It’s All in the (Customer) Mix: Optimal Organizational Structure for MSPs
When did Customers become a 4-letter word?
Bill Gates might say your high maintenance Customers are your friends.
Sorry Bill, but I am not so sure.
It is probably because we have two different definitions of the word “maintenance.”
We now turn our focus to the Customer mix that impacts staffing decisions. The obvious one is the ratio of T&M to Managed Service Customer. But the more important one is seat size, followed by:
· Network Design
· Type of Business
· and even the Customer’s Culture
Relationship
We all know it is much easier to provide services to a Managed Service Customer than a non-Managed Service Customer, for the reasons listed in last week’s article. But the ratio of the two is what impacts staffing levels: the more Managed Service Customers an MSP has, the more Account Managers and Field/NE II techs are needed. The reason for this is the proactive nature of providing services. Depending on the seat size, true vCIO services may be needed or a CIO advisory role.
Seat Size
There is a very big difference between a small 5 to 15-person company than a 500 to 1000-person size one. Knowing your Seat Count Sweet spot and Seat range is important for many business reasons.
Recently we were working with an MSP, talking about their number of Customers, and something was not making sense. They had a high-ticket volume and # of Techs based on the number of Customers. Then we realized they had some very large Customers; they felt it was these large Customers that were overwhelming the Service Delivery Team.
So, we ran a Noise per Seat by Customer report and found the Largest Customer was by far the best partner. It was actually a few in the middle that caused most of the noise per seat and was overwhelming the Team.
Yes, the Large Company turned in the most tickets, but the MSP knew they would and staffed up to meet anticipated demand - which was not as much as anticipated. What was happening was - the middle size Customer was siphoning off their unfair share of the Support Team’s time, kind of like hogging the middle of the road.
Now your first reaction might be to say, “Great – tell me what the average Noise per Seat is so I can spot the better partner.”
Well- not so fast, it is not that easy.
I remember spotting one of those types of Customers and it turned out they all worked remotely (this was 11 Years before COVID-19) using Citrix (which was much less dependable back then) and had problems with profiles disappearing (or caused by a carbon disconnect between the monitor and chair – we never did find out).
Another MSP we know had this situation with a school system. They sat down with the Customer and said the relationship wasn’t working, and they would need to double the price or help them find another provider. The school system said great, double the contract, as a Managed Service Provider you get it done and that is what we need.
The bottom line is - it is the Noise per Seat that drives staffing decisions, as much as the # of Seats
Network Architecture
There is also a difference between pier to pier, cloud base, on-prem, and data center networks.
Note: I doubt there are any Small Business Server networks out there, but there may be just like I am sure there still are Win XP machines hanging around.
You would think that Network Architecture follows the Seat size of the Customer, but I was very surprised when a 150 Seat Customer moved to the cloud and after that a 500 Seat Customer, followed by the State of Maine.
While I am not a fan of the cloud (productivity stinks given the number of times we need to log in each day and the latency issues of the Cloud Services compared to on prem), it seems there is no limit to the size of a Cloud-Based Customer.
I know 5 years ago; the prevailing thought was that moving Customers to the cloud would kill project work. This has never happened. There are just as many project hours, but rather than saying VMware, we are saying Azure and AWS.
Type of Business
There was a day when thought leaders touted to stay within a vertical; that it is much more efficient and profitable. I am sure this is true…if you can pull it off. We know of one MSP in the NY financial district that stays in a financial vertical and is very profitable, but it is more because they are growing their business by 20% with no sales staff – just referrals. Whereas, here in the Northeast, where there is an acre of trees per person, large sales staffs (16% of the Employees plus another 8% in Sales Support staff) are the norm.
Managed Support for various types of businesses takes more staff, due to the inefficiency of getting up to speed with every diverse type of business. Also, there becomes a need for a broader skillset in-house to support the various differences in network devices and Core Business Applications.
Customer’s Culture
If the Customer views the MSP as a service, then it will be difficult to provide the level of service that is in the heart of an MSP. However, if the MSP can position itself as a Technology Partner, and even have a seat at the executive table, then life is good.
The difference impacts how they relate to you and your type of work – therefore staffing levels and MSP encounters. As a service, the engagements are more of a Managed Service Support nature and the need for more Level 1 staff is higher. However, as a partner, Project Engineers, Network Architects, vCIOs, etc. are necessary.
Other Customer Culture factors that impact staffing are how needy, or more importantly, how demanding, the Customer is. A Customer that gives you a 2-week notice that they hired someone (yes, they do exist – maybe rare but they do) has a more considerate/partnership culture then someone that calls you on the Monday morning the new Employee started.
I even had a Service Coordinator at one time tell me that we needed to respond quicker than the SLA required because, “the Owner was stepping on the neck of our liaison, demanding expedited service.” In this case we stepped up and met the liaison’s need, followed by an executive visit telling them to knock it off or find a better technology partner.
This brings us to the end of the 3 key components that go into planning a staffing strategy. Next week we will summarize the series by presenting specific staffing models. Stay Tuned.
How do we know this? Because we have 22+ years of MSP Service Delivery Coordinator/Manager experience on staff, and 17+ years Autotask System Administration experience. Which is another way of saying we have been there and done that, and we know how to leverage the Autotask software to Resolve Service Delivery Issues.