud (or not)

Cloud computing has a soft spot for the cash flow of smaller MSPs. Factors like no hardware maintenance cost, pay per use, ease of scaling, to name a few have led to cloud becoming a popular cost optimization tactic.

However, larger MSPs would find on-premise a better option in terms of value for money. The freedom to customize and total control over data are key reasons that have kept on-premise relevant among two-thirds of the enterprises.

The choice between cloud and on-premise depends on your needs. The one thing to keep in mind is no matter which one you side with, it should save you costs in the long run.

2. Push for proactive service

Proactive customer service equals higher savings. Addressing issues even before the customer contacts you lead to fewer tickets. You save on precious man-hours and other resources, allowing for a healthy cash flow.

Clearly, being proactive requires you to be on top of every issue at all times. This is where you need a reliable RMM.

Pulseway RMM Solution not only identifies issues in real-time but, lets you resolve them on-the-go. Dig deeper into the source of the issue to ensure it doesn't happen again.

Basically, Pulseway raises the bar for proactive customer service.

3. Adopt network automation

Deploying automation to your network infrastructure lets you stretch every dollar spent. When you don't have to put real man-hours for generic tasks, you're setting yourself up for better returns at minimum costs.

What's more, MSPs can roll back the costs incurred due to human errors. It's no surprise 79% of companies who adopted automation were able to efficiently repair network problems.

Network integrity with solid returns — a win-win situation

4. Invest in training

If you think training is expensive, try ignorance. Untrained staff with their poor quality of work can easily frustrate customers; a leading cause for approx. 67% of churns.

But, the worst bit is dealing with a huge employee turnover. Ambitious employees want to be up to date with the latest skills to face current-day challenges. A lack of training in the workplace pushes them to leave the organization for better opportunities.

To avoid such situations, try these cost-effective ideas:

  • Comprehensive onboarding
  • DIY user manuals
  • FAQs

Build a culture of cost optimization

Cost optimization cannot be treated as one-time cost cuts. It will have no impact on either profit or growth. Instead, deploy a strong cost optimization culture. The bottom-up approach includes cost ownership, greater accountability, and stronger adherence to financial discipline.

Conduct a periodic review cycle to have greater visibility on the cost optimization results. Instill a mindset of continuous improvement, empowering individuals to identify and implement tactics on their own.

The bottom line is cost optimization works best when everyone buys into it.

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