How MSPs Can Use Performance Monitoring to Create New Revenue Streams
Today’s Managed Service Providers (MSPs) face the common challenge of needing to grow revenue and reduce costs. But, unlike other environments where IT represents a business expense, MSPs make money by delivering managed IT services. This gives them a unique set of IT challenges and opportunities – including the chance to create additional revenue.
Currently, most MSPs focus primarily on fault management. However, this paper will explain how MSPs can use performance monitoring to differentiate their offerings and beat out the competition. It will cover the components of a tiered service offering approach that accommodates a variety of target customers, from those who need a basic service to those looking to address new technology trends.
Customers who select MSPs to provide services typically fall into two categories:
These customers lack the internal IT resources or skills to effectively manage and monitor their infrastructure and decide they want to turn it over to the “experts.” Their buying criteria centers around price and ability to offload IT risk to the MSP.
This group needs a more advanced solution and wants to find outside expertise to address a challenge they’re not equipped to deal with internally. They realize their competitive advantage stems from focusing on key assets like people, process and innovation. They typically do not believe IT management represents a way for them to dominate their market segment. Their buying criteria include things like capacity planning services, traffic analysis, response time measurements and customized solutions. They also require proactive alerting, advance reporting, self-service reporting and support for new technologies.
Clearly, these two groups approach their MSP relationships from different perspectives. One wants to offload a non-core function of their IT department. The other wants an expert to address challenges that have pushed their IT organization beyond their skill set.
So, how do MSPs address both markets? The answer lies in tiered service offerings that meet the needs of both groups of customers. The chart below provides sample tiers, along with the benefits for each new level of service
Level of Service
All Silver tier services, plus:
All Silver and Gold tier services, plus:
Growing Revenue with a Competitive Service Catalogue
To grow revenue MSPs can win new customers or add on services to existing customers. To win new customers they need a cost-effective basic services offering and a solution for customers looking for more complex and customized offerings.
While most MSPs understand how to win new bids, very few understand how to tier services to lead customers on the path to a more complete utilization of their services. Below are four core components of any Managed Service offering – Reporting, Alerting, Server Monitoring and Network Device Monitoring – along with the different offerings for each level. This illustrates how attracting customers with a lower-level (silver) offering can lead to additional revenue from more advanced levels.
- Silver Level - Static dashboards show historical performance data. Historical report may include 7-30 days of data.
- Gold Level - Real-time dashboards that update every minute, provide granular data, and high levels of reporting that reduce customer visibility gaps. Historical reports include 6 months of as-polled data.
- Platinum Level - Includes the ability for customers to build their own views, manipulate report templates, save favorite dashboards, and create customized views. Historical reports include up to 12 months of as-polled data.
By exposing customers to these additional reports on their portal, MSPs can drive market demand for additional services that are not included in their basic service plan.
Popular reports to include:
- Overview reports for networks, servers and VMs
- WAN utilization, including NetFlow for traffic analysis
- Protocols in use over the WAN
- Red/Green availability reports
- Application response time reports
- Site-to-site response time using IPSLA tests
- Silver Level - Basic notification of performance events within 30-60 minutes of occurrence.
- Gold Level - Notification within 15 minutes of a performance event.
- Platinum Level - Notification using threshold-based alerts before a performance event occurs.
Server and Host Monitoring
- Silver Level - Includes SNMP support, basic up/down monitoring, CPU utilization reports, ICMP support.
- Gold Level - Includes process monitoring, DNS monitoring, HTTP response monitoring and capacity reports for understanding future utilization levels.
- Platinum Level - Includes virtual machine discovery with API connection to vCenter, JMX monitoring for Java hosts and WMI support for Windows hosts.
Network and Data Center Devices Monitoring
- Silver Level - Includes availability reports, SNMP support, 2-4 KPIs per device. Simple UP/Down, ICMP support.
- Gold Level - Includes automatic baselining and NetFlow supported for traffic analysis
- Platinum Level - Includes unlimited KPIs per device and IPSLA support for response time.
Additional Ways to Grow Revenue
MSPs can attract buyers looking to address their toughest and most complex IT challenges by offering the following services:
Custom reports based on customer-supplied parameters provide a step up from the canned usage reports in the Silver level. For example, maybe the manager of a network operations center wants to see data on a few specific elements, while an executive wants data that reflects a specific time period. Whatever the situation, with a performance management tool that makes it easy to set report parameters, MSPs can offer custom reporting services to clients.
NetFlow reports reveal users and applications that hog bandwidth.
Advanced Traffic Monitoring
Advanced Traffic Monitoring Performance monitoring solutions provide information on the makeup of traffic traversing critical network links with no need for probes. Using technologies like NetFlow, they help clients understand how applications are using the network, and enable them to locate and manage bandwidth hogs. Other performance data collection technologies – including IPFIX, sFlow, NetStream, Juniper J-Flow and Cisco Flexible NetFlow – add to the mix. Extending these capabilities to customers gives them valuable information about their users and applications, peak usage periods, traffic patterns and more.
Cloud-based Application and Resource Monitoring
It’s not unusual for today’s MSPs to manage an infrastructure owned by a cloud services provider like Amazon Web Services or Microsoft Azure. If a performance monitoring solution has plug-ins for such providers, it can import data from them and include it in all its dashboards and reporting. This gives customers complete visibility into their compute and storage environment from a single platform.
Capacity Planning for Resource Utilization Planning
Any performance monitoring platforms that can baseline historical performance should also provide a view of what to expect in the future. Numeric and graphic capacity projections can show customers where KPIs will be in the future. This data helps avoid bottlenecks by allowing sufficient time to provision more bandwidth or deploy more virtual hosts to address utilization needs.
Capacity Reports forecast expected resource utilization and exhaustion.
Capacity Planning Data Export
Performance monitoring solutions collect all sorts of data that’s valuable for capacity planning. This presents an opportunity for MSPs to enable the export of such data, so customers can import it into their enterprise resource planning (ERP) systems or other analytic engines. Enabling clients to budget and plan how much capacity they need will not only make them happier, but may lead to additional business as well.
Rapid SNMP Certifications
Networks constantly change and clients often ask their MSP to support new devices, including routers, switches, load balancers, DNS servers, etc. However, in order to effectively monitor any device, the MSP must certify the Management Information Base (MIB) for SNMP monitoring. A good performance monitoring platform vendor will provide rapid device certification along with an object editor that allows the MSP to import definitions for new MIBs and perform their own MIB management. This enables MSPs to then provide MIB certification as a professional service to clients.
Monitoring for Critical Services
Customers sometimes want to monitor critical applications or services as a whole, meaning they want to monitor all the components that play a role in delivering the service. MSPs can put together custom monitoring services that deliver just that. Perhaps it’s the service that delivers the most revenue for a company, or maybe it’s an application that employees and/or customers can’t be without. Either way, with a customized service, MSP customers can see at a glance if there’s an issue and take steps to correct it.
Status Maps provide a simple red, yellow, or green indicator of device and service health at a particular geographic or data center location.
Color-coded status maps enable administrators and operations teams to instantly see the status of networked devices and services. Some performance management solutions also enable users to click on the maps to get reports on devices, WAN links and other elements. These capabilities represent a premium service that customers find valuable – and are willing to pay for.
Portal and Platform Integrations
Giving clients access to portals through which they can manage their own network services is another valuable offering. These portals may offer integrated dashboards and reporting capabilities. MSPs can also enable customers to integrate the portal with other, premisesbased management platforms. This helps the MSP become even more entrenched with its customers. The key is to select a performance management platform that supports this level of access and integration.
Another opportunity comes when MSPs offer to offload all infrastructure monitoring and management by providing a dedicated engineer to handle the chores for customers. The engineer can monitor, analyze and interpret all performance data, and recommend corrective actions or opportunities for infrastructure optimization.
All MSPs share common goals of efficiently delivering their services and driving cost out of their operations. Additionally, all MSPs want to enable new revenue from upsell opportunities within existing accounts and by offering new services to win new customers.
By tiering services MSPs can win customers at both ends of the market. If they address customers’ basic needs, they can then upsell them to more advanced services and grow revenue without increasing expenses. However, to do so, they need a performance monitoring platform that has a wide range of capabilities, reduces administrative work and allows for rapid expansion.
With many MSPs providing commoditized offerings focused on fault management, there exists a great opportunity to attract customers by showing that performance monitoring can provide significantly greater value than that found in reactive services.