IT and Business Insights for SMB Solution Providers

Automation Can Help MSPs Improve Valuation and Profit Margin

Automation of repetitive and mundane tasks allows MSPs to free up employees to focus on more profitable aspects of the business, improving their firm’s overall value. By Shawn Sailer

COSTS ARE INCREASING everywhere for businesses, and managed service providers (MSPs) feel the pinch too. While MSPs have sought to reduce unnecessary costs, streamline operations, and increase profit margins, they have another lever they can pull to improve valuation: acting on insights hidden deep within an organization’s data to automate processes.

Automating discovery and documentation while actively monitoring IT systems empowers MSPs to audit their customers to understand growth opportunities, proactively identify changes to stay ahead, and free up employees’ time to focus on more profitable aspects of the business, thus improving their company’s overall value.

MSP buyers are primarily interested in a company’s value and customer base. A valuation is heavily focused on recurring revenue, not professional services or project work. That’s because professional services and project work can go away overnight, but recurring revenue attracts potential investors who want a healthy cash flow.

There are two ways for MSPs to increase their profitability: increase revenue through sales or become more operationally efficient by harnessing the data at their fingertips.

This is not a binary choice; successful MSPs do both.

Automation Is the Answer

To be operationally efficient, MSPs can’t operate with humans alone. People call in sick, have personal problems, and take vacations—all regular occurrences companies accept and work around.

Automation, in contrast, doesn’t need time off or long weekends. It alleviates the need to hire additional employees for recurring tasks and empowers team members to accomplish even more.

MSPs often spend an inordinate amount of time focusing on the seemingly endless list of mundane chores, such as updating documentation. What can feel like just a few minutes every day adds up quickly across all resources. As systems grow in complexity and volume, it is increasingly difficult for team members to manually check systems, verify the security state, or confirm which upgrades are urgent.

MSPs trying to complete these tasks with humans are effectively running on a hamster wheel, because these systems are continually evolving—someone is always making a change, whether it’s on their team, at the customer level, or a third party.

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