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N-able‟s MSP Maturity Model Advancing your Managed Service Provider Business with N-able
N-able’s MSP Maturity Model
Table of Contents Overview ......................................................................................................... 3 N-able‟s MSP Maturity Model..................................................................... 3 N-able MSP Maturity Model Levels ................................................................ 4 Level 0: Chaotic ......................................................................................... 4 Problems with the Chaotic Service Provider Model ............................... 5 Chaotic Customers ................................................................................ 5 Problems with Chaotic Customers ........................................................ 6 Level 1: Reactive ....................................................................................... 6 TU
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Problems with the Reactive Service Provider Model ............................ 7 TU
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Reactive Customers ............................................................................. 7 UT
Problems with Reactive Customers...................................................... 8 TU
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Level 2: Proactive....................................................................................... 8 Problems with the Proactive Service Provider ....................................... 9 Proactive Customers ............................................................................. 9 Level 3: Service........................................................................................ 10 Problems with the Service Model ........................................................ 10 Service Customers .............................................................................. 11 Level 4: Value .......................................................................................... 11 A Commitment to Evolving your Business .................................................... 12 The Solution Overview ............................................................................. 12 MSP Program Descriptions ...................................................................... 13 Summary ...................................................................................................... 15
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N-able’s MSP Maturity Model
Overview A business‟ success delivering managed services depends on its ability to improve the delivery of effective and efficient services to its customer base. N-able‟s tools, N-central® and N-vision™, certainly support the evolution of the business and service delivery model, but they are neither the initiator nor the facilitator of such change. This type of business evolution requires a complete curriculum of education, tools and program materials. The purpose of this whitepaper is to define the N-able MSP Maturity Model and provide the concept of the next generation of N-able‟s Velocity System™ for MSP and N-able University™. A successful migration through the N-able MSP Maturity Model will strengthen the managed service providers (MSPs) business practice in the following ways:
Provide more consistent, higher quality services
Allocate work more efficiently, thus gaining a higher technician utilization time rate
Offer higher value, higher margin services that are not commoditized in the same way „time‟ is
Attract larger, more sophisticated customers, and
Create relationships that would be difficult for another service provider to penetrate
The goal of the N-able MSP Maturity Model is ultimately to help MSPs develop a higher-value business by improving their ability to attract and retain high-quality customers and provide IT services in the most effective manner possible. The N-able MSP Maturity Model is based upon industry best practices, the Gartner, Inc. Maturity Model and observed behavior from N-able‟s own global partner base – a substantial group of managed service providers.
N-able’s MSP Maturity Model The N-able model for IT management process maturity clearly defines five levels of maturity for IT service providers: 1.
Chaotic
2.
Reactive
3.
Proactive
4.
Service
5.
Value
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N-able’s MSP Maturity Model
Figure 1 N-able‟s MSP Maturity Model
N-able MSP Maturity Model Levels Level 0: Chaotic The Chaotic level of the maturity model is the initial stage of process development. Organizations that don‟t have process maturity are in the Chaotic stage. Symptoms of a Chaotic service provider include:
Ad-hoc service processes: In the absence of a process, each technician will develop their own processes without consistency or reliability.
No process documentation: No effort to document a standard set of processes that every technician can refer to in their own service delivery.
Unpredictable service delivery: As each technician has their own process, good technicians will be able to provide high levels of service and poor or junior technicians will not. Demand for these high providers will increase and ultimately key individuals who are prized by the customer base will be over-utilized while other won‟t be used nearly enough.
Lack of service desk optimization: No effort is made to create a centralized service desk or use junior resources for mundane and often repetitive processes to free up senior resources for problem management and project-based business.
Little or no use of supporting tools: Chaotic service providers generally haven‟t invested in monitoring solutions, help desk solutions or other resources designed to improve their business processes.
User calls to notify problems: The customer (or worse, the customer‟s customer) detects the failure and the service provider does not act until the customer indicates a problem. This provides low value to the end user as business operations may be impacted for a considerable amount of time before the problem is fixed.
No Service Delivery Promises: Chaotic service providers will not place any type of promise around the service delivery level.
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N-able’s MSP Maturity Model
Reactive service: 100% of billable technical resource time is dedicated to reactively correcting failures discovered by the customer.
Problems with the Chaotic Service Provider Model The Chaotic service provider has the least amount of process maturity. This environment is problematic at best and presents a number of business issues that will seriously impede an organization‟s ability to grow, evolve and ultimately, even exist.
Chaotic service providers are restricted in their ability to attract and retain anything other than a Chaotic customer. Higher margin customers are looking for a level of service that the Chaotic service provider can‟t provide.
Chaotic customers are costly to manage and are the worst investment for a service provider.
Competitive service providers who have achieved a higher level of process maturity are attractive alternatives for the Chaotic customer (or higher level customers) looking to achieve a higher level of service and can‟t retain those services from their existing service provider.
Chaotic service providers tend to achieve the lowest technical utilization rate as all of their time is spent reactively dealing with network issues – an impossible activity to predict or schedule.
Chaotic service providers will not be able to charge premium billing rates, as they are not providing a premium service. In fact, lower cost tends to be the primary differentiator for a Chaotic service provider.
Chaotic Customers Chaotic customers are organizations that place the least value on IT as a business enabler. Generally small, technologically unsophisticated organizations, these companies can operate effectively for extended periods even if their IT infrastructure is not available. Chaotic customers are defined by the following criteria:
Unstable Infrastructure: The Chaotic customer‟s existing IT infrastructure can be highly unstable – usually due to neglect.
Unconvinced of the value of maintenance: Many of the IT instabilities found in a Chaotic customer are avoidable through proper maintenance. The Chaotic customer generally doesn‟t believe the cost of preventative maintenance is justifiable.
Unrealistic expectations: Chaotic customers will expect high levels of support and stability without the associated cost of that level of service delivery.
Low value placed on IT: Usually due to a minimal reliance on IT, the Chaotic customer does not see a high value in open maintenance and management of IT.
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N-able’s MSP Maturity Model Problems with Chaotic Customers The fundamental problem with Chaotic clients is that they are low margin customers. The instability of their infrastructure combined with their unreasonable expectations create an environment where tremendous energy is spent and still the customer is not satisfied with the results. Chaotic customers are generally unhappy with the service levels or costs (or both) of IT and are searching for a better, cheaper alternative. Chaotic customers can be educated on the value of IT to their overall business objectives and the need for appropriate investments in those support mechanisms; but not by a Chaotic service provider. By learning about business objectives and investments, the Chaotic customer (almost by definition) can be elevated to a more mature customer level. The goal of the service provider with Chaotic customers is to either help them mature to a higher-level customer or to end their contract1, although many service providers opt to keep their Chaotic customers but charge a premium. Of course, only MSPs that have themselves achieved a higher level of IT process maturity are in a position to improve their install base by eliminating lower-end customers.
Level 1: Reactive As organizations begin to develop practices and processes, they gradually ascend to the higher levels of the MSP Maturity Model ladder. The Reactive service provider is in the first level of process improvement. Organizations in the Reactive level exhibit the following features:
Best Effort Support: Reactive service providers try to understand their customer‟s service requirements and do their best to deliver on them, however they will not provide guarantees, service level agreements or even service level objectives.
Firefighters: Reactive service providers tend to be very good at dealing with crises.
Problem Management Process: Reactive service providers will generally have a documented problem management process, however this process may be in an initial stage whereby it has not been reviewed and updated as per best practice process management.
Inventory: Reactive service providers will maintain an inventory of devices and services to be managed – often in the form of an onsite checklist.
Alert/Event/Incident Management Process: Reactive service providers will have a process for dealing with incidents and alerts.
1 As service providers mature, the goal is to increase the average level of maturity of their customer base – thus improving the overall margin associated with the business. Ultimately there are only two ways of accomplishing this; add more customers with an above-average level of maturity or eliminate customers with a below average level of maturity.
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N-able’s MSP Maturity Model
Up/Down Monitoring: Reactive service providers are likely to use an availability monitoring solution to automatically notify service failures.
100% of billable technical resource time is dedicated to reactively correcting failures discovered by an up/down monitoring tool or the customer.
The Reactive service provider is the most common type of managed service provider serving the small- and medium-sized business. These organizations use products like N-central for reactively notifying them when a service has failed. Reactive service providers are capable of attracting and managing both Chaotic and Reactive customers. In addition, it is possible for a Reactive service provider to elevate a Chaotic customer to a Reactive level at an educational cost that is quickly recovered by decreasing the cost to support.
Problems with the Reactive Service Provider Model The Reactive service provider has historically been a stable business platform, which is why so many N-able partners exist at this level. There are several problems with this model though:
New competition / Higher Expectations: As competition increases between the ever-increasing number of service providers, so too does the need to provide greater differentiation. More service providers will look to provide greater levels of service – levels of service that can only be achieved through a higher maturity level, thus diminishing the perceived safety of the Reactive model.
False Sense of Accomplishment: Many organizations think they have achieved a management service provider status simply because they are providing reactive services combined with up/down monitoring. Since they believe they have reached managed services, they don‟t look to grow.
Moderate Technician Utilization: The Reactive service model is based entirely upon correcting failures. The nature of this service is such that technician time can‟t be scheduled and becomes a cause of technician inefficiency
Limited Growth Potential: Reactive service providers are limited only to customers that are looking for the types of service that a Reactive service provider is capable of providing. Generally, this will limit the ability to attract and retain larger and/or more sophisticated organizations.
Reactive Customers Reactive customers constitute the largest group of users in the sub 100-seat market – which is one of the reasons why the Reactive service provider model still works in the SMB market. Reactive customers are characterized by the following:
They have an appreciation for the cost of IT failures on their business – especially when IT fails.
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N-able’s MSP Maturity Model
They are value-minded, always balancing costs vs. benefits.
Not only do they want to pay for a certain level of IT service, they require assurance that the service provider is delivering the best possible services.
Relatively loyal to their service provider (assuming the appropriate value/cost/effort criteria is met).
As technology dependence increases, they can be migrated to a higher level of maturity if the value of IT is evident.
The customer infrastructure is „reactive‟ – meaning that most of the infrastructure can be monitored.
Problems with Reactive Customers While Reactive customers themselves may or may not be problematic (it‟s not inherent in the level), there are some problems with the Reactive customer category:
As new technologies emerge or as their own businesses grow, Reactive customers are likely to advance to a higher level of customer. While Reactive customers are loyal as a group, if their service provider is clearly not achieving on expectations, they will seek alternate service provisioning.
New competition within the service provider market is creating new service alternatives for this market group – in effect educating the entire group out of existence.
Reactive customers are still very prone to business impacts resulting from IT failures.
Ultimately the Reactive customer group will become absorbed into the Proactive customer class as more sophisticated service options that deal with the customer‟s primary concern become available and more commoditized.
Level 2: Proactive The Proactive service provider level differs significantly from less mature levels in that the service provider not only attempts to reduce the impact of an IT failure, but also attempts to minimize the occurrence of failure within the customer infrastructure. This has the benefit of improving the customer‟s experience and of dramatically improving the technician utilization rate for the service provider. Organizations in the proactive phase can be defined as:
Using a monitoring solution to capture up /down information as well as performance and capacity utilization information.
Working with the customer to define and set thresholds (preferably automated within the monitoring solution) to initiate incident avoidance scenarios.
Analyzing available information to predict and minimize threat of failure.
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N-able’s MSP Maturity Model
Using remote access and automation to improve management capabilities.
Using mature asset and change control processes to minimize the impact of unplanned and untested change on the stability of the infrastructure.
Employing a service contract.
Using service level objectives to set targets on availability, response and incident resolution.
50% - 70% of billable technical resource time dedicated to reactively correcting failure discovered by a monitoring tool or the customer. The remainder of billable time is spent on maintenance activities with the goal of incident avoidance.
Problems with the Proactive Service Provider The Proactive service provider tends to incorporate business models introduced 20 years ago. The basis of these programs is still centered on time as a product that is sold. The problems with this model are:
Time is a commoditized product that can be purchased from any number of vendors. The nature of a pure product sale makes the relationship (vendor – customer) relatively low value from the customer‟s perspective. Other vendors can easily undercut the service providers pricing and since the customer perceives the value of the „product‟ to be the same, they may be willing to choose the cheaper alternative.
The level lacks scalability: Increasing the amount of revenue generated involves increasing the amount of hours available to sell, thereby increasing the number of resources able to provide the time.
Time isn’t the product customers want: The sale of technical time is once removed from the business objective; the customer is looking for better IT support for their business goals, the service provider must illustrate why their product (time) is a suitable solution for the customer‟s objectives.
Proactive Customers Proactive customers constitute a relatively high-value and attainable customer base for service providers in the SMB space (mostly in the higher end). Key attributes of a proactive customer include:
Have one or more critical business processes that are fundamentally supported by technology. As a result of this dependency, these organizations are intrinsically impacted when the technology infrastructure fails.
These customers have already recognized the value in dealing with a more mature service organization, in terms of service level targets, reports on the actual service levels, better overall stability etc.
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N-able’s MSP Maturity Model
Preventative maintenance is highly regarded as a way to improve availability through incident avoidance.
These customers are still buying the notion of time as a product and want to make sure that they are getting as much for their dollar as possible.
The customer infrastructure is rated as a Proactive level.
Level 3: Service The Service level service provider takes a fundamentally different approach to the delivery of IT services from all of the less evolved levels. The Service model is the first level in the hierarchy that doesn‟t approach the value of IT service as a function of the amount of time it takes to deliver the service; rather, the Service level views the worth of the IT service based on value the IT service presents to the customer organization. This approach is more inline with how utility companies (water, electricity, etc.) approach service delivery. The amount of time the technicians from electric company actually spend to deliver electricity is irrelevant to the consumer since it has no visible impact on the cost per kilowatt-hour. „Service‟ service providers can be identified as:
Providing service guarantees in the form of a service level agreement (SLA) to the customer.
Setting and achieving quality goals, both internally and externally (within the SLA).
Understanding customer availability and capacity requirements.
Truly understanding the cost of service delivery and abstracting those costs away from the user into a relatively flat contract-based service charge that is developed based on the customers service usage needs.
Monitoring and reporting service availability.
Problems with the Service Model The problems with the Service model can be broken into two categories; the problems service providers have in achieving the Service model level of maturity and the problems with the Service model itself. The problems service providers have in achieving the Service model level of maturity stem from the evolutionary nature of the SMB service provider market. These organizations have spent the last five to 15 years selling time as a product. While understanding the need to move to a higher-value model, the concept of not directly billing for technician time is incredibly foreign to them. The problem with the Service model itself is that it still deals with IT at a component level. The typical SMB customer is not technically savvy so the purpose of routers, switches and servers may not be readily apparent (never mind the service level requirements for each).
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N-able’s MSP Maturity Model Service Customers The Service-based customer does not perceive the value of IT in terms of the amount of time it takes to deliver them, but rather in terms of the business value that IT presents. The Service-based customer is more interested in availability, capacity, regulatory compliance and performance. Service-based customers are defined as:
Customers that require a guarantee of service in terms of a SLA.
More interested in service levels combined with a predictable cost structure than understanding the effort required to deliver the service.
Customers whose business processes require foundations in IT.
Customers that place a high value on predictability of IT spending.
Customers who have invested in their IT infrastructure – understanding the relationship between IT investment and IT supportability
Customers that are affected by privacy and/or security legislation.
Level 4: Value The Value level service provider is the logical evolution from the Service level. While the Service provider manages IT based on the value of the IT components, as documented in the SLA, the Value provider manages IT based on the business process that it supports – regardless of the infrastructure that requires the service. As with the Service approach to IT management, Value-based service providers generally abstract the amount of time required to provide a service in favor of a flat-fee based on the value of the business service. Value-based service providers can be identified as:
Understanding all of the business objectives of the customer organization.
Managing IT at a business service level.
Completely understanding how elements of the IT infrastructure combine to create business services, as well as an understanding of the relative priorities of each of those business services.
Reporting to multiple stakeholders, at multiple levels, tactically, operationally and strategically.
Being a strategic partner to an organization by providing „Virtual CIO‟ functions in terms of providing technology planning and forecasting services.
This is the “holy grail” of the IT service provider model for both the service provider and the customer.
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N-able’s MSP Maturity Model
A Commitment to Evolving your Business So far, this document has described service provider levels as classified by the N-able MSP Maturity Model. The problem is that moving to a high level of service delivery requires a company commitment from the top down. This migration is not without cost – there is time, training, tools and resources to consider. An MSP that has made a conscious decision to migrate toward the Value level must understand that this is a process, not a project. Organizations can‟t go from Chaotic to Value directly, but must evolve through all of the maturity levels. The following section of this document describes the resources that N-able has created to help organizations progress through the evolutionary process. In addition, this document will describe the roadmap that N-able has put into place to develop the N-able University training program and materials to better service our MSP partners.
The Solution Overview N-able‟s MSP Maturity Model ushers in a complete revamp of the existing programs designed to support the MSP business; specifically the Velocity System for MSP and N-able University. Service organizations must grow through each level in the program – and the materials supplied to them must correspond to their current level of maturity - i.e.: A Reactive level partner should access training and marketing materials designed for a Reactive partner, not a Value-based. With this in mind, N-able has developed an online assessment (see figure 2), coupled with multiple levels of training materials and program content, each focused on providing targeted support and growth opportunities for the partner at that level. Not only has N-able created a granular targeted approach to training as per the MSP Maturity Model, but has also broken down the assessment and training by major topic:
Business Readiness
Tools Leverage
Service Support & Delivery Process
Policy & Documentation
Therefore, a partner may complete the assessment and determine that they are at a Chaotic level with respect to business and at a Proactive level with respect to service delivery. A personalized training program (as well as sales and marketing materials) is provided to help them grow their organization in a way that will best suit their needs, and help them be as successful as possible.
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N-able’s MSP Maturity Model
Figure 2 N-able‟s Online MSP Maturity Assessment
N-able has also recognized that in addition to benchmarking the level of maturity of the service organization, these same maturity levels must apply to the end user organization as well. Assessment of the user level is defined by different criteria, such as IT complexity, business needs and goals/objectives. The interesting parallel is that just as service providers must grow through the maturity levels, so too must their customers. In addition, it is critical to note that service organizations of a certain maturity level are unlikely to attract or retain customers of a higher maturity level.
MSP Program Descriptions The updated programs are based on the concept that service providers at different levels must be provided with the training, collateral and support that is consistent with their current maturity level. Key elements to this strategy include:
Targeted Training: The existing N-able University training content is aligned with the MSP Maturity Model. This way, organizations that are attempting to move from Chaotic to Reactive (as an example) are not encumbered by content that is not relevant to their level of development.
Incremental Training: Much of the N-able University training will be broken into several course levels whereby more attention can be applied to areas that are critical to organizations of a particular maturity level.
Recommended Marketing Content: Content and support materials are based on maturity levels. The goal is to assist organizations by
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N-able’s MSP Maturity Model providing more direction in terms of what materials should be used, rather than simply providing access to all materials that could be used.
Figure 3 N-able‟s Online MSP Maturity Assessment Results
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N-able’s MSP Maturity Model
Summary The challenges and opportunities for the managed services sector have never been higher. Stringent cost models, a changing regulatory landscape and industry acceptance of the outsourced business model have created incredible demand for managed services. IT service providers that understand these pressures, the needs of the consumer and are willing to make the investment to fill those needs will be in a position to capitalize on the market demand and create a new business practice with an overwhelming competitive advantage. N-able‟s Velocity System for MSP provides managed service providers with the most direct approach to developing an industry-leading managed services practice. N-able partners have asked for relevant training, tools and collateral – and N-able has delivered. By utilizing industry standards, analyst research and our experience in the managed services space N-able has developed a system that provides an unprecedented level of support for IT service providers who have recognized the need to differentiate their service offering by providing a higher level of service.
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N-able’s MSP Maturity Model
Disclaimer This executive brief may include planned release dates for service packs or version upgrades. These dates are based on our current development plans and on our best estimates of the research and development time required to build, test, and implement each of the documented features. This document does not represent any firm commitments by N-able Technologies Inc. to features and/or dates. N-able will at its best effort, try to meet the specified schedule and will of course update this document should there be any significant changes. N-able reserves the right to change the release schedule and the content of any of the planned updates or enhancements. N-able Technologies is a market driven organization that places importance on customer, partner and alliance feedback. All feedback is welcome at the following email address:
[email protected] . H
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N-able’s MSP Maturity Model
About N-able Technologies® Founded in March 2000, N-able Technologies is the market leader in transforming service organizations into managed service providers (MSPs). N-able‟s combination of products, people and processes help service providers, OEMs, resellers, VARs, Telcos and ISPs develop, sell and deliver highly profitable managed services to the small- and medium-sized business (SMB) and mid-enterprise markets. N-able‟s product line provides complete solutions to monitor, manage and optimize information technology and security from a business perspective to evolve IT services from reactive to proactive to managed. www.n-able.com H
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Copyright Copyright © 2006 N-able Technologies. All rights reserved. This document contains information intended for the exclusive use of N-able Technologies‟ personnel, partners and potential partners. The information herein is restricted in use and is strictly confidential and subject to change without notice. No part of this document may be altered, reproduced, or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of N-able Technologies. N-able Technologies, Velocity System, N-able University, N-central, N-vision and Monitor Manage Optimize are trademarks or registered trademarks of N-able Technologies International Inc., licensed for use by N-able Technologies, Inc. All other names and trademarks are the property of their respective holders. www.n-able.com
[email protected] 1-877-655-4689 MA-VELMSP-WP-1.0-ENUS-MSPMM-RES
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