In the 2022 Global MSP benchmark survey, Kaseya reports that most MSPs support up to 50 clients. Multiple reports from Datto, Kaseya and Acronis indicate that most MSPs have been in business for over six years, and over a quarter have been in business for nearly 15 years.
Many companies have been in business for a long time and have yet to grow beyond 50 clients. Based on numerous conversations, there are three primary reasons: the inability to support more customers, the inability to recruit more customers and the general lack of desire to scale the business when the owners are content with their profits.
In this article, we will talk about the inability to scale due to a lack of technical talent to support more customers and manage more workloads.
While many MSPs can’t afford to hire more people, without adding people, they cannot scale the business; others can scale and support more customers. What differentiates them is the level of operational maturity.
There is a model with five levels of maturity based primarily on financial performance, yet I prefer a model based on business and technical maturity. The level of maturity is not directly related to the financial performance, as many small MSPs can collect reasonable profits, and it is more of an indicator ability to scale the business using the existing resources.
The maturity level is not directly connected to an MSP’s size. I met high-maturity MSPs with only two technicians, and I regularly met low-maturity MSPs with over 25 technicians.
Low-maturity MSPs
The primary differentiator of low-maturity MSPs is their willingness to take any customer with any infrastructure and maintain that infrastructure as it is. Therefore, technicians must support multiple software packages and services and different types of hardware.
They readily accept break-fix customers without long-term contracts, show up to fix a range of issues and charge customers by the hour.
Low-maturity MSPs often offer only a basic set of services—remote infrastructure management, backup and security—and different tools for each based on what a previous MSP already installed at the customer’s location.
The vast scope of tools to support leads to difficulties for the technicians, who have to be experts in too many different tools. Onboarding new people is complicated, and shifting technicians between customers is also complicated, as each customer’s infrastructure is very different.
Medium-maturity MSPs
They are still willing to take any customer with any infrastructure; however, they have documented procedures to standardize the infrastructure over time, replacing existing hardware and software with their preferred choices. Often the standardization is presented to the customers during the onboarding process, and initial buy-in for the standardization is received.
Some technicians specialize in certain tools or services. For example, dedicated people are responsible for backup, disaster recovery, and security services, and they support a set of technologies.
Medium-maturity MSPs focus more on preventative maintenance and push break-fix customers; they occasionally serve to transition to long-term contracts, pitching them lower risks from preventing the issues.
Automation is developed for the standard tools they prefer, usually a set of standard scripts to implement recommended policies.
Switching technicians between customers is much easier in comparison to low-maturity MSPs, and standardization of infrastructure that happens over time leads to increased productivity and capacity to onboard more customers.
High-maturity MSPs
The primary differentiator for high-maturity MSPs is their own stack of technologies. They have pre-selected vendors and tools tested in the various environments they support. Standardization of the infrastructure is documented in a contract with the customers and begins right at the onboarding process.
Standard hardware, standard software and a set of documented standard operating procedures allow transitioning technicians between accounts, faster onboarding of new customers and providing more reliable service to the customers with shorter times to resolve problems.
Preventative maintenance and automation are the keys to success, and with all infrastructure needs handled, high-maturity MSPs have time to provide strategic IT advisory to their customers, not only handle their infrastructure.
Measuring scalability
One key metric to compare the capacity of MSPs to handle more workload is the number of endpoints per technician that the technician can maintain at a level satisfactory for the customers. Based on multiple interviews, I estimate that on average, low-maturity MSPs can manage less than 200 endpoints per front-line engineer, medium-maturity up to 300–400, and high maturity over 400 endpoints. So far, the lowest number I heard was about 60, and the highest was over 1,500 endpoints per front-line engineer.
The technicians’ productivity is dramatically different based on the experience and type of customers they support; thus, the numbers mainly indicate the scale that could be achieved with a higher level of operational maturity.
A higher level of operational maturity allows MSPs to scale and grow the business with the existing resources. Therefore, if you target to grow the business, it makes sense to look at the maturity of your operations and consider what can be improved to increase it.